News Article

Why you should switch after a one-year energy deal ends

Published 26 September 2016 by

When it comes to getting the best deal on your energy, there's one piece of advice that's repeated time and time again – and that's to switch your supplier or your tariff. And Ofgem says more people are taking this advice, with around 3.8 million people moving provider in the first half of this year.

New analysis by one provider has revealed the extra costs energy customers face when a one-year deal comes to an end, and they can vary widely. An average household using one of the UK's big six suppliers can face an increase of up to £350 a year after their initial deal ends.

The research

Octopus Energy found that customers moving to a variable tariff at the end of a one-year deal could face extra costs ranging from £275 to nearly £350 a year. For smaller suppliers, extra charges are at around £30 a year.

See below for a full breakdown of the average tariff rises for the big six providers.

Provider

% increase

£ increase

npower

48%

£348

EDF

47%

£341

Scottish Power

45%

£330

British Gas

43%

£311

SSE

37%

£276

E.ON

36%

£273

 

As you can see, npower had the highest rise in the cost of its variable tariff from a one-year energy deal, with an increase of nearly 50 per cent. EDF followed closely behind with a rise of 47 percent at £341, while E.ON had the smallest increase at 36 per cent as its tariff rose by £273.

The research also looked at the best one-year fixed price deals each energy company offered during the last six months and the last Standard Variable Tariff (SVT) each company charges.

The analysis showed that after 12 months, four of the top five deals were from the big six energy suppliers. After 15 months – 12 months on a fixed deal and three months on an SVT – none of the big six suppliers provided the best overall deal.

The big six suppliers fell even lower down the list after 24 months.

Why does this happen?

If customers do nothing after a one-year deal runs out, they will be moved onto a company's SVT and incur additional charges as a result. An SVT is rarely marketed as it's almost always higher than the price of one-year tariffs, and can vary from company to company.

Your energy firm should always warn you when your 12 months fixed deal is up. Once they tell you, you can then look around and see what other deals are out there – you shouldn't face an exit penalty as you're leaving at the end of the term.

Price comparison websites like uSwitch and MoneySuperMarket can help you with this. Bear in mind, you'll need to know the amount of energy you use to search these sites. You can find this out by using your annual statement from your energy supplier or checking your previous bills.

With up to £350 at stake, you shouldn't let your one-year deal run out without looking what else's out there and switching to a better deal. You shouldn't be put off if you're renting a property, as you might be able to change energy supplier as a tenant.

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