Energy Switching

Energy Switching

Energy Price Rises:

What you should know before Switching Energy Supplier

At the time of writing SSE, British Gas, Npower and Scottish Power had all raised the prices of their variable products by between 8% and 11%. EDF meanwhile have published a headline rise of only 3.9% and Eon have yet to declare a price rise at all. 

At the time of writing SSE, British Gas, Npower and Scottish Power had all raised the prices of their variable products by between 8% and 11%. EDF meanwhile have published a headline rise of only 3.9% and Eon have yet to declare a price rise at all. At first glance this may look as though EDF have adopted a highly restrained approach to price rises and their existing customers may feel some element of comfort around their pricing as compared to other people on variable products with the other main suppliers. This would be to compare apples with grape-fruits and it is important that before you make any decisions regarding to switch or stay with an incumbent you understand what these increases mean.

EDF has stated that this price increase is all consumers will see AS LONG AS the government removes the obligation on supply businesses to provide free housing energy efficiency upgrades and fund green initiatives through energy bills rather than through general taxation. EDF have been vague on the specific request that they have given government regarding what is in and what is out but what is undoubtedly clear is that while the other 4 large suppliers to raise their prices have incorporated these obligations and taxes into their price rise – EDF has not (but could do so at any time). We therefore have no certainty as to the true level of EDF’s price rise as the current figure is contingent upon the government taking some pretty radical action on policy that would require legislation.

They have provided no idea as to when the action above needs to have taken place, what constitutes actions that meet the contingent criteria; and what the impact is (in £ or % terms) on end users of a failure to act by the government in delivering the somewhat undefined actions. It is therefore worth pointing out to all EDF variable customers that whilst the current level of a 3.9% price rise seems a good deal; we have no idea as to whether there is a sting in the tail and what that sting in the tail may represent. This makes evaluating the EDF standard tariff against the wider market a substantially trickier and less accurate exercise than were they to have raised their prices along the same lines as the other 4 large suppliers. We have already seen Npower suggest that were the government to remove these cost obligations then their price rise would step down from the current 10.4% to a more equitable 6.3%.

It is only by switching from the Big 6 to the smaller supply companies that a consumer can hope to both save money and make a long term difference to the state of the energy market. As long as consumers are reluctant to embrace new and emerging suppliers, then the 98% stranglehold on the energy market currently enjoyed by the Big 6 will remain. So why should you opt for an unknown brand rather than one you have known for years?

  1. The unknown brand is cheaper than the known brand (often by hundreds of pounds) and in the current climate of austerity every pound is worth saving.
  2. The unknown brand is cheaper because they have lower overheads and are often substantially more efficient than the larger businesses. This efficiency manifests itself in cheaper prices, better systems and therefore better customer service.
  3. The unknown brand didn’t fall off the back of a lorry. Their business had to post collateral and pass a series of stringent tests laid down by the regulator in order to be allowed to enter the market. OFGEM has your back here.
  4. Whatever you may fear; the truth is that your gas or your power won’t be shut down because you picked up a new supplier. You might be surprised to know that it is actually extremely difficult – if not impossible – for a supplier to disconnect a domestic household such are the strength of the consumer protection policies in place.
  5. It is only by switching away from the big 6 altogether, and staying away from them as long as the price point deems it necessary, that Plymouth residents and UK households writ large can hope to effect change in the system. The threat of losing even half a million customers might not effect change – but over a million would and that change needs to start somewhere and why not in Plymouth?
  6. Allowing suppliers in the domestic market to make money from apathy allows them the financial space to stifle competition in other markets such as the SME market where they face genuine threats from new entrant suppliers. By over paying you could be cross subsidising their business customers and making competition in other arenas less effective.

The problem with the domestic market isn’t that it has no competition; it does. The problem is that people don’t appear to be willing to switch to the competition despite them being cheaper. Until we can help the general public, and the mass media, get over their love/hate relationship with the big 6 we can look forward to many more years of the kind of public dance being played out in our papers and through the broadcast media by the pantomime cast of the energy industry.

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Articles about Energy Switching:

Is fixing Energy Prices a Fix?

fixing-energy-pricesThe not so subtle trailing of the impending October price hike by supplier or suppliers unknown has, this week, been superseded in its ability to create headlines by Mr Miliband. (…)

Rise of Energy Bills:

Infographic Energy Prices Rise

*This figure is an annual saving, based on a dual fuel energy switch on the 19/07/2013, from a British Standard tariff (payment: cash / cheque) and a EDF Standard tariff (payment: cash / cheque) to a dual fuel online variable tariff (payment: Direct Debit). We used a London postcode and the average UK consumptions: 16,500 kWh/year for gas and 3,300 kWh/year for electricity.