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Energy switching – spending time to save money

A light bulb in the snow

Today the last of the six big energy companies’ price rises comes into effect. Eon’s customers can switch to save money, but how long does it take to feel the benefit?

Eon customers – of which I’m one – are the last group of energy customers to be affected by this year’s inflation busting hikes (unless you’re with a smaller supplier). But as the snow falls this morning, this delay is little comfort when we face a bill increase of almost 9%.

So what should I do about this year’s hike? Looking at my latest bill, I definitely need to find ways to cut down my heating costs and think about whether my draughty house could be a bit more insulated.

Switching to save

But I also decided to go to Which? Switch and see whether I could get a better deal by switching supplier. Sadly the current deals don’t seem to offer me much of a saving, so immediately I wondered if I could be bothered with going through the hassle of changing my tariff.

Of course, switching your supplier is fairly straight forward. And a lot of people who are on poor value deals – like the three quarters of energy customers on standard tariffs – could potentially save a couple of hundred pounds by getting onto a better tariff.

But the fact remains that switching should be even simpler. And one of the main things that needs to be tackled is the length is takes for a switch to take place.

Which? highlighted this in our ‘Imbalance of Power’ report that we published before Christmas. The report set out how the energy market has been failing consumers. As well as making the case for tariffs to be radically simplified through a simple, single unit price, it also argued that the switching process needs to be improved.

Time is money

At present, the average switch takes between five and six weeks. And during this time customers have little information about what is going on. This means that the gains from switching don’t benefit my budget immediately, unlike similar money-saving moves like choosing a cheaper supermarket.

The EU has tried to tackle this through legislation requiring a three-week switch. But the UK government proposed a two week ‘cooling off’ period before the switch commences, meaning that it will still take up to five weeks.

This doesn’t seem to be the case in other EU countries. In Ireland and Norway you can switch in a week, while in Finland, France, Portugal, Spain and Sweden it takes around two weeks. So why should it take so long here?

I may end up deciding to switch supplier, if I can find a cheap enough alternative. If I do, why should I have to wait such a long time to see the financial benefit of switching?

sue greenbank says:
18 January 2013

switched in october 2012 for fixed until december 2013 told them what i use, they gave the amount i would pay monthly which was lower then my previous provider now they want to up my amount so whats the point

Sue, if it is “fixed” until December 2013 how is it your energy company can increase your charges “now”.? Did you mean December 2012? We have recently completed our third switch in about 3 years and this experience indicates that it seems best to switch to a “fixed”deal.
The sooner switching time is reduced to no more than 3 weeks the better. Three cheers to the EU! What is the ulterior motive that has made the UK government try and prevent this?

I cannot understand why the switching process takes so long. There is no practical reason – so long as accurate meter readings are available and status checks completed [which are virtually instantaneous nowadays as I recently discovered] then the switchover from one supplier to another should be automatic. The cooling-off period could still apply if there was a “reinstatement without detriment” guarantee to protect consumers against misselling or mistakes but the benefit of the preferred tariff would be available sooner. Many switches are desired because of a change in circumstances [like house no longer occupied all day or change of fuel for heating or cooking] that would attract a better tariff from a different supplier. In pushing for smart meters the energy companies are enabling switching to be done overnight and they won’t have a leg to stand on if they want to hang on to accounts for longer than is absolutely necessary.

Burton says:
21 January 2013

I have read much of the correspondence about energy suppliers on the Which website. What puzzles me is that last year, as a result of a major Which campaign I moved from my then supplier to The Co-operative supplier. I have seen absolutely no mention of The Co-operative as a good value supplier in all this correspondence, despite the assurance that this was the best supplier in town. My monthly direct debit went from £110 per month previously to £129 with The Co-op which doesn’t, seem to me to be going in the right direction…..Perhaps that’s why there’s no mention?

I’m inclined to generally agree with you. Last years “which” initiative, “the big switch” was I’m sure well intentioned but really was not “the game changer” I kept reading about on this forum (written mostly by “Which” staff). Never thought it would be and said so at the time, but no one likes to hear “told you so”, better therefore probably not to dwell on it.

The only thing we seem to read about nowadays in the ongoing battle against ever increasing energy cost is “switching”. Well the best we’ll get from that is short term gain because over say a five year period the difference in price between any of them (especially with the big six cartel) is going to be minimal. I know this because I’ve been a serial switcher and I’ve kept score on the exercise. All we really end up doing is dodging price increase dates, or getting a fixed deal giving a relatively short term gain.

We need a radical rethink on energy supply. Privatisation has not worked, competition such that there is (not much) has not benefited the consumer with fair prices.
I’m all for re-nationalisation but with a strong independent overseeing body to ensure we don’t get the problems we got with the old inefficient nationalised system.
Even if prices didn’t come down I’d be happier that profit came back to the nation rather than went to lining the pockets of share holders.

I’d like to see a “Which” investigation into the pros and cons of re-nationalisation, and perhaps a subsequent debate.

Using the British Gas Parent company, Centrica’s Accounts for 2011, It can be calculated, that for gas, the Government take 22% Tax (including ‘green’ and ‘social’ initiatives). Their profit is less than 3%…!!!!!!!
The Government takes the lion’s share after the wholesale cost of the gas. Thus, there is no room for competition. Switching tariffs and or suppliers in the long run a waste of time…
It will get worse are the Government are set to grab more and then weep fake tears about how nothing can be done….

I have signed up to receive information about one of the ‘Ready to Switch’ collective switching schemes and will receive information about their offer soon.

Can anyone tell me if these schemes are worthwhile?

I see you posted the outcome of the collective auction on the “Your view: are you happy with your energy supplier?” Conversation. Surprise winner and a good result.

