'All that glisters is not gold' in the world of switching energy supplier
Posted by David Dean on 24 March 2016 at 12:05 pm
Recently, my energy supplier contacted me to remind me that my contract was coming to an end. Rather helpfully, they clearly laid out the various alternatives that were available to me:
• Sign up to the new, cheaper deal they were offering – providing me with a saving of £89 per year.
• Do nothing and automatically move onto the company’s more expensive default standard tariff, which would cost me £183 per year more than I was currently paying.
• Scout round for an alternative deal from a different supplier.
'Save money by switching'
Initially, I was tempted to simply click the button and sign up for the new, cheaper deal. However, with the Government’s mantra of ‘save money by switching’ ringing in my ears, I went to one of the best-known price comparison websites to see if I could find a better deal.
Not so straightforward
The process itself was not as straightforward as I had imagined. It asked me for either the amount of gas and electricity I used in a year or how much I spent on energy annually. My current supplier didn’t provide either of these as an overall total so I had to go through 12 months’ worth of bills and manually add up the individual figures to come up with the annual amounts – for both electricity and gas. Having completed all the information and pressed the search button, the top-listed deal was with a different supplier and claimed to save me £276 a year – a figure displayed in big bold numbers.
Savings significantly spun
Great, I thought; quite a substantial saving. Once again, I was tempted to press the button and sign up straight away. However, I didn’t. I don’t know why I didn’t but I’m glad because when I looked into the ‘saving’ in more detail, I found that it wasn’t against my current tariff, nor was it against the new, cheaper one my energy supplier was offering. It was, in fact, against what would have been the cost if I’d opted to do nothing and move to my current supplier’s more expensive standard default tariff.
So, although it was a saving – technically – it was also a significant ‘spin’ and would have actually saved me just £4 against the new deal being offered by my existing supplier.
Better the devil you know?
A £4 saving is hardly worth the hassle, nor is it worth the risk of moving from a supplier I knew and which had provided me with good customer service over a number of years, to one that I had no previous experience of and had variable customer reviews. As the saying goes: “better the devil you know”, especially when there’s so much bad press about poor customer service in the domestic energy supply sector these days. To be honest, I think the saving would have had to be much, much higher than £4 for me to even think about switching.
Factors to consider before switching
My experience is that you should consider lots of factors before considering switching, in particular:
• Make sure you make any comparisons with the cheapest alternative being offered by your current supplier.
• Take into account any exit fees. These are sometimes charged PER FUEL and could wipe out a significant proportion of any saving if, for any reason, you decide to leave your supplier before the deal ends.
• Consider any discounts (for example; for loyalty, paperless billing or managing your account totally online).
• Think about the unit cost of each fuel and the daily standing charge. These vary between tariffs/companies and, depending on your individual circumstances and how much energy you use, they could make quite a difference to how much you pay. For example, if you’re a low energy user, you might benefit from a higher unit cost and a lower daily standing charge while it might be the other way round for high energy users.
All that glisters...
So, the moral here is that “all that glisters is not gold” in the world of switching energy supplier. My experience makes me wonder if the potential savings strongly promoted by the Government and the price comparison sites are real or illusory. Anyone thinking of moving should consider all the factors involved and spend some time doing some research and getting under the skin of what, on the face of it, seem like tempting offers.
Image: William Warby
Need help with any Jargon?
About the author: David is communications manager at the National Energy Foundation
If you have a question about anything in the above blog, please ask it in the comments section below.
3 comments - read them below or add one