How to save by switching to green energy suppliers

green wind energy in nature

Unless you are already on the cheapest dual-fuel, electricity or gas plan, paying by monthly direct debit and managing your energy account online, you can always save by comparing what energy suppliers offer.


Potential savings by switching energy suppliers - the basics

Official Department of Energy and Climate Change data suggest that customers pay the following average prices in the UK:

Fuel/Payment method

Credit (GBP/year)

Direct debit (GBP/year)

Prepayment (GBP/year)

Average (GBP/year)

Electricity (standard)

602

557

605

577

Electricity (E7)

809

745

810

776

Gas

767

701

758

729

Dual fuel (standard)

1369

1258

1363

1306

Dual fuel (E7)

1576

1446

1568

1505

According to these statistics:

Switching from a prepaid energy plan to a direct debit energy plan can lead to savings of:

  1. £48 for electricity (£65 with Economy7 for electricity);

  2. £57 for gas;

  3. £105 for dual fuel (£122 with Economy7 for electricity);

switching from a credit energy plan to a direct debit energy plan can lead to savings of:

  1. £45 for electricity (£64 with Economy7 for electricity);

  2. £66 for gas;

  3. £111 for dual fuel (£130 with Economy7 for electricity).

However, customers on direct debit energy plans usually stand to lose out by switching payment methods, as DECC averages prices suggest.

What you can really save by switching energy suppliers

With average UK electricity and gas consumption (3,200 kWh per year for electricity and 13,500 kWh per year for gas), switching from the most expensive to the cheapest dual-fuel energy plan can save you over £300 per year and around £200 per year on average, when the average dual-fuel bill is around £1,150. This is considerable, and exponential if your electricity and/or gas usage is above average.

Saving by switching to an online energy plan

Online electricity and/or gas plans are often cheaper than paper energy plans because managing your account online saves your energy supplier considerable human resources: fewer phone calls means fewer people needed to answer the phone. Consequently, these savings are reflected in the prices customers pay.

An energy supplier comparison for June 2014 shows that customers moving from a paper billing energy plan to an online energy plan save over £100 per year and up to £250 per year if household electricity and gas usage is the same as the national average.

Saving by switching to a direct debit energy plan

Direct debit energy plans are often cheaper than payment on receipt of bill plans because your supplier is certain they will be paid on time, regularly, which makes managing sales accounts much simpler for them. Consequently, these savings are translated into lower costs for customers.

A comparison of energy suppliers in June 2014 shows that people moving from an energy plan with payment on receipt of bill to an electricity and gas plan on monthly direct debit stand to save over £50 per year and up to £200 per year if household electricity and gas usage is on par with national averages.

Saving by switching to a fixed-rate energy plan

One-year fixed-rate electricity and/or gas plans tend to be the cheapest on the energy market because (i) customers are tied into an energy contract for at least a year (unlike variable tariffs, where no period is defined), (ii) early cancellation fees discourage customers from switching suppliers before the end of their contract, which allows for easier planning by the supplier.

Comparing electricity and gas suppliers in June 2014 shows that families moving from an energy plan with a variable tariff to an electricity and gas plan on a one-year fixed-rate tariff stand to save at least £100 and up to £300 per year if consumption is the same as UK national averages.

Saving by switching from a big six to an independent energy supplier

Although independent energy suppliers are not always the cheapest, they tend to offer the least expensive energy plans on the market - the cheapest big six offers are always more expensive than the cheapest energy plans from independent suppliers.

TheSwitch’s electricity and gas suppliers comparison for June 2014 shows that, if using as much electricity and gas as the average household in the UK, customers switching from the cheapest big six supplier to the cheapest independent supplier can save between £60 per year, and up to £200 per year if moving from the most expensive big six energy plan to the cheapest independent supplier electricity and gas plan.


Saving by switching energy suppliers: which are the cheapest?

The energy market in Great Britain changes frequently so it is impossible to establish absolute truths about which supplier is the cheapest. Only a detailed comparison with your electricity and/or gas consumption in your distribution area will provide you with the exact savings you could make by switching suppliers.

However, to give you an idea, these were the cheapest electricity and gas suppliers in June 2014 for average UK energy consumption, viz., 3,200 kWh per