Millions of households will soon be struck by higher gas and electricity costs as suppliers push up prices and old cheap tariffs come to an end. It means now is the time to find a new deal.
Energy giant SSE is the last of the Big Six to deliver a thunderbolt to customers. It announced an average annual price rise of £76.
The move affects more than two million customers and only spares the vulnerable, those on a fixed-price deal or who use a pre-payment meter.
All of the major energy suppliers have revealed price hikes so it is a good time to switch
SSE’s price hike follows similar increases by rival suppliers British Gas, Npower, ScottishPower and EDF Energy, which all take effect between now and the middle of next month. Eon also removed some of its customer discounts earlier this year – the equivalent of a price rise.
Adding to this flood of bad news is the fact that dozens of fixed deals are ending. Those who fail to find a new one will join millions of households on costly standard variable tariffs.
Switching to a new deal or a new provider will protect customers from higher bills. Since all of the major suppliers have revealed their price rises, it is a good time to compare offers without fear of jumping from frying pan to fire.
Peter Earl, head of energy at price comparison website comparethemarket, says: ‘Energy suppliers rely on consumer inertia, so all it takes to beat soaring prices is a simple switch of tariff or supplier.’
Rita, 97, who has dementia, was left £4,000 in energy debt
Rita was left wiht £4,000 of energy debt
Price rises are one sting – but problems with billing and complaints are another in the tail for many households.
Energy supplier Npower is one of the worst culprits. One customer who has fallen foul of its dreadful service is Rita Shead, a 97-year-old woman with dementia. She has been left struggling with an array of unclear bills and an outstanding debt of more than £4,000.
This is despite many delays in the company delivering her bills and her son, David Shead, raising questions over their accuracy.
David says: ‘She was sent multiple bills at the same time. One was for thousands of pounds and it sent her into a spin.’
Last year Npower delayed sending bills owing to a ‘systems issue’ – a problem affecting an unknown portion of customers. In December last year Rita was sent bills dating back to 2015, each demanding different but large sums of money for usage at her three-bed bungalow in Bournemouth, Dorset.
‘Competency and efficiency do not seem to be concepts it can deal with in my mother’s case,’ says David. ‘I have no intention of leaving a bill unpaid. I am just not convinced its bills are right.’
David has paid small sums on a regular basis to demonstrate he is not avoiding the issue.
A spokeswoman for Npower says: ‘There have been some billing delays and missed appointments on the account.
‘It is now up to date and unfortunately the outstanding debt is £4,169. The debt has been building since 2013 and we have been sending the usual debt collection and advice correspondence.’
She adds that Npower is keen to offer additional help and will be recommending an energy efficient home visit.
WHERE TO SWITCH
Cost is only one consideration when switching. Another big issue is customer service – where there is a wide gap between suppliers.
Joe Malinowski, of switching website TheEnergyShop, says: ‘Customers need to be careful where they move to – the savings will not be worth it if you switch to a company with customer service issues.’
The Big Six are still inundated with complaints – with all but one fielding more customer gripes in the first quarter of this year compared to the final three months of 2017.
ScottishPower, Npower, Eon, EDF Energy and SSE all saw the number of grievances from customers increase. Only British Gas saw a decrease, albeit from a high number of complaints.
‘The savings will not be worth it if you switch to a company with customer service issues’, says Joe Malinowski
There are also tens of thousands of issues each month across all major suppliers that go unresolved for longer than eight weeks, indicative of a large number of complex disagreements.
Younger companies that have fewer customers and modern technology are less distracted by longstanding customer service issues.
But it is not always a case of the smaller the better. Some embryonic players could be at risk of becoming overwhelmed when things go wrong if they lack the resources to cope.
For example, fledgling provider Iresa is banned from taking on new customers or increasing the direct debits of existing customers while it seeks to resolve customer service problems.
The ban is in place until the end of this month. If it fails to meet targets set by energy regulator Ofgem its licence could be revoked.
Malinowski also warns that cheap deals offered by cash-hungry small suppliers, against a backdrop of bigger players increasing prices, could signal wider problems.
He says: ‘There are cheap deals being offered by small companies that take customer money upfront, before energy has been provided. This could be a sign of financial stress and some of these companies are unproven.’
Yet mid-tier challengers are not without their issues. On Friday Ofgem announced it is investigating how Utility Warehouse manages customers in debt.
Consumers could save up to £397 if they switch to a cheap fixed-rate energy provider
Victoria Arrington, of energy comparison site Energyhelpline, says: ‘Loss-leading tariffs could be a viable method of doing business if done with care – as many suppliers do. If not, this strategy could potentially lead to the supplier going under.’
But she says customers should not be overly fearful. She adds: ‘Energy is the easiest household bill to switch and can result in an annual saving running into hundreds of pounds.’
Should a supplier go bust, energy regulator Ofgem will step in to find another provider, a supplier of last resort. But customers may then be moved onto a more costly tariff with the new supplier and any disagreements about billing under the previous one will prove hard to reconcile.
Malinowski adds: ‘Choosing a fly-by-night supplier could be a recipe for disaster. There are what I call safer options, even if they are not the cheapest available. It could be a reasonable offer from an alternative big supplier or a competitive tariff from an established mid-tier provider.’
Low income or vulnerable customers in receipt of the Warm Home Discount – a one-off discount of £140 on electricity bills only – should also choose a supplier signed up to this scheme.
Suppliers offering the discount can be found online. It includes challengers such as Utility Warehouse, First Utility, Ovo and Cooperative Energy.
Energy bills have gone up by £57 on average after the energy price rises this year
How to change gas and electricity provider – our ten-step guide
1. Bring your account up to date by providing your supplier with the latest meter reading.
2. Dig out the relevant paperwork showing your annual energy usage and current tariff type.
3. Compare different tariff prices with your existing one using a switching website.
4. Check energy supplier customer reviews. Once you have a list of cheaper deals, find out which company is worth moving to. Consumer review website Trustpilot is a good place to start, although most price comparison websites also show reviews and ratings for suppliers.
5. Call the energyhelpline switching service on 0800 074 0745 if you do not have access to the internet. Or at the very least ask your existing provider for details of cheaper tariffs it offers.
6. Be assured you will not be without energy supply during a switchover. Some providers offer further safeguards under the Energy Switch Guarantee. Visit energyswitchguarantee.com. A transfer will take around three weeks.
7. Tell your new supplier you want to initiate a switch. It will inform the old supplier on your behalf.
8. Take a meter reading on the day of the switch to give to the new provider.
9. Settle your final bill with your old supplier or get any credit refunded.
10. Find guidance by visiting Ofgem’s consumer switching site.