Are you with the best value gas and electricity supplier? If you’ve not looked at your options for a while and are on a standard variable rate tariff, you might be overpaying by hundreds of pounds a year, according to Ofgem. With 66% of UK households currently in this position, could it be time to look at your options?
In October 2017, the government announced plans to put a ‘price cap’ on expensive standard variable rate tariffs, which could come into effect from 2019, saving consumers on these tariffs up to £100 a year. And if you switch utility providers or change onto a different plan, you could save even more.
Why don’t people switch providers?
Households typically find themselves paying more than they need once their fixed rate tariff lapses and they don’t bother to sign up for a new deal. According to YouGov, many consumers think it simply “isn’t worth it”. However, with considerable savings to be made, it could be worth reconsidering.
How easy is it to switch?
Once you’ve compared plans and chosen your new provider, you simply need to contact them directly to let them know, or do it through a price comparison website. They will take care of the process, including informing your current provider, and it will take 17 days to come into effect. In case you change your mind, this includes a two-week cooling off period where you can cancel the switch.
Your new provider will be in touch to let you know the date your plan will start, so be sure to take a meter reading that day. Also, make sure you cancel any direct debits with the old company, to avoid being charged twice.
On switching day itself, you won’t notice any difference in your energy supply: there’s no down time at all.
What to look for when thinking about switching
Start with the supplier: do you need to be with one of the big players or would a small provider be better?
Although people tend to feel comfortable with a big player – around 90% of households choose them – it’s not always the best choice. No matter who you’re with, if your supplier goes out of business, you’re protected by Ofgem. Smaller players can offer better deals and better customer service. Also, if you’re after green energy, smaller companies are often your best bet.
Next, look at different types of tariffs. Check out price comparison sites but do independent research as well: websites don’t always show offers from all suppliers in your area.
Consider your household size, energy usage and what type of tariff suits your needs. Think about what’s important to you: would an online account or app suit you best, or do you need paper bills? It’s worth knowing monthly direct debits tend to be the cheapest way to pay – just make sure you do regular meter readings.
While shopping around, why not consider helping out those who aren’t online as well – maybe parents or grandparents. You can use price comparison sites to research options, then give them the phone numbers of suppliers if they’re ready make the switch, potentially saving them a significant amount every year.
Tariff types explained
- Fixed rate tariffs are locked in for a period of time. The price may either be fixed for the full term, or offer different fixed rates at different times during the contract. Generally this is the cheapest option, however should energy prices fall you won’t reap any additional savings. And if you want to leave before the end of the contract, you might be charged an exit fee.
- Standard variable rate tariffs (also known as ‘variable rate tariffs’ and ‘standard tariffs’) are the default tariff. They tend to be more expensive, the price can change at any time, but they don’t lock you into a contract – so you can leave whenever you like.
- Dual fuel tariffs are when you combine your gas and electricity into a single package and could save you money.
- Green energy tariffs use renewable energy sources – such as wind farms and hydroelectric power stations. Although some providers can be a little more expensive, this isn’t true for all - particularly the smaller players.
- Time of use (ToU) tariffs can save you money if you tend to use energy during off-peak hours – when there’s less demand on the National Grid. You’ll need to have a separate meter installed to monitor your usage, and not all suppliers offer this option.
- Prepayment meters mean you pay for your gas or electricity in advance by topping up the meter as you use energy. Although this pay-as-you-go approach helps keep you on top of your finances – there’s no monthly or quarterly bill – these are often some of the most expensive options.
When to switch
If you’re on a standard rate tariff, you should be able to switch at any time. However, if you’re already in a fixed term contract, make sure you check your agreement: there may be an exit fee for leaving early. Do your sums to make sure you’re still likely to save money even if you make the switch.
If you live in rental accommodation and are considering a fixed rate tariff, it’s worth comparing the length of the term with how long you plan to live there: should you move, how much would it cost you to cancel? Also, as a tenant the only time you’re not allowed to change energy suppliers is if your landlord pays the energy bills. If you do switch, it’s good practice to let them know who the new supplier is. And if you have prepayment meters, you’re permitted to replace them with normal meters for the duration of your tenancy. However, you might need to change them back when you move out – which is likely to incur a fee.
Shopping around for a new tariff or energy provider doesn’t take long, but the rewards you reap could add up to hundreds of pounds each year. And don’t forget to keep an eye on the offers available – even once you’ve switched – to make sure you’re across the best deals for the future as well.