Don’t let energy price hike hit you in the pocket
IT’S predictable, but depressing. The big six energy firms have all now announced they’re hiking standard tariff prices by 9% on April 1. This will hit over half the homes in the UK. Yet you needn’t accept the price hike – sadly, in many ways it’s a fine on customers for apathy, confusion, or complex set ups.
Instead, you can simply switch tariff. Everyone should be checking now. Many can save at least £200 a year.
This is all about standard tariffs
It’s the default deals that energy firms put customers on who’ve never switched, haven’t chosen a special rate, or once that rate finishes. It’s always expensive. Yet for the last couple of years they have been governed by a price cap that’s set every six months.
A few weeks ago it was announced that from April 1 the direct debit dual-fuel price cap would rise from £1,042 to £1,138 a year for someone on typical usage. This is primarily due to the wholesale rate of energy (those the firms themselves pay) having gone up rapidly after bottoming out due to low usage in the first Covid-19 wave.
A price cap isn’t really a cap In truth, while it’s called a price cap it’s actually the rate for each unit of energy that’s capped. There’s no maximum energy bill you will pay. If you’ve high usage you’ve a higher cap, lower usage, a lower cap.
And whilst the cap may be a ‘fair’ price, it certainly isn’t a good one. In fact, since the price cap has been in place, it’s been on average £200-a-year more expensive than the cheapest tariffs.
To show the size of the savings possible, here’s a tweet I got from Sarah “@MartinSLewis just gone on to MSE energy saving and switched, saving over £400 on my energy bill, £500 with the price increase in April. Thank you”
All the big brands – British Gas, SSE, Scottish Power, Npower, Eon, EDF, respond to the price cap change, and like sheep they’ve set their new standard tariffs within £1 of it. For those on prepay meters the price cap is going up by 8%.
That means if you’re on one of these tariffs – which over half of UK households are – then you’ll see your bills jump.
Now’s the time to compare prices When the price cap rise was announced, many people flooded to comparison sites. Yet that was in some ways too early; compared then, and the savings you were shown would be against what you pay today – the rate before April – so it was likely undercalculating by over £90/yr.
The small saving may have wrongly put some off switching. Yet now all of the rate cards for big firms have been published, so comparison sites have the right details, and you can see an accurate savings figure.
It’s worth noting that for those who have got a cheap tariff within the last 12 months, do a comparison and it’s likely you’ll find today’s cheapest tariffs more expensive than yours, because of that increase in wholesale prices – in which case unless your deal ends soon, stick where you are.
Many big firms do not offer their best deals direct
Don’t go direct Many big firms do not offer their best deals direct. They ONLY allow you to sign up for the cheapest tariff via comparison sites. That way they hope to win new business from those who are looking to switch, but can keep existing customers on higher tariffs.
These sites
MoneySavingExpert. com founder Martin Lewis
are also useful