NAOMI CAINE
Scottish households could see their annual fuel bills rise by more than £135 if their fixed energy tariff expires at the end of the month. A total of 24 dual fuel plans run out on September 30 and experts advise consumers to shop around now to avoid a bill shock during the colder winter months.
Tariffs from seven suppliers – British Gas, Co-op Energy, Extra Energy, First Utility, ISupply, M&S Energy and Scottish Power – will come to an end on the last day of this month. Customers who do nothing when a fixed rate expires are automatically transferred onto the supplier’s standard tariff, resulting in an average price increase of £136.79, or 13.87%. Co-operative Energy customers in the Scottish Hydro distribution area on the Fair & Square September 2015 tariff will experience the biggest hike in bills at £200.26, or 20.60%, according to figures from Gocompare.com, the comparison website.
Caroline Lloyd, energy spokesperson at Gocompare.com, said: “With a huge number of fixed tariffs coming to an end this month, it’s really important for customers to keep on top of when their fixed term deals expire and ensure they’re not paying over the odds for their energy.
“Unfortunately, households who are loyal to their energy provider once their current fixed deal expires are usually rewarded with a significantly more expensive tariff that doesn’t represent value for money. However, there are a range of competitive tariffs available at the moment for those who take the initiative and shop around.
Some households will actually be better off on the supplier’s standard rate. For example, a medium energy user on monthly direct debit pays £1213.90 a year for their gas and electricity with Scottish Power’s Fixed Energy October 2015. When the deal expires on September 30 they will pay £1113.25 on the standard tariff, a saving of £100.65 a year, or 8.29%. Customers with the online version of the tariff, as well as those with the Fix and Reward September 2015 from British Gas, also stand to gain when the fixed rates run out.
Lloyd says: “While some Scottish Power customers may see their energy bills fall when their fixed tariffs come to an end and they are moved onto the supplier’s standard tariff, this doesn’t necessarily mean that they will be getting a good deal – it just means the Scottish Power variable tariffs is cheaper than the fixed tariff that they were on. They could still save up to £300 by shopping around and switching to another tariff instead.”
Fixed-rate tariffs are popular with consumers because they are often cheaper than variable deals. They also allow households to budget for their energy bills with certainty. There is normally a penalty if you switch before the fixed rate expires, typically about £25 or £30. The penalties apply to both gas and electricity, so if you are on a dual fuel tariff, you will pay two charges.
Your utility firm should, however, give you between 42 and 49 days’ notice of the end of a fixed-term contract and there are no penalties during the notice period.
Suppliers must also inform their customers if they offer a cheaper tariff and outline the potential savings. For example, if you are on a standard tariff, but could save by switching to the firm’s online deal, the information will be on your bill. But a supplier will only tell you about its own tariffs. If you want to search the whole market, a price comparison website is a better option, particularly if it is accredited by the Ofgem Confidence Code.
About 70% of customers are sitting on the most expensive standard tariff, but more than 285,000 customers switched electricity supplier in August, an increase on July’s of 273,122. Smaller suppliers gained 80,237 electricity accounts, 28% of all switches and slightly above average for the year so far. Lawrence Slade, chief executive of Energy UK, says: “People don’t normally think about switching their electricity supplier until the days get colder and the clocks go back. But this year switching numbers have remained high and represent a significant change in behaviour. Take a look at your energy bill – it takes just a few minutes to hunt around to see how just how good a deal you can get.”
The switching process is pretty straightforward. You will need details of your supplier, your current tariff and your energy consumption to make an accurate comparison, but all the information should be on a recent bill. You will also have to take meter readings so you can settle any outstanding debts. If you are in credit with your old supplier, the money should be refunded.
It used to take about five weeks to switch, but the time has come down to 17 days, largely thanks to pressure from the government and the market regulator. The time scale includes a two-week ‘cooling off’ period during which you can change your mind and stop the switching process.
Jason Wakeford, energy expert at uSwitch.com, says: “With the nights already starting to draw in, now is the perfect time to switch and save money before temperatures drop. Small suppliers have consistently given the big six a run for their money this year by offering some of the cheapest deals on the market – but you need to switch to get these savings. By planning ahead, customers can avoid being rolled over onto a potentially more expensive tariff, and instead find a better deal before the cold weather starts to bite.”
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