Monday, 20 May 2013

Consumer organization reveals electricity contract tricks that could increase your bill by 11%

SPAIN The hard-hitting consumer organization FACUA revealed in its magazine Consumerismo for Jan-Feb 2013, the tricks used in special offers from electric companies. The organization studied discounts offered by several of the main suppliers and found that in fact, they can increase your electricity bill by up to 11%. It denounces the companies' 'false advertising' and 'fraudulents practices' used by sales people making cold calls at homes offering discounts that turn out not to be real, or are conditional on the buyer contracting additional services that do nothing but make the bills more expensive. Some companies even commit falsely to not increasing the price of electricity for one or more years - something that is not in their hands as that is controlled by the government. The companies analysed are Iberdrola, Endesa, Gas Natural Fenosa, HC Energía and E.On, using the Tarifa de último recurso (TUR, Last Recourse Tariff) as set for January.>>>
The TUR is used by the vast majority of home consumers and is the cheapest. FACUA says that opting for another tariff is notadvisable in the  best of cases, and foolhardy if contracting more expensive tariffs - which are those offered by the three largest companies (See below).

The contracts being offered by salespeople (more often than not subcontractors on commission) cut back consumers' rights and allow the companies fewer of the obligations set by regulations included in the TUR.

Gas Natural Fenosa
Their trick is to offer discounts of 15% or 20% of the TUR tariff over the first year, but on the condition that one or more repair or maintenance services are contracted, pushing the bill up by an average of 3.6% (€2.91 per month) and 8.5% (€6.84) respectively.

Once the first year is up, the discount is no longer operative, which increases the bill by 5.5% more than the TUR tariff (€4.44 per month) in the first (15% 'discount') example and by 11% in the second (€8.88).

The 15% 'discount' offered by this company is also subject to a contract for 'breakdown' services, which raises the average bill by 0.6%, or €0.46 per month. The discount also disappears when the first year runs out,  the monthly service bill doubles and the tariff is €3.99 more expensive than the TUR.

This company offers a 10% discount, but not on the TUR tariff set by the government, but on one that is much more expensive. When compared to the TUR, the 'discount' amounts to a mere 2.5%.

In addition, while the tariff applied by Iberdrola is more expensive than the TUR, the company also demands a contract for 'payment protection service', which, if the consumer falls for the false advertising in its ads, he/she will end up paying 6.8% (€5.50 per month) more than the TUR.

The average usage by people checking their bills through the FACUA website is 366 kWh (based on 50,000such verifications) and contracts maximum power of 4.4kW.

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