How to switch energy supplier
AFTER a couple of years when wholesale energy prices dropped dramatically, relatively low oil prices, and a couple of investigations into high retail energy prices, what we pay for our gas and electricity is on the rise again.
But a surprising number of us - more than a third, according to research for the Competition and Markets Authority - never make the decision to switch supplier or deal.
In some instances these concerns are justified, even in light of the efforts made by Ofgem over the years to simplify the market for customers. That begs the question:
Is it worth the hassle?
We are firmly of the opinion that it's very often worth the hassle of switching energy supplier.
Energy is energy and, unless we're particularly concerned about customer service or green energy (more on the latter here), there aren't really any pros and cons to weigh up: it all comes down to price. And it's often too high.
According to the CMA, customers of the Big Six energy companies could save between £158 and £234 a year on their energy bills by moving to a better deal, particularly if they switch company.
Choosing the right moment
The size of saving is dependent on a number of factors including when a household decides to switch.
For example, energy companies tend to follow each other, so when it's reported in the news that one has lowered prices it's often worth waiting to see if the rest follow suit before making a move.
It's also worth bearing in mind that when energy suppliers announce price cuts or freezes, they usually apply only to those on their standard variable tariffs (SVT) or capped deals; those on a fixed or other kind of special deal often won't benefit.
Admittedly, the majority of us are on an SVT, or "evergreen" tariff, which tends to be the most expensive each company offers.
There's more on the different kinds of tariff, and which is the best type of energy deal for us, in this guide.
Saving without switching
When waiting for the right moment, or even after switching, households can also save money on their energy costs in other ways.
Energy companies thrive on people not making the kind of small changes that can rapidly add up to cut costs.
Don't let them. Here's how:
- Manage your account online - there's often a discount available for agreeing to forgo paper statements and looking after the account online.
- Pay by direct debit - cuts the bill by around 10% just for signing up for automated payments. However, check that the amount is fair: find out more here.
- Check the meter - traditional suppliers may rely on quarterly meter checks; others ask for monthly readings. It's worth getting into the habit of providing a meter reading once a month to prevent estimated bills that are either too large or too small. The latter, in particular can lead to customers having to make huge payments at the end of the contract or annual period. If the supplier offers to fit a smart meter, all the better, as this will send daily readings for us.
- Check for cheaper tariffs - almost everyone on an SVT will be able to save by signing up to one of their supplier's other tariffs, usually offering fixed prices.
- Check for free energy help - households where someone is aged 60 or above, or considered vulnerable, can get extra help. It used to be the case that those in, or at serious risk of, fuel poverty could be eligible for a supplier's social tariff - but these were all phased out by 2015.
- Use less energy - simple but effective. Better insulation, for example, saves households an average of £150 a year. Home insulation is often available free for many people and there are plenty of ways to cut down on energy use with these efficiency tips.
How to switch
Be sure to compare prices and deals before making a decision, using a couple of price comparison sites (ours is here) to get an idea of the tariffs available. Never switch after only talking to a cold caller.
Phone and doorstep cold calling on the part of energy suppliers may not be on the same scale as that for accident claims, PPI and solar panels, but it is still an issue for many, and it's often an unscrupulous business.
Another option is to join a collective switching group, often run by consumer organisations or community groups.
These groups negotiate for a cheaper energy price on behalf of a huge group, and help by guiding their customers through the switching process.
Check current obligations
In general, only commercial supplies for business have a contracted notice period for switching.
Even households with fixed energy deals - which are intended to run until a set date - can switch before then, although it's likely they'll have to pay an exit fee to do so (usually around £30-£40 per fuel).
Households in the last 42 to 49 days of a fixed price, fixed period, deal should be able to switch fee-free.
Regardless of whether we're on a fixed plan or an SVT, it should be possible to switch in less than three weeks - the industry aim is to get customers switched in 17 days, which includes a two week cooling off period before the actual switching process gets under way.
Those moving house should plan to let their supplier know as much in advance as possible, but the minimum notice an energy company requires is 48 hours .
Don't worry about being disconnected during a switchover. This is illegal unless the household is in severe arrears to the company - and even then it's not allowed if there are extenuating circumstances such as severe financial troubles or ill health.
The switching process is usually very smooth, with our new supplier getting in touch to talk us through what should happen and when.
The most important thing to remember on the scheduled day of the switch is to take meter readings. Some suppliers will send a meter reader around, others will ask us to do it.
It's a good idea to take photos of the meters when the reading is done to help eliminate the possibility of any billing discrepancies.
If we've built up credit on our account - say we're switching at the end of the summer when we've been overpaying in preparation for higher winter bills - check how to reclaim that money.
Most providers should show any existing credit on the final bill and arrange or offer to refund it fairly quickly, but if not we can reclaim energy credit well after we've left - even if it was years before.
Look out for poor credit history
Energy suppliers can't refuse the custom of those with a poor credit history but they can offer a prepayment meter instead of allowing us to sign up for a standard post-pay tariff; prepay tariffs are almost always more expensive.
Those with a prepayment meter can still find better deals, even if they're in debt to their supplier (as long as the debt does not exceed £500 per fuel). Unless they're in debt, they can also ask to be moved to a post-pay meter.
This request is more likely to be successful if we've built up a good repayment history with our supplier, or made serious efforts to rebuild our general credit history over a period of time.
We have a guide on what that means in practice, here.
Those who already have a standard credit meter but who are in debt to their current energy supplier, and have been for more than 28 days, can be refused the right to switch.
If the debt is less than 28 days old, however, the debit balance will be transferred to the new supplier.