Despite the huge increase in switching numbers which saw a record 4.8 million switches in 2016, many people are still sceptical about switching their energy supplier, claiming that it would be too much hassle for such a small difference in price. In theory this is very understandable giving the extremely poor customer service skills that we’ve seen from sectors such as telecommunications and travel, but the reality is very different here. Switching your energy tariff has never been easier and sees minimal effort on the consumer’s part. Switching with an energy comparison service like Selectra also means that you don’t have to contact your previous provider, it is all taken care of for you. If you’re not sold already, here’s three key reasons why you should be thinking about switching your energy tariff.
- Tame the fluctuating unit price
First, an explanation: Your energy tariff in the UK is split up into two main pricing components: the standing charge; and the unit rate. The standing charge is set by your energy supplier and is unlikely to change regardless of activity on the global wholesale markets. This charge is to pay for transmission and distribution costs, meter readings at your property and various other static costs. The unit rate, on the other hand, is what you need to pay the most attention to. The unit rate refers to the price per kilowatt hour (kWh) of electricity that you consume in your property. This price is dictated by a number of things: wholesale energy prices; internal generation; profit margins; and many other factors. This price will change on a frequent basis, mostly upwards, which means locking in a desirable unit rate price is the most recommended money saving method for your energy bills. This is what we’d called a ‘fixed tariff’.
Fixed tariffs have a single unit rate that will not change for the duration of your fixed term. This will usually be 12 or 24 months, but unlike a phone contract, you can cancel whenever you want. Some companies charge a fee for early contract termination, but this is usually only around £40, and some, like EDF Energy, don’t charge at all. The reason to switch behind this point, is that if you’re not on one of these tariffs, you’ll be on a standard variable, which is generally the most expensive possible tariff from your supplier, which can be hundreds and hundreds of pounds more expensive per year than the cheapest on the market. Switching to a fixed rate tariff can lock in a price so that you do not experience shock increases, which happens a lot more than you think.
- Switch to a green tariff
In our current situation of rising population levels and depleting fossil fuels, renewable energy has been put at the forefront of the UK’s generation efforts. Slowly but surely we are progressing towards a greener energy mix, although we are still lagging behind in the EU target of 20% renewables by 2020. Energy suppliers across the country have begun offering 100% renewable energy tariffs to customers in order to reduce our reliance on fossil fuel generation whilst funding the generation of electricity through sustainable methods. By switching your tariff to one of these green deals, you’re not only saving money from the standard variable tariff you’re likely to be on now, but you are helping the environment and supporting renewable generation at the same time. The future generations will thank you! (get it?)
- Start a switching revolution!
Although the energy markets in Great Britain have been open to competition since 1990, there has only really ever been six companies with any considerable amount of market share up until a few years ago. Up until 2014, the ‘Big Six’ energy providers, British Gas, EDF Energy, Eon, Npower, Scottish Power and SSE, had almost 100% dominance of the market share. However, since then, the emergence of independent suppliers such as Co-operative Energy, First Utility and Ovo Energy has completely changed the landscape of the energy markets. The latest figures state that independent suppliers have managed to claw bag a massive 15% of the market share, and it is only going up. Independent suppliers that are less focused on huge profit margins are able to provide a much cheaper price and better customer service and is thus forcing the Big Six companies into being much more competitive as a result.
The more people switch away from the expensive standard variable tariffs that the Big Six put you on as a default, the more suppliers across the country will have to up their game and be more attractive to their customers. No longer can the Big Six rely on the infinite support of the general public. If the market share of independent suppliers reached around 30%, the Big Six energy suppliers would have to drastically reduce their prices, which would make the consumer experience largely better for everyone.