The ‘phantom’ energy tariff switches that can leave you paying MORE

BRITAIN’S biggest energy firms are misleading millions of customers into changing their gas or electricity tariffs by promising them ‘phantom’ savings, an investigation has found.

More than a third of UK households are believed to have changed their deals in the past two years on the back of promises of bogus savings over a 12-month period.

But energy providers and websites such as USwitch are giving customers false estimates of how much they would save, according to the probe.

In some cases, customers are told they will save more than £200 per year, but in reality their bill goes down by only a few pounds. And sometimes they can actually end up paying more. In one case a consumer was told by Npower they would save £47 on their annual dual gas and electricity bill, but in fact they would end up paying £147 more per year than on their previous tariff.

And a customer was told by EDF that they would save £42. In reality they saved just £4.

Consumer groups and energy watchdogs have called for an end to these ‘bonkers’ phantom savings, which they say are deceiving consumers.

The investigation, by BBC Radio 4’s Moneybox programme, found that the big six energy firms and most price-comparison websites use a ‘flawed’ calculation to work out savings – a calculation introduced by the energy regulator Ofgem in 2014 to encourage switching.

Under Ofgem’s method, when a customer calls an energy company or uses a website such as Confused.com to consider changing tariffs, they are told how much they would save over 12 months if they change to the new rate.

To illustrate the saving, the energy provider or website calculates a ‘personal projection’ of how much the consumer would pay for gas or electricity over the next 12 months, based on their current tariff.

But what the companies rarely reveal is that the projection is never solely based on a customer’s current tariff spread over 12 months.

If the customer has only one month of their current rate left, the energy company will calculate the 12-month cost by adding another 11 months based on the firm’s own much more expensive standard variable tariff.

This greatly inflates the projected bill and overestimates potential savings by tens to hundreds of pounds.

Both EDF and Npower admitted to the BBC that they are following Ofgem rules. But last night there were calls by experts for Ofgem to adopt a fairer system.

Archna Luthra, an energy specialist at Moneysavingexpert.com, said: ‘It’s a completely bonkers model and it’s confusing to people. The energy market is very complex and Ofgem should create a model that is simple for consumers and encourages switching.’

However, an Ofgem spokesman said that when the personal projection model came in, it was supported by most industry experts and groups. The spokesman said: ‘We believe the method we chose to calculate customers’ personal projections was the best for comparing people’s energy costs over the following 12 months.’

‘It’s completely bonkers and confusing to people’

Moneybox will be broadcast on BBC Radio 4 today at 9.02pm.