Keep switching to get the best energy deal
By Margaret Taylor Personal finance editor
IT IS not so long ago that the big energy players were patting themselves on the back in recognition of their own tariff-freezing magnanimity, announced in the face of spiralling wholesale energy prices. Yet just a few months on and Scottish Power has announced that its standard tariff electricity and gas prices will rise by 10.8 per cent and 4.7 per cent respectively. Meanwhile, Npower is set to raise electricity prices by an average of 15 per cent and gas prices by 4.8 per cent, and EDF will bump up its electricity costs by 8.4 per cent.
Ben Wilson from comparison website Gocompare reckons there could be more to come, pointing out that “what we know from previous price hikes is that where one energy giant leads, others surely follow”.
Stephen Murray, energy expert at MoneySuperMarket, agreed, noting that the rises show it is “clearly open season for energy price movements”.
For consumers, such rises are just the tip of the iceberg with Gocompare’s finding that 27 fixed dual-fuel tariffs are due to come to an end on February 28, with customers signed up to 25 of them automatically being charged more by being rolled onto providers’ standard packages.
The average increase across all UK regions where the standard tariff is more expensive than the fixed deal is £256.32 – a rise of 31.4 per cent – although in some cases the increase will be much higher.
Wilson at Gocompare said such rises will be a “big driver” of people switching to new providers, with savvy customers who are “no longer fooled by the ploys of the energy companies” knowing that “when the price rises it’s time to switch”.
According to Gocompare research the cheapest fixed dual-fuel tariff currently on the market comes from Iresa, a Nottingham-based supplier whose stated vision is to “bring fairness to the market”. The average monthly cost of its 12-month Flex4 deal is £833.72 for a medium user paying by direct debit.
Others, such as Tonik Energy, Toto Energy and iSupply, offer similar deals, all of which are under £900 a year, the equivalent of £75 a month.
While such deals seem appealing, particularly as many of the new players in the market have added selling points such as sourcing 100 per cent of their supply from renewables, is there really much appetite among consumers for switching provider?
If research from data business Bilendi which found that almost one-quarter of the UK population has never switched any of their main financial products is anything to go by, the answer would appear to be no.
This is backed up by market research business Opinium Research, which found that at 23 per cent versus 16 per cent, more people are more likely to switch now than they were in 2014 but many are looking for an incentive before they make the move.
Adam Wilson, head of Opinium’s energy and utilities team, said the research found that most switchers will simply move to one of the other biggest players in the market.
This, he said, could be a mistake, with smaller providers typically not only offering the prospect of lower bills but better customer service and access to cleaner sources too.
“While three-quarters of switchers will still choose a Big Six company when switching, the largest opportunity lies with challenger providers who can not only compete on price but also on the unique features of their offering,” Wilson added. “It could be worth taking a couple of minutes out of your day and find out how much you could save.”