Millions of energy customers will be furious to learn that their energy prices are about to be hiked over the next few months, as three of the big six firms have announced hikes. Our Money Saving Expert MartinLewis, though says some of this fury must be turned upon themselves, as it’s easily possible to avoid this and save hundreds.
Who’s rising prices, when and how much?
Last week the big announcement was from British Gas – it is putting up both gas and electricity prices for those on its standard tariff by an average 5.5% on 29 May. This is equivalent to around £60 added on top of a typical bill. Yet it’s not the only firm doing this, after British Gas’ announcement, EDF then said it’d increase its standard price on electricity by 2.7% (gas prices won’t change) on 7 June, equivalent to around £16 on a typical bill.
Plus last month Eon did what I call a backdoor price hike, not announced like the others, because its rates won't change. From this Thursday it'll ditch some 'dual fuel' (ie, gas & electric) discounts and up some standing charges – equivalent to an average rise of £22/yr on average.
Will other firms follow?
When British Gas does price hikes, the other Big 6 energy firms often bleat like sheep and follow. When British Gas put prices up this time, I said I thought it was a slightly more difficult call this time, because even after this rise, British Gas’ standard tariff isn’t quite the most expensive. Yet on balance my thought was we’d see some others follow suit, after all in a PR sense, British Gas will face the full flak, so they’ll get less of a hit if they can sneak in afterwards.
And indeed EDF’s rise just two days later shows this seems to be the case.
What can people do about this?
We live in a market where the ‘do-somethings’ pay far less than the ‘do-nothings’. It’s no secret that British Gas and all the other big 6 providers aren’t cheap. In fact if you’re sitting on their standard tariff, frankly you’re being ripped off, and with typical bills could cut the costs from around £1,140 to a little over £800 for the same usage, a saving of £340. Some save far more if they’ve higher usage.
Switching energy supplier is not complicated. In fact it only takes minutes to find your cheapest deal and then it's switched over in 17 days. Those who worry about switching, don’t – it’s the same pipes, gas, meter, safety – you don’t lose supply – the only difference is price and customer service. And there’s no break in supply when you do switch.
As your cheapest depends on where you live and what you use, there’s no one winner. So just plug your details into Martin’s ‘Cheap Energy Club’ or any other Ofgem-approved comparison site and it'll give the best deal for you. It’s best if you have your bills to hand to do this, but even if not, most comparison sites will estimate for you and the sin of inaccuracy isn’t as big as the sin of doing nothing.
Though do beware, as comparison sites are now allowed to only show you tariffs that pay them, which means you may not see all the deals (for the sake of transparency Martin’s Cheap Energy Club defaults to all deals). Though sadly these won’t work if you’re in Northern Ireland.
Those who aren’t online can call up some comparison sites too (or ask friends who are more web savvy to help them).
When you compare, the cheapest are always small companies no one has heard of, is that scary?
When people talk about the difficulty of switching I think it’s not the comparison, but it’s picking their winner. The huge encouragement given for new entrants to the energy market is actually putting many off switching. And to an extent there’s good reason. The energy market is swamped with new firms, and often at launch they offer super-cheap deals to build a customer base; yet feedback is limited or poor.
Yet usually the first five or more firms are often new, if that worries you, simply SCROLL DOWN the comparison site results to one you know, or one which has a good customer service feedback rating (some allow you to filter by this). The savings can still be over £200 – and if you’re nervous better to go for that.
What about those people who just won’t switch?
There are some vulnerable customers who, rather than being apathetic, are unable to switch due to confusion, lack of online access or fear.
The flaccid current ‘vulnerable customer’ price cap only reduces their costs by a relatively trivial £70. This means disgracefully, a wealthy, savvy man like me still pays far less to boil a kettle than a struggling 90-year-old grandmother.
Yet for those who can switch but just don’t’ want to, there is another route. I often get questions like: "I'm with E.on - is it cheap?" I can't answer that, as what you pay depends on which of a firm's tariffs you are on. E.on, for example, has one of the most expensive standard tariffs at a typical £1,156/yr, yet it also offers a relatively cheap fix at £984/yr.
In fact EVERY Big six provider has a cheaper deal than its standard tariff - so through gritted teeth let me say, if you won't switch as you're loyal to your existing firm, at least ensure you're on its cheapest tariff. Call them up and ask them (or better use a comparison site to see your providers cheapest and how much extra you’ll be spending to be with it).
Can you switch if you’re on a prepayment meter?
If you pay by a key or card meter, as many of the country’s poorest and most vulnerable do, then outrageously there’s nowhere near as much competition, and you pay more – though prices have been capped which has helped a touch. If you do a comparison there are often savings to be made, but often less than £100.
Yet if you can, try and switch to a billed meter. It’s free to do with one of the big six providers, and you’ll usually be credit scored to check you’re capable of keeping up with payments.
And for those who are struggling to pay at all...
Too many have to choose between heating and eating. So make sure you’re on the cheapest tariff, but if that isn’t enough call the Energy Saving Trust helpline on 0300 123 1234 (England and Wales and Northern Ireland) or 08088082282 (Scotland) to see what help is available to you.