Have you switched energy provider in the past five years? Were you pleased with how much money you saved? If so then I’m afraid I have some bad news. You are probably going to have to do it again.
When you switched you probably moved onto a fixed rate deal. By now this will either have run out and you’ll have been moved onto your providers standard – more expensive – variable rate, or you could be in a fixed deal that is far too expensive.
For example, if you took out British Gas’s four year fixed-price tariff in September 2008 you are paying £1,428, on average, a year for gas, says Alexandra Goss in The Sunday Times. The £70 exit penalty may be putting you off switching, but if you jump to Npower’s Sign Online 19 tariff you’d pay around £890 a year. So even after you’d paid British Gas’s penalty fee you’ll still be about £468 a year richer.
The truth is that energy suppliers are no better than any other businesses. They lure you in with what looks like a cheap deal and then rely on your inertia to keep you with them when that deal turns expensive. That means that – just as you do with savings accounts and credit card rates – you have to remain vigilant.
Natwest and RBS customers: should you stay or go?
The NatWest and Royal Bank of Scotland have been forced to sell branches to Santander to satisfy European competition rules. Customers at those branches will automatically become Santander customers over the next year. So what should you do?
All you need to do is spend a few minutes on a comparison site to check your deal against everyone else’s. If yours isn’t good, you move. It takes a few minutes to do of course, but what’s that next to a £400 plus saving? This is a particularly good time to be thinking about this.
Why? Prices appear to be on the up – by around 7% since April, according to energyhelpline.com. At the same time Ofgem, the watchdog that oversees the energy industry, has warned that householders could endure price rises of £80 by the spring thanks to a jump in wholesale gas prices. So if you get a new fixed deal now you might just avoid the pain.
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How to switch
Switching energy provider is a painless procedure when you have a spare half hour – it can easily be done in a lunch break- check all of these websites: uswitch.com, moneysupermarket.com, comparethemarket.com, confused.com and gocompare.com.
That might sound like slight overkill, but not all the energy providers are listed on any one website, so if you want the best of the best deals, you do have to visit them all.
Once you’ve found the cheapest deal, shave a bit more off the price by paying by monthly direct debit. Also, check whether there is a discount for ‘paperless billing’ – where you get your bills by email rather than through the post. Then your new provider should be able to get going on the hard work for you. They’ll inform your current supplier and arrange a switching date. All you will have to do is provide meter readings on that date to make sure you’re billed accurately.
A word about Npower
If you are or have ever been a customer of Npower you could be about to get a small windfall. The energy firm has agreed to hand back £2m to customers who were overcharged for their gas three years ago. The payouts will be given to people who were Npower customers between May 2007 and May 2008 – when the company introduced a new pricing structure that ended up overcharging 1.8million customers.
The structure meant that people were charged in two tiers – customers pay more for the first set of units used in a period, then the price drops for the second set of units. In 2007/8 customers were being charged for too many units at the higher rate. Still, while rebates are always nice, don’t start planning your retirement to the Caribbean just yet. The maximum refund will be £100, with most people getting £35 plus VAT and interest.
Npower plans to contact everyone affected over the next two months, but if you aren’t sure whether you are due a refund, you can call the helpline (0800 975 7938) to find out.
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