How to switch gas and electricity suppliers
- 25 July 2011
- From the section Business
Energy firms have been accused of "Del Boy" sales tactics when encouraging people to switch their gas and electricity providers on the doorstep.
The Energy and Climate Change Committee says mis-selling is an issue that should have been dealt with years ago, although an industry body claims that rules on sales have been tightened.
MPs were told that 40% of those who switched suppliers on the doorstep failed to end up with a better deal.
But energy regulator Ofgem says that those who fail to shop around are paying at least £100 a year more than they need to on bills.
So how can consumers ensure they are better off, without running the risk of being tricked on the doorstep?
Switching is not unique to the energy market. Bank customers are teased with deals to save or hold their current account with a different bank. Mobile phone customers are regularly encouraged to shop around for a new contract.
But with prices changing relatively regularly, comparison websites have been pushing the money-saving potential of changing energy suppliers.
An Ofgem survey suggested that four out of five consumers are failing to shop around, prompting it to run a switching campaign with Citizens' Advice called Energy Best Deal.
It says that big savings are on offer to those who have never switched, or who change from paying by cash, cheque or pre-payment meter to paying by direct debit.
The whole host of tariffs are available, which can cause confusion and inertia among some customers.
The best deals are available for those with access to the internet, but people who are not online can still make savings.
Before looking around, Ofgem advises people to work out how much they spend every week or month, to have the exact name of their current tariff to hand, and ensure they know their postcode.
Copies of recent bills, and the new annual statement - which energy companies are obliged to send out - would also be useful.
The next stage involves some simple choices:
- Will your existing supplier offer a better deal? This might include help for those who are ill, disabled or of pension age
- Shopping around using price comparison websites. A list of accredited sites is available from watchdog Consumer Focus
- Calling energy suppliers direct to see what deals they have at the time of asking
Consumer Focus also provides fact sheets on prices charged by the major suppliers that can be used for reference.
Which? points out that off-peak electricity tariffs, such as Economy 7 and Economy 10, are best suited to people who use more than 60% of their electricity late at night, such as those who heat their homes using storage heaters.
Debts to a supplier of more than £200 would usually have to be cleared before a customer can switch.
Making the change
After finding a better deal, or deciding to sign up to a fixed-term deal which offers certainty on monthly payments, there is a set timescale for switching.
Switching can take between six and eight weeks, during which time the old supplier continues to provide energy. There will be no interruption to supply.
However, there is a chance that the price of the new deal might change in that period. The consumers' association Which? is calling for new rules that would ensure tariffs cannot change during the time it takes to switch, plus one month.
If a customer changes their mind, they have seven working days from the time they signed the contract to pull out without being charged.
Switching before a fixed-term deal expires might incur a charge. Tenants in rented accommodation should also check with their landlord or housing association before signing up to a new deal.
Which? also suggests considering other ways of cutting bills, such as looking into energy efficiency grants for loft insulation, ensuring the electricity meter is read regularly, and checking direct debit payments match energy use.