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Why aren’t more of us on online energy deals?

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Households signed up to web tariffs for gas and electricity are far better off than customers on standard deals, new figures suggest. So in this price hike climate why aren’t more of us taking advantage?

uSwitch has calculated that a typical UK household can expect to spend around £756 a year on the cost of heating and hot water if they’re on an offline, standard energy plan.

On an online tariff that yearly cost can drop to £616.

That’s a not so insignificant difference of £140 a year, if uSwitch’s sums are accurate. Yet, apparently only one in ten of us manage our bills digitally – which raises the question, why aren’t more of us making the switch?

More energy doom and gloom

This week’s news has been far from cheery for energy customers, making it all the more pertinent to get on a better deal now – and that’s rarely ever by staying on an energy company’s standard tariff.

Eon’s the latest in a growing line of energy companies (all of the ‘big six’ except EDF Energy) to announce a hike in its standard prices – gas up 9% and electricity by 3% from 4 February.

Meanwhile, Save the Children suggests that lower income households – which are more likely to be on expensive prepayment meter plans – pay £255 more for energy on average than wealthier households.

How online energy tariffs work

So, do you sit in the online or offline camp when it comes to your energy bills?

Online energy tariffs can offer fixed prices, meaning they won’t be susceptible to standard price rises, and often track below the company’s standard rate for a specified period.

Naturally, you’ll usually have to sign up directly with an energy company or through a comparison website, and also manage your bills online. Setting this up, along with extra jobs like submitting your own meter readings, might take a bit of getting used to – but it’s here you’ll find the better gas and electricity rates. This tariff round-up serves to illustrate the point.

You won’t be able to rest on your laurels, though. If your online deal is for a fixed term only, watch out for when it expires, otherwise you could get shifted to a pricier standard tariff.

Online versus offline bills

Of course, a bigger question hangs over energy companies delivering their most competitive deals in this way. Online-only tariffs are automatically inaccessible to homes without internet access, on a prepayment meter or those simply uncomfortable with managing bills online.

But if none of the above applies, what’s stopping you from giving one a go – or maybe you’re already an online tariff serial switcher?

Which? Members can join our team of energy experts on 27 January from 12.30pm for a special live energy Q&A session. They’ll be answering your energy questions – from getting yourself on a better tariff to troubleshooting problems with your supplier.

Comments
Member

I used to have an OnLine deal with British Gas for Gas only (I have had electricity from Ecotricty since they were founded) but I stopped using online because British Gas kept putting up the amount that they took by Direct Debit, leaving me paying at one point £80+ per month and almost £900 in CREDIT with them. (This was about 5 years ago now.)
They refused to refund the credit saying that in the next winter I’d use up that reserve (which I did not – my annual gas bill now is barely £500 let alone 5 years ago!) and when I kept reducing the Direct Debit over the ‘phone they simply put it back up a week or 2 later without giving me notice.
I finally complained to my bank and was told – and this is the important fact – that the Direct Debit Guarantee is worthless with on line deals because if the payee (i.e. British Gas) claims to have warned you of a change by electronic means, then in the eyes of the law you have received that warning.
I never had any notifications of the constant increases but because it was an online deal the bank and the Banking Ombudsman both stated that they were powerless to claim refunds under the Direct Debit guarantee.
As a direct result of this I now refuse to pay anything at all by direct debit and I don’t use on line energy billing either because, as far as I can discover, all on line deals have to be paid by Direct Debit.
Experiences like this, and the fear of falling victim to them even if you have not before, probably puts off a lot of people I should think, especially lower income households who can’t afford to suddenly find that a payment they had budgeted for has been increased without warning.

Member

I’ll certainly keep your experience in mind – At the moment I do not have an on-line direct debit.

Member

We had our gas & electricity from Scottish Hydro for years & years. I thought that changing would just be hassle as friends had told me of problems they had encountered so I was always weary of trying alternatives.
It seemed each year we overpaid – usually getting a refund. When our circumstances changed early last year, I had to scrutinize our finances and check for anything we could cut back. Obviously our gas & electricity requirements remained the same or possibly even higher as we were now in the house a lot more! I was amazed when we were told in August that during the previous six month period we had overpaid £895 on gas and £376 on electricity.
After arguing with SH it did make a refund but refused to reduce out Direct Debit amounts!
I decided to check some of the comparison sites and discovered we could save around £600 per year in total by changing supplier and using an online account.
We are almost at the completion stage of this and it appears – so far – to have been a smooth transition.
So I would certainly advise everyone to at least check the options available!

Member

@dave – I’m not surprised that experience was enough to put you off online deals! I didn’t think BG could increase your direct debit without prior notice like that? As a slight aside, are you now on – or have you looked into – Ecotricity’s ‘green’ gas tariff?

I think you’re right about the absence of non direct debit-based online deals. When I helped my Mum to switch her gas and electricity supplier, I was ideally looking for a deal that offered a pay quarterly option – she’s not a big fan of direct debits. But the difference in price against the best online, direct debit deals of the day just didn’t justify it, so we went with the online tariff. So far, so good – Scottish Power has done a little tinkering with the monthly direct debit payments, but always informing beforehand and the price changes seem to have been logical enough against the rolling bill total.

@Danny – fingers crossed your smooth transition to a different supplier continues that way!

Member

I’ve just switched again, from a Scottish/Southern online tariff to a Scottish Power online tariff. I used the 20 day rule – rejecting SSE’s increases to hold their prices so long as they were notified from the new supplier within 15 working days. Bizarrely, 40 minutes after receiving confirmation from Scottish Power that they had contacted my old supplier, I received an email from SSE telling me that they hadn’t been contacted and my 15 days were up. Technically they were, but they hadn’t factored in all the bank holidays over Christmas.

I sent them a slightly snotty email thanking them for confirming my reasons for leaving them – that they are complete muppets (as well as politely requesting that they hold their prices as per my original request). They were fine as Atlantic – a pain in the proverbial as the SSE giant.

But it did make me think – are the energy suppliers in cahoots with one another over this 20 (+15) day switching rule?

When I did my comparison using the Which? tool both eON and nPower came out a few pounds cheaper. eON hadn’t increased their prices at the time so, guessing they would soon (they have since) I ignored them, and I ignored nPower on principle – having been a previous customer of theirs I can confirm that their practices and customer services are truly, truly shocking.

However, I have to say this when people moan that offline deals aren’t fair because they’re more expensive. Look at this way: the offline charges are the standard, the online prices are, effectively, a discount, in the same way as paying by DD is for all manner of other services.

Why should customers continue to subsidise those who want to use more expensive payment methods or don’t want to use the internet. You make your choices, you pay for them. Simples.

Member
Anne says:
18 January 2011

You forgot to mention redemption fees. The amount we would save by switching to an online tariff with NPower* is about how much we’d pay in redemption fees if we left an online deal early.

*Who we are very happy with. I think they have been unfairly clouted in the press recently. We are £62 in credit after the coldest winter and have had brilliant service from them the whole time to the extent that I wrote to a national newspaper to defend them!