Home NewsAnalysisEventsON-LINE PRICE OFFERS – NOT JUST A RECOMMENDATION BUT AN OBLIGATION NOW

Go back

Go Back

ON-LINE PRICE OFFERS – NOT JUST A RECOMMENDATION BUT AN OBLIGATION NOW

ON-LINE PRICE OFFERS – NOT JUST A RECOMMENDATION BUT AN OBLIGATION NOW

The Energy Law amendments in progress at the National Assembly, coming into force on 1 October 2020, set in motion the next stage of retail electricity market liberalisation in Bulgaria. All low-voltage non-household customers will have to look for a new power supplier at freely negotiated prices, rather than at regulated prices.

In addition to the proactive awareness campaign that has to be conducted with the participation of institutions, the regulator, the end suppliers and energy providers in the coming months, the legislator has envisaged that by 1 January 2021 all final customers with an expected consumption below 100 000 kWh need to have free-of-charge access to a platform for comparing electricity supply offers, including offers for dynamic electricity price contracts.  This platform is a single, central, public, web-based information system, which provides access to an up-to-date information on electricity supply offers. Platform operator will be the Energy and Water Regulatory Commission.

What are price comparison tools all about?

Comparison tools (CTs) are a key element in providing clear and transparent information to consumers. From the CT information content, energy consumers may get a clear picture and understanding of the market environment, and base their initial or subsequent choice of energy supplier.

CTs allow for consumers to compare prices of various offers, while increasing consumers’ options to take advantage of retail market activity and competition.

In accordance with the latest amendments of European legislation (Directive (EU) 2019/944), Member States should guarantee that household customers and microenterprises with an expected yearly energy consumption below 100 000 kWh have a free-of-charge access to at least one tool for offer comparison, including offers for dynamic electricity price contracts. Customers are informed about availability of such tools in or together with their bills or by other means.

The same Directive introduces CT standards with the view of effective market operation to the benefit of energy consumers. More specifically, any Member State needs to have at least one such comparison tool, meeting the following requirements:

  1. independent from market participants;
  2. equal treatment of energy undertakings in search results;
  3. disclosure of ownership;
  4. disclosure of sources of financing;
  5. objective criteria for comparison and their disclosure;
  6. plain language;
  7. accurate and up-to-date information;
  8. information on the time of the last update;
  9. accessibility to persons with disabilities;
  10. procedures for reporting incorrect information;
  11. limited personal information for comparison, and
  12. coverage of the entire market

The criteria listed promise consumers a better access to neutral and objective information that enables them to take an active role in the energy market liberalisation.

European practice

The figure below gives an idea about CT number and types available in Member States, including about the part which provides full market coverage and the number of reliable tools. For instance, the largest CT number across European states is offered to consumers in The Netherlands (32) and Germany (30). According to ACER report, however, these figures may look differently, if the requirement for full market coverage is considered. There are 15 CT covering the entire market in France and Spain, 7 – in Norway.

National regulatory authorities have conducted CT reliability assessment based on a set of criteria, for the first time defined in Guidelines of Good Practice published by ACER in 2017. Standards, similar to the defined ones, refer to independence, transparency, completeness, clarity and comprehensibility, fairness and accuracy, user-friendliness, accessibility, and empowering consumers.

The results show that 18 Member State have devised reliable CTs. There are Member States with a number of reliable CTs, such as the UK (11), Austria and the Czech Republic (3), Portugal (2). In the majority of Member States with one, two or three CTs, national regulatory authorities responsible for consumer protection, manage and maintain CTs. Some Member States have entrusted CT development to private companies.

Figure: Number of types of CTs in EU MSs and Norway – 2018

Source: ACER Market Monitoring Report 2018 –Consumer Empowerment Volume

As it is shown in the figure below, 18 are the states where a public institution has maintained and offered this important tool to electricity consumers for several years now.

Figure: MSs where a public authority provides a comparison tool in EU MSs and Norway – 2018

Source: ACER Market Monitoring Report 2018 –Consumer Empowerment Volume

On this page Energy General Directorate supports information with links to institutional platforms containing offer comparison tools of Member States.

Bulgaria, Cyprus, Hungary and Malta do not have a single developed and operational comparison tool provide either by private or state institutions.

How do standard Offer Comparison Tools operate and what information do they provide?

