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European Commission Project

Consumer Champion is a capacity building programme of the European Commission, managed by the Consumers, Health, Agriculture and Food Executive Agency (Chafea) to support and develop the capacity of consumer organisations and other entities with similar objectives from EU Member states, EEA and candidate countries.

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Energy

consumers' behaviour: (not) understanding energy bills

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energy

According to the recently published Second consumer market study on the functioning of the retail electricity markets, about three in five European consumers think that domestic electricity markets in their country are not functioning
very well.

To what extent consumers are able to make informed, rational and empowered choices?
The study shows that over three in ten consumers do not know how much electricity they use - neither on a monthly or yearly basis. Nearly four in ten consumers do not know how the price of their electricity is calculated. Four in ten are not aware of the sources of electricity they use. Only four in ten mystery shoppers agreed that the electricity bills were easy to understand.

The objective of the study was to investigate if a well-functioning electricity market is in place for consumers in the EU, Iceland and Norway; specifically, in terms of:

  • quality of services and availability of information, 
  • choice of electricity companies and price tariffs, 
  • comparability of offers and switching rates, 
  • billing practices, 
  • unfair commercial practices and complaint handling, 
  • prices and affordability, and 
  • sustainable energy use and innovation.

The experiments carried out to collect the data:

  • “Stay or switch”: this experiment tested the impact of pricing structure and bill presentation on respondents’ ability to choose the cheapest electricity deal. In addition, the “stay or switch” experiment tested the effect of switching costs on consumers’ behaviour and choice in the experiment. Switching costs were simulated by introducing a real effort task which required respondents to input information from their bill before being able to view alternative offers. 
  • Bill comprehension: the bill comprehension exercise tested consumers’ understanding of electricity bills. Respondents were allocated to one of six bill types, which varied in terms of the inclusion of a comparability box, how historical consumption was presented and whether additional surplus information (not relevant to understanding the task) was included on the bill. 
  • Marketing material comprehension: this task tested how common marketing methods impact consumers’ ability to correctly understand an offer.

If you want to learn more about the EU Energy policies, Consumer Champion offers a dedicated online course. Sign up and apply for the Energy e-learning module. 

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