Start a power surge . . .
Fed up with being hit by energy price shocks? ...by switching NOW to a cheaper supplier (it will send a thunderbolt message back to the Big Six)
MILLIONS of households will soon be struck by higher gas and electricity costs as suppliers push up prices and old cheap tariffs come to an end. It means now is the time to find a new deal.
Energy giant SSE is the last of the Big Six to deliver a thunderbolt to customers. It announced an average annual price rise of £76. The move affects more than two million customers and only spares the vulnerable, those on a fixed-price deal or who use a pre-payment meter.
SSE’s price hike follows similar increases by rival suppliers British Gas, Npower, ScottishPower and EDF Energy, which all take effect between now and the middle of next month. Eon also removed some of its customer discounts earlier this year – the equivalent of a price rise.
Adding to this flood of bad news is the fact that dozens of fixed deals are ending. Those who fail to find a new one will join millions of households on costly standard variable tariffs.
Switching to a new deal or a new provider will protect customers from higher bills. Since all of the major suppliers have revealed their price rises, it is a good time to compare offers without fear of jumping from frying pan to fire.
Peter Earl, head of energy at price comparison website comparethemarket, says: ‘Energy suppliers rely on consumer inertia, so all it takes to beat soaring prices is a simple switch of tariff or supplier.’
WHERE TO SWITCH
COST is only one consideration when switching. Another big issue is customer service – where there is a wide gap between suppliers.
Joe Malinowski, of switching website TheEnergyShop, says: ‘Customers need to be careful where they move to – the savings will not be worth it if you switch to a company with customer service issues.’
The Big Six are still inundated with complaints – with all but one fielding more customer gripes in the first quarter of this year compared to the final three months of 2017. ScottishPower, Npower, Eon, EDF Energy and SSE all saw the number of grievances from customers increase. Only British Gas saw a decrease, albeit from a high number of complaints. There are also tens of thousands of issues each month across all major suppliers that go unresolved for longer than eight weeks, indicative of a large number of complex disagreements. Younger companies that have fewer customers and modern technology are less distracted by longstanding customer service
issues. But it is not always a case of the smaller the better. Some embryonic players could be at risk of becoming overwhelmed when things go wrong if they lack the resources to cope.
For example, fledgling provider Iresa is banned from taking on new customers or increasing the direct debits of existing customers while it seeks to resolve customer service problems. The ban is in place until the end of this month. If it fails to meet targets set by energy regulator Ofgem its licence could be revoked.
Malinowski also warns that cheap deals offered by cash-hungry small suppliers, against a backdrop of bigger players increasing prices, could signal wider problems.
He says: ‘There are cheap deals being offered by small companies that take customer money upfront, before energy has been provided. This could be a sign of financial stress and some of these companies are unproven.’
Yet mid-tier challengers are not without their issues. On Friday Ofgem announced it is investigating how Utility Warehouse manages customers in debt.
Victoria Arrington, of energy comparison site Energyhelpline, says: ‘Loss-leading tariffs could be a viable method of doing business if done with care – as many suppliers do. If not, this strategy could potentially lead to the supplier going under.’
But she says customers should not be overly fearful. She adds: ‘Energy is the easiest household bill to switch and can result in an annual saving running into hundreds of pounds.’
Should a supplier go bust, energy regulator Ofgem will step in to find another provider, a supplier of last resort. But customers may then be moved onto a more costly tariff with the new supplier and any disagreements about billing under the previous one will prove hard to reconcile.
Malinowski adds: ‘Choosing a fly-by-night supplier could be a recipe for disaster. There are what I call safer options, even if they are not the cheapest available. It could be a reasonable offer from an alternative big supplier or a competitive tariff from an established mid-tier provider.’
Low income or vulnerable customers in receipt of the Warm Home Discount – a one-off dis- count of £140 on electricity bills only – should also choose a supplier signed up to this scheme.
Suppliers offering the discount can be found at gov.uk/the-warmhome-discount-scheme. It includes challengers such as Utility Warehouse, First Utility, Ovo and Cooperative Energy.