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Energy bills: do you stand to overpay by £400?

Energy bill confusion

What’s the difference between a fixed energy tariff and standard variable tariff? If you’re unsure about energy prices, don’t worry. You are not alone.

Luckily, we have a handy guide explaining the ins and outs of the various energy tariffs here.

The next question; do you know which one you’re on? Again, you’d be forgiven for not knowing. Check out your latest bill to find out.

Now perhaps the most important question; are you prepared to lose £400 this year? Because that could happen if you’re not aware of how you pay for your energy.

Many households could see their energy bills soar by up to £416 in a year, as a number of fixed tariffs come to an end this month.

Energy tariffs expiring

Customers risk being automatically moved onto standard variable tariffs when 17 fixed deals from ten suppliers – including seven with the big six energy providers – expire in May. So if your tariff is coming to end, I urge you to start shopping around and switch now.

Incidents like this are precisely the reason why we have been calling for action in the energy market. In fact, recent Which? research found that more than half of people consider energy to be priority issue for the next government. This is hardly a surprise when energy prices have increased more than 40% for gas and 35% for electricity over the last 10 years.

Energy prices are hot topic

It’s a timely moment to consider this when a cap on energy prices is being discussed. If the next government were to introduce a cap on energy prices, we think there are a number of tests that would need to be passed to ensure customers get a fair deal on their energy prices. These five tests for any energy price cap are that:

  • It must not cause longer-term price increases
  • It must not ​remove incentives for providers to improve their service
  • It must not stifle innovation
  • It must lead to a truly competitive energy market
  • It must have clear criteria for bringing any cap to an end

Did you understand the difference in tariffs when you signed up to your energy provider? Have you made moves to stop yourself losing money? How do you think an energy market can function in the best interests of consumers?

Fixed energy deals ending in May 2017

All prices are provided by Energylinx, based on the details of a dual-fuel medium user who uses 13,500kWh gas and 3,100kWh electricity per year, pays by monthly direct debit and chooses paperless billing. Prices are rounded to the nearest whole pound and averaged across all UK regions. Data correct at 8 May 2017.

Jo Smith-Kearney says:
12 May 2017

I monitor usage carefully & there are no incentives to move for me because my supplier offers a realistic & better telecommunication package; otherwise might consider but all the deals I have gone through have been worse.

I am with one of the big 6 Scottish power. They had an offer on, which was competative, and I noticed they said other offers were available checking this I found they were offering the same deal (well £1 /month more) for 2 years. which with the threat of increases I think is a good deal.

Why is it that to save on fuel cost we have to go through this process of finding another energy supplier once our fixed deal has run out and we are automatically transfered to the suppliers most expensive tariff which is usually a lot more expensive, not just a few pounds but hundreds. It just shows the these energy companies can supply our energy much cheaper but are continually trying to catch us out if we take our eye of the ball?

I don’t believe they can “supply it much cheaper”. I believe they provide the cheaper fixed price deals by subsidising them from Standard Variable Tariffs. I have suggested abolishing those subsidised deals so the cost of SVTs can be reduced accordingly, and become the norm. All you then have to do is shop around for the best supplier and worry not about end-of-deal price uplifts.

I have joined Money Saving Expert’s Cheap Energy Club. They monitor the market and advise me when I could save money by switching. If you choose to switch they arrange it for you, and you often get £30 cash back from them after switching. I have switched each year lately, and am currently supplied by a small supplier called Iresa.
I don’t know why people think switching is so difficult. Once you have chosen to switch you don’t have to do anything else except supply meter readings when requested, something I do each month anyway.

I switch energy supplier almost every year to make savings. Its usually worth it. I have just switched again this week after checking switch with Which? and uSwitch. Both recommend “Bulb” energy just now as the cheapest on the market. They also offer 100% renewable electricity and 10% renewable gas and NO EXIT FEES which i find wonderful.

[Sorry, Michael – it’s great to hear that you found switching so easy but we’ve had to edit your comment to align with our Community Guidelines. Please make sure that your comments aren’t promotional and are aligned with commenting rules. Thanks, mods]

I was on a EDF’s Dual Fuel Price Promise January 2017 ,having been on Price Promise 2016 before. I have now switched, having consulted Which? comparison site,as well as Ofgen’s to Economy Energy, which lasts for one year,and which they give me notice of it ending. It was very easy to switch ,only providing meter readings on the day of switching! The projected saving for me is just over £200. p.a. on direct debit.

Albert says I am a member of which, I have gone with Green Energy for 3 years at the same cost £30 a month. I also look after a small chapel which has been termed a Micro business, this means that it pays for electricity it uses and no standing charges. Unless the chapel has a great change in funerals or attendance it still is a Micro business. If the firm the chapel insists on trying to put a standing charge, Take them to a magistrates court , Once a micro business, unless its income changes very much always a Micro business. There are too many investors in some of the energy companies even with the staff that they employ. If you go to your food supermarket and you are paying for goods, and the girl on the till says to you, you have not been here for a month there is a standing charge, Just imagine Ha Ha. I do not know where there is a standing charge other than on electrical power, But WHICH will have the answer. WE can check who has shares in companies. But the name may not be the same. The Goverment could make a change to this tax. Good Luck

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John paton says:
24 May 2017

Only one question should be asked when it comes to energy …. How much does it cost for the basic kWh electric and meter square volume gas ….. Generally power company will bamboozle people over the phone with facts and figures that really don’t mean anything …. Daily standing charges mean nothing compared to the price per kWh you use … Especially in winter ….

Colin Smale says:
31 May 2017

I took the plunge, went on uSwitch to change my supplier and chose Green Star Energy, big mistake and now trying to reverse out of it. I wanted to switch both gas and electric and even though I spoke to them on the phone they ignored me and still did not include my gas supply. They just sent someone to read the electric meter but not the gas.
Now that I am registered with them it is impossible to get a reply on email, the ‘contact us’ on their web site wont open, no one answers the 0800 number and there is an extra charge if you ring their other number unless you are on a BT line which I am not.
NO TO GREEN STAR ENERGY! Plenty more fish in the sea.

I also switched to Greenstar and had no problems.

Surely it is the daily charge that is important to compare with other companies as if we decide to try and save on our energy bills and turn our thermostat down etc. and there is a high daily charge nothing can be done about it so although some companies quote lower prices for energy they do sometimes charge a higher daily charge

The tariffs on offer include different combinations of standing charges and unit charges. When comparing offers you need your approximate annual usage so you get a total cost to compare. If you are a very low user you can use a tariff with no daily charge (but relatively high unit costs), but if you are a high user you will be better off with a high standing charge and a lower unit charge. Whether or not people agree with the way tariffs are constructed, that is the situation now and to get the best deal you work with what you’ve got. A comparison site – I use Which?Switch – takes all this into account when you look for the best deal for your circumstances.

@j964144156, The CMA have suggested that comparison websites do not need in future to show every available tariff, but perhaps only those that they can switch you to and receive a commission. Ofgem are considering this and due to rule on it in the next few weeks.

Does Which?Switch show every available tariff? Will that continue even if Ofgem rule it is not necessary?

My concern with tariffs is that many fixed price ones may be artificially low, subsidised by standard variable tariffs. I think the fixed ones should be abolished and the svts reduced in price accordingly, then the need to switch between a large number of tariffs is avoided – just choose between suppliers.

Well, I asked the Department of Business, Energy & Industry Strategy about this. They tell me cross-subsidy is not allowed and the difference in cost is accounted for by administration savings for those on fixed price tariffs.

So I looked at each of 5 of the “big 6” tariffs – their cheapest svt and their cheapest fixed price, paid by monthly direct debit, for an average dual fuel consumer (3100 kWh electricity, 12500 kWh gas). Svts ranged in annual cost from £1122 to £1170; the corresponding fixed price tariffs ranged from £873 to £1037. The biggest difference for one supplier was £297 – 25% of the svt total bill. Ofgem tell us the average admin cost is 15.8% of the total bill. So somehow I am being asked to believe that not only is the whole admin cost saved, but another 10% as well if I choose their fixed price tariff!

As far as I can see there must be a cross subsidy. Perhaps Which? would like to pursue this?

I have written back to the Dept for BEIS to ask them to comment. I’ll report back (watch this space for a few months….. 🙂 )

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Since the energy companies import vast quantities of energy-producing material it will continue to make sense for them to import the cheapest supplies that they can find and enter into long-term contracts. When the UK had abundant home-produced energy it could influence international prices or avoid imports altogether, but that is no longer the case. We can get by on renewables and nuclear when demand is low but suppliers don’t like fickle buyers so want a higher price for short-term supplies, hence we get locked into long-term year-round contracts that mean renewables become the balancing or top-up element rather than a part of the base-load.

I take fixed price one year tariffs because they benefit me considerably duncan. But I don’t think the reasoning supports their pricing. I do urge people to use Which?Switch to find a deal because it is very easy to use and it works.

Incidentally I’ve asked Which? whether if Ofgem rules that not all tariffs need to be shown, whether Which?Switch would take advantage of this possible relaxation. I do hope not because whether or not they get a commission from a supplier, it is important to have a truly independent and comprehensive price comparison site. However I await a response – either from the Convo author or through the Which? member community forum…………………… 🙂

“hence we get locked into long-term year-round contracts that mean renewables become the balancing or top-up element rather than a part of the base-load.”

John, whilst nuclear is excellent for base-load, I doubt that renewables are as good for that. Because wind and solar are uncertain sources of supply, it makes sense to backup those renewables with additional renewable sources, including hydro and biomass (e.g. wood pellet boilers) and also with storage batteries. In Wales, the CAT centre have been using this approach for several years – but it does require the integration of all of those diverse elements to work well.

I totally agree, Derek. I include those other sources within the general category of renewables. While the wind is always blowing somewhere around the British Isles so can be harvested if there are enough turbines in every suitable place, that is obviously not true of the sun and back-up certainly is required. I am surprised we haven’t made more progress with tidal energy given the reasonable predictability of and repetition of tidal movement and a number of suitable locations for capturing it. We should also be looking at expanding hydro-electric generation in England where despite the general lack of mountainous terrain there must be some headwaters capable of producing power.

I am not quite sure about wood pellets. Is there not some concern over whether it is a truly sustainable resource unless extensive new planting takes place beyond current consumption levels? The regeneration cycle is quite lengthy. Because of stockpiling difficulties [product deterioration] there has to be a reliable continuous flow of wood pellets to the power stations which does not correspond with demand; it is therefore suited to baseload applications but still requires very careful management. Although it has been argued that coal is more efficient than wood pellets for conversion into energy, that is now irrelevant given that there will soon be no more coal-fired power stations in production for financial as well as environmental reasons.

I recently moved from East Sussex where I was paying around 9.3p per kWhr. Now in North Wales I am paying 12.2p per kWhr with a small, online biller ( Let’s face it, it all comes from the same power stations! ) . That’s around 30% more for my electricity. The view from my home overlooks one of the biggest, most productive wind farm installations in the country and nearby is one of the biggest onshore gas terminals fed by a massive field below my feet ……………. and I pay more for energy!

I’ve been in a complaint with British gas for 3 years as my energy shot up over 300%. The ombudsman got involved last year and a check meter fitted. Unfortunately British gas lost the meter readings when it commenced and when and when the engineer took it out. He told me my meter was faulty and needed replacing!! Anyway British gas said there’s nothing they can do even though it clearly shows a complete varied usage month to month. They haven’t let me switch suppliers as they pit my account on default. I recently asked ombudsman to reopen my case as I’m getting nowhere and British gas have increased my bill yet again to £129 a month energy I live in a one bedroom bungalow on my own. Last month they took £658 for energy usage for may. I’m completely stressed out with it all and can’t afford to pay it but my account isn’t in arrears and still on default so i can’t switch. I’ve received an email from ombudsman saying they are disappointed with British gas but because they’ve lost the information they need there is nothing they can do.
Please can someone help me… I don’t know where to turn now xxxx

Carrie – I think a good place to start would be Citizens Advice. I am not sure whether Ofgem might be able to assist – possibly not because there is an Energy Ombudsman. Sometimes MP’s can put pressure on companies to deal with complaints properly. Weekend newspapers also have ‘readers’ problems’ columns on your sort of case where companies have treated customers badly [the one in the Daily Telegraph Your Money section on Saturdays seems to be effective for those they publish but it probably involves a long wait for action]. The money at stake is considerable – it could be worth getting legal advice but be careful about the costs and any terms and conditions; a court claim might galvanise BG’s mind.

Back in March my electricity supplier Eon wrote to me about forthcoming price increases to my ‘Economy 10’ tariff. The day rate was to increase by 16% and the night rate by 22.5%. They gave a personal projection for the coming year which showed an increase overall in my bills of 19.5%. Is this a record? When I wrote to them enquiring why the huge increase and why the difference in the increases to day and night rates I was told ‘it was a business decision’ ! They did point out that they hadn’t increased prices for three years!! Being on an Economy 10 tariff (all electric with underfloor heating, total bill last year £2,600) I am very limited in choice of provider and unable to participate in ‘energy clubs’ and the like. Forgive me if I believe energy companies to be some of the worst examples of rip off merchants in this country and the sooner they are nationalised the better. Before anyone accuses me of being a socialist, my view is that a socialist, once they gain power, very quickly becomes a capitalist!

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