Can Which? please urgently look into what Jay has posted today.Is this creative accountancy or is it true that there is in fact no scope for the energy companies to compete and lower prices. If we are all being mislead by a possible hidden government racket the sooner consumers know the better!

Hi Wavechange.

I have noticed that a number of councils are looking into collective purchase schemes for local residents where they are hoping to use their bulk buying advantages to negotiate better tariffs for residents. I don’t know whether this is the same thing as the ‘Ready to Switch’ schemes you mention, but on the face of it it looks attractive. The devil is no doubt already worming his way into the T’s & C’s but it is potentially a good proposition.

Taking a broader view, switching is, as Chris of Gloucester remarks, only rearranging the furniture and doesn’t change the basic economics of supply, demand, production and supply costs, and taxation. Obviously there are economies of scale to be had on the supply side which the big providers should be capable of delivering to domestic consumers, but the margins appear to be tiny. Logic tells me that it is inconceivable that a company buying a small quanity of gas or electricity from the producers and feeding it through a common grid to a small number of dispersed customers can, over time, do it cheaper than the majors . . but that is how it appears to be.

To respond to Burton’s comments above, I switched to The Co-operative Energy last year and, as I reported in another Conversation, was very satisfied with their prices and their responsible business model and policy. I also valued the Co-op’s ethical stance, and the fact that it was a mutual organisation was also important. So I was not exclusively concerned with a raw tariff comparison, and – because I have not done an analysis and like-for-like comparison – I did not know whether I was slightly better off or worse off as a result; that doesn’t matter in the short term, but I should be worried if their general objective, to be at least competitive with the majors on price over time and better on service [I paraphrase], was not being realised.

However, all good things must come to an end and we recently moved to a brand new house which was already signed up to E.ON. The logistics of dealing with a switch during the moving process have taken second or third place to sorting out various other more pressing matters [like getting a telephone line and broadband]. Following previous bad experience with E.ON I had vowed never to trouble them again for so much as a watt or a therm. But I have to say I have been impressed with their written communications [once the Royal Mail found our address and we started getting occasional deliveries of post] and with their personal customer service over the telephone [the mobile has its uses at last!]. Their dual-fuel monthly direct debit tariff [with monthly customer meter readings] has very low exit charges [£5 per fuel] and seems to be about as good as you can get at the moment, plus they are estimating a lower annual cost than I was expecting. The first month’s consumption will be untypical [I hope] because of the prolonged low temperatures. A number of factors will make it impossible to make a real comparison – the greater volume of the house, a new more efficient heating system, much more sophisticated zone/time and temperature controls, and higher insulation values; nevertheless we are hoping that costs will be broadly similar and possibly lower overall. I feel like switching back to the Co-op as soon as the time is right because I prefer the mutuality aspect and still have faith in their more responsible approach to sourcing and pricing.

Thanks John. It was my local council that provided information about ‘Ready to Switch’ though I was only alerted to this by a friend. I will get to know the offer before the end of the month.

I am currently with e.on and they have been a frequent source of irritation, mainly by pushing up my direct debit when I am already well in credit. It was encouraging to get an unexpected call to discuss how my last complaint was handled and to see one of their representatives respond positively to one of my whinges on W?C. I am glad to see that e.on now has switched to an 03 phone number. e.on has also repaid exit fees that were charged in error.

I don’t know what I will do about energy supply but at least the Ready to Switch quotation should encourage me to look around. The reason I’m with e.on is that I was a Powergen customer, so it’s been a while since I last looked at suppliers.

Im reading all the above whith interest and with E-ON increasing their prices Im trying to get onto which switch but I think they’ve escaped the weather somewhere? I’ve been trying to get on switch for 1hr no luck ! come on W. SWITCH wake up

The difficulty in switching supplier seems to be that all switching sites require you to state your current bill or energy use. This can have no resemblance to future seasons, especially in Britain, where no two years are the same, regarding temeratures, etc.
This problem is caused by the fact that some tariffs include a standing charge,whilst others don’t.
Would it not be better to introduce a minimum annual charge ( which most consumers would exceed) to cover the expense of providing the supply, metering, etc.?
Then, the average consumer would be able to compare unit prices, without needing a degree in meteorology or climate change !

It’s bad enough having the supply companies making life complicated without the customers joining in. 🙂

If we get rid of standing charges and have a simple price per unit, it will make comparisons very easy.

Nice to see some ref to the Co Op.Im just changeing to them after useing Which Switch and phone calls that was 7 Feb sign up not received any welcome pack yet.Today 22 Feb E-ON present supplier phoned me too ask why I was leaving.I said price he told me that the Co-op had put their prices up thur 21 and was now dearer than E-ON so get onto Co-op ,after 20 min wait I got onto them, answer Yes price has gone up but only for clients signing from the 12 thankfully Im OK they said it was’nt a fixed priced[ I thought Pioneer was[ but they said I can switch any time as there is no cancelation charge whith the Co-op.There was a suposed saving with theCo-op over E-ON I was happy with E-ON on a fixed price no probs ,suppose I will have to take a chance ??

It’s all through the papers today regarding British Gas (Centrica) Profits
Figures can distort the truth.
1. British Gas made a profit of only 5% for 2011.
2. A 10% increase in Profit represents an extra 0.5% or 5.5% profit
3. Do you not think 5.5% profit is unreasonable?
So, where does your money go, if it’s not the “greedy, greedy” Utility Companies?
After the cost of the gas, the main robbers of your bill are the Gruesome Toosome:
‘Triple A’ Osbourne and ‘Cast Iron’ Dave —
Including gang green charges and hidden taxes, they amass 20% from your bill.