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Can your energy supplier increase what you pay?

Published 24 May 2016 by

Your energy bill is likely to be one of the bigger expenses that you pay each month. According to uSwitch, the average household energy bill for people on a standard plan with one of the ‘Big Six’ energy companies is £1,166.

Depending on your tariff, your energy supplier can increase or lower your energy bill. To find out how this could affect what you pay, we’re going to explore whether this applies to all tariffs and what you can do if your energy bill goes up.

Rising energy prices

Energy providers are able to increase the price of certain energy tariffs. If you’re on a standard tariff – typically your supplier’s basic tariff – this can go up and down depending on the market.

This won’t happen with a fixed rate energy tariff, as you sign up to pay a set price for an agreed period. The amount you pay can still vary according to how much energy you use – it’s just the price of each unit (per kilowatt hour) that’s fixed.

There are some instances where a fixed rate tariff can go up. It can increase if the Government raises VAT or if you have a tariff that sets out price changes from the start.

Prices on a capped tariff are not able to go over a set limit but can go down. This is different to a prepayment meter, where you’ll always pay for your gas and electricity upfront. Prepayment meters can be more expensive as a result. If you’re a prepayment meter customer, you could claim back £30 at the moment – find out why in our blog.

Your gas or electricity supplier should give you a minimum of 30 days’ notice before they raise their prices. An energy supplier must write to you to explain this, unless:

• your supplier is changing the way you pay (for example, if they’re installing a prepayment meter, you should get seven days’ notice),

• you’re on a ‘staggered tariff’ which sees your contract increase on set dates, or

• you’re on a ‘tracker tariff’ where your prices fluctuate based on something else like the stock market.

You can complain if your supplier doesn’t give you the appropriate amount of notice.

Switch energy supplier

If your energy supplier is increasing their costs, you do have the right to end the contract. A change in price is effectively a change to the terms of your contract, so you shouldn’t have to pay a penalty fee to leave.

You must tell your supplier that you’re leaving by the date the price increase comes into effect. Once you’ve found a new supplier, they must contact your current energy supplier within 15 working days of the price increase to let them know you’re switching. Remember you’ll need to clear any outstanding payments with your existing supplier before you switch.

Compare a range of different quotes to make sure you get the best deal possible when switching. The Competition and Markets Authority (CMA) estimate that 70 per cent of all customers are on their supplier’s standard tariff. By moving these customers could save between £300 and £400 a year.

Want to know more about how much you could save by switching? Check out our blog.