Even though on-line offer comparison tools of Member States differ with respect to the set of services offered, scope of information required by consumers and provided by traders, and information visualization, all of them follow a general pattern. As regards the set of services offered, a CT may compare only offers available on the market or facilitate additionally the process of supplier switching.

To be as useful as possible, a CT requires consumers to enter specific information about consumer profile and current supplier. This usually includes:

  • Customer type: household or non-household.
  • Postal code: It is needed because some fixed (regulated) electricity tariff components (e.g. network prices) may vary in the different regions, while some suppliers operate only on a limited geographic territory. An alternative for identifying consumer region, applicable tariffs and active suppliers, i.e. defining available offer options to a consumer, is provision of electrometer number (for instance,https://www.simplyswitch.com/). However, this option requires strongly integrated market player information databases.
  • Current supplier and details of an existing contract: The current supplier and energy ‘tariff’ used by the consumer should be clearly indicated in the invoice. This is the baseline for comparison among various suppliers. In the perfect case and in order to comply with the principle of completeness, CT database needs to include (for example, as a drop-down menu) all tariffs applicable to the respective consumer type and offered by all suppliers on consumer’s territory.
  • There are some CTs that follow a different approach and do not take into account the current supplier. In such cases, the baseline for comparison and calculation of potential savings in customer’s electricity bill is the information about customer’s usual average electricity consumption. The customer is required to identify current consumption either by an amount paid or by electricity in kWh, consumed over certain time period (g. monthly, quarterly, annually).
  • Specific information may be requested about characteristics of tariffs used – day/night; special/seasonal tariffs; social tariffs, etc., as well as any other relevant information about the contract that may affect the final price, for instance, mode of bill payment (for instance, some suppliers offer a deduction upon a direct debit payment), payment in equal monthly instalments, one or two readings within certain time period, combined utility services – electricity plus water, mobile services, natural gas, central heating, etc.

Usually, this entire information is present in the invoice issued by the current supplier and CT provides a template that makes it clear where to retrieve the details from.

In case the customer is not aware of the electricity consumption, the average consumption of a given consumer type for a certain time period is considered in order to calculate annual costs. However, this practice bears inaccuracies and cannot grant proper information to the customer. To overcome this obstacle, some CTs require specific details such as type of facility, degree of modernity, type of insulation and joinery, number of premises, type of heating and cooking appliances, number and employment profile of inhabitants, etc.

Depending on tool’s level of complexity, the consumer may further enter additional preferences and requirements about the offers he/she is looking for. In contemporary urban agglomerates, for instance, a principal argument in supplier selection turns out to be non-price features, instead of prices, such as:

  • mode of bill payment/special payment schemes
  • fixed tariff where electricity prices will not rise or drop within a certain time period
  • opportunity for an on-line bill management
  • no fees for an early contract termination – open-ended contracts
  • no requirement for a deposit payment
  • provision of free-of-charge services to customers, for example, energy surveys, property insurances, combined services
  • green energy requirement
  • support for making the home and devices smarter (smart measurement, demand-response premiums)
  • other promotional offers, for instance, deductions in case the customer purchases or accepts an additional service.
  • CT collects all the information listed and returns the results about available alternative solutions to this specific consumer.

As expected, the offers are ranked on the basis of the final price that can be offered to the specific consumer, or quite frequently, on the basis of expected annual savings that would be achieved against the current tariff.

The better part of CT operators in states with a well-developed retail market provide additionally the supplier switching service – on behalf of the customer they act as intermediary in the process of concluding a contract with the selected supplier at the chosen tariff against a commission.

For more information, you may go to the link for such a comparison tool in the UK.

Here is the result we obtained when searching for an electricity supply offer today, step by step:

  1. Postal code/address of the site and mode of payment (monthly/quarterly direct debit, in cash or by cheque, prepayment).  We pick the postal code of Buckingham palace and mode of payment – a monthly direct debit.
  2. Selection of current supplier– out of listed suppliers operating in this region, we pick eON.
  3. Selection of a current tariff – a drop-down menu holds several tens of options for the current supplier.  We select a fixed price tariff for a one-year period. 
  4. Approximate bill/consumption and preferred mode of payment. In this case we enter an annual consumption of 53 MWh, which is typical for a hairdresser salon or a kindergarten in Bulgaria.

Leave a Comment

Your email address will not be published. Required fields are marked *

Share: