Who switched energy suppliers in The Big Switch and why?

Beryl, these days many fixed tariffs have no exit penalties if you switch suppliers, and certainly not when you change tariffs with the same supplier, so no problems there.

Reduced gas prices do not only show on standard tariffs, but also on fixed tariffs – a new version just appears that you switch to, as I have in a matter of minutes getting a 5% reduction.

Having put your details into a comparison site it should be simple for an email to be automatically sent advising of better deals. I already get that from one of my energy suppliers when the saving exceeds £1 a week.

Comparison sites are watched for good practice by Ofgem – they have a Confidence Code, currently being updated

https://www.ofgem.gov.uk/publications-and-updates/confidence-code-review-january-2015-policy-decision?utm_medium=email&utm_source&utm_campaign=5299461_Daily-Alert_30-01-2015&utm_content=$LINK_KEYWORD$&dm_i=1QCB,35L39,F31FFV,BAZOI,1

No need for more Govt. involvment.

Our supplier, E.On, offers penalty-free switches to lower-priced tariffs within their own tariff menu as they become available [which, as Malcolm, says has become fairly frequent lately], so it isn’t always necessary to switch to a diffferent company to get a better rate. If an alternative company’s prices are so much better, then E.On’s exit penalty of £5 per fuel is hardly a deal-breaker anyway. One consequence of switching internally is that a new contract period starts immediately putting off the day when you can make a penalty-free exit.

I agree with Beryl that at the moment there is a case for encouraging people to switch because that is the best way to make competition effective. But since energy is an essential commodity we should be at ease over it and not have to keep worrying about fractional movements in prices and changing suppliers all the time – switching is costing the industry millions of pounds a year and we’re all paying for it. Ofgem has made a useful start on consumer-biased regulation by rationalising and harmonising the tariff structures to make comparisons easier. In fact comparison websites are becoming less relevant as the myriad of tariff types has been drastically boiled down.

I saw an interesting breakdown of “the costs that make up energy bills” on a friend’s recent statement from SSE as follows: Buying the energy 52%, delivering it 24%, govt. environmental & social schemes 8%, billing, customer services & IT 6%, VAT 5%, and supply business profit 5%. So the reduction in global market prices for oil and LPG bears on only half the bill. And as has been seen recently, EDF customers won’t see much benefit because that company made a price promise to customers that anticipated increases rather than reductions in input costs. EDF entered into forward procurement contracts that looked very good at the time but have now been overtaken by falling world prices which cannot be passed through to customers [who are said to switching in droves].

Sometime around the end of May-early June the government, whoever they are, will have to give consideration to how to compensate for the fall in VAT revenues from lower energy bills and lower prices on other goods and services. Savings on the government’s own energy consumption and other purchasing won’t offset much of it so some cunning book-balancing required. I would expect it to be wrapped up with increased reliefs to the offshore oil and gas industry and putatively funded from economic growth resulting from lower input costs for industry and commerce [to the extent that that isn’t all absorbed in countering the impact of devaluation in the Eurozone].

John, Ofgem publish, monthly, an SMI (Supply Market Indicator) that shows, in an average domestic energy bill, how an average major supplier’s charges are made up. 44% gas and electricity, 23% network (transmission),7% environmental and social, 13% supplier operating,

It is estimated that “environmental and social obligations” cost us £93 – perhaps these should be funded elsewhere?

More importantly it shows that the pre-tax margin the supplier makes has increased from 3.9% in 2013 to an estimated 6% last year and a predicted 9.6% this year – that is a 2 1/2 times increase in % margin. As it is an average clearly some will make more than this. That, to me, seems an overgenerous increase in return at our expense. Should not Ofgem be stepping in here to protect consumers?

If environmental and social costs were transferred elsewhere, then the same should apply to standing charges. It’s not difficult to see that standing charges bear little relation to the actual cost of supplying gas and electricity to an individual home.

At present, those who cannot afford to heat their homes adequately are subsidising those who are heavy users of energy, for whatever reason.