Is switching energy suppliers worth it?
Is it worth your time comparing gas and electric prices and switching? A question that is often asked because people assume they are on the best tariff already or they'll only save a few quid by switching so it isn't worth the hassle.
Read on to find out how much people actually save in the UK by comparing and switching to a cheaper energy company. How much the comparison websites claim to save customers and how much actual customers have saved.
Price comparison sites show how much you can save
If you have never switched energy supplier or only done so once then you stand to save. People using energy comparison sites save hundreds according to the officially reported figures published by the Ofgem approved utility comparison websites. EnergyHelpline saved 10% of their customers £461 (January to September 2019) whilst Moneysupermarket saved at least £248 for over half of customers who compare and switch (November 2019).
Your energy company is telling you you're paying too much
Since 2015 energy companies have been obliged by Ofgem to tell you if they have a cheaper deal. It comes to something when energy providers are telling their customers they are paying too much and can switch to a cheaper tariff.
Under Ofgem regulations, suppliers already have to tell customers about their cheapest deal, but until now this rule hasn’t extended to white label tariffs.
Ofgem October 2015
Granted, these notifications on the statements are small, after all what company wants to charge less when their customers are willing to pay more for the same gas and electric.
Your energy company only has to tell you about cheaper tariffs that they offer and not cheap energy deals from other companies.
You can see in the highlighted picture of this People's energy statement that it is showing you that if you switched to one of their other tariffs you could save £108. So even though this customer is a low energy user they can still save a significant amount of money and they don't have to switch companies to do so.
However if you compare energy deals and switch energy supplier you are going to save even more.
Retired couple living in a bungalow with high gas usage
Ray and his wife live in a 3 bedroom bungalow that was built in the 1990's. They spend most of the time at home as they are both retired. In winter they tend to have the heating on during the day and keep the thermostat to a high setting in the living room where they spend most of their time.
Looking at Ray's energy bill from one of the Big six companies Npower it states they use 23,465 kWh of gas per year and 4,267 kWh of electricity. They pay about £130 a month by direct debit and are on the dual fuel tariff 'Exclusive Fix February 2021', a fixed rate deal which ends at the end of February 2021.
They compared their current energy prices and found that they could switch to 'People's Energy 2 Months Upfront Winter 20 v3' where they would be paying £97.57 a month. Over a year that's a saving of £408.
As they are on a fixed contract the terms state they cannot switch until after 10th January 2021 or they will have to pay an early exit fee of £30 for each fuel, so £60 in total.
They have 10 months left on the contract so it makes sense to leave now and pay the £60 exit fee as they are going to save around £340 over the next 10 months which is far greater than the leaving penalty.
When can I switch energy supplier without penalty?
Penalties or exit fees only come into force if you have signed up to a fixed tariff deal with your supplier. If you are on a standard or variable tariff then there is no penalty for switching to another energy tariff or other energy providers.
Your supplier cannot charge you an exit fee in the last 49 days of your tariff.
If you are moving address and staying with your current energy company or if you want to change to a better deal that your supplier is offering they usually do not enforce any leaving fees.
Why do people switch energy supplier?
According to research by MoneySupermarket the main reason stated by 58% of respondents is that they switch suppliers due to the savings they make. Increases in their current energy bills was a reason 41% stated whilst 18% were tempted by a one off incentive or offer such as cashback. Interestingly 8% wanted to switch in order to get a green energy supply.