The £200 charge for leaving your energy firm
Households are locked in by early exit fees on twice as many energy tariffs as a year ago. The number of deals that carry exit fees has increased to 43pc of the market, compared with 21pc last year.
The average fee is £63 but in the worst case Engie, a “green” supplier, charges a penalty of £200 – almost 20pc of the average annual tariff. Several other firms charge £100.
The proportion of fixed-term deals on the market has also increased from 67pc to 71pc.
The development comes amid a climate of rising prices that has seen 43 increases in 2018 from 30 suppliers. British Gas has raised prices twice, costing its customers an extra £104 a year, while Scottish Power has increased prices by £109, the most of the Big Six.
uSwitch, a comparison service, said the rises had been coupled with the removal of the cheapest deals on the market. The cheapest offer is now £921, against £815 this time last year.
Rik Smith from uSwitch said: “With wholesale prices rocketing this year, suppliers – especially smaller ones more susceptible to volatile market conditions – are looking at ways to guarantee that customers will stay with them for the duration of their tariff.”
Exit fees are charged on fixed-term deals, after which most suppliers shift customers to a variable tariff. Providers cannot increase costs during a fixed-rate period.
Martyn James of Resolver, a complaints service, said: “People are vaguely aware that when they sign up to a fixed rate they will be tied in for a time, but if you move house or want to switch supplier I’m not sure people realise how big these fees can be. The industry needs to be clearer over these costs.”
Engie’s Control June 21 tariff costs an average of £1,133 a year, more than £100 higher than the cheapest deal, and has an exit penalty of £200 for dual fuel. A spokesman said the tariff included a smart thermostat installed free of charge and the exit fee was to stop customers leaving immediately.
In other industries the regulator has stepped in to cap exit fees. Ofgem, the energy watchdog, said that while there was no cap on fees it would not allow charges that were “against its standard of conduct”.
A spokesman for Energy UK, a trade body, said exit fees were a commercial decision for suppliers. He added: “Such deals are designed to provide certainty for both customers and suppliers, which is why they are often the most competitively priced offers. Customers coming to the end of a fixed-term tariff will be notified by their supplier and at that point they can switch without an exit fee.”
Almost half the energy tariffs on the market charge exit fees – twice as many as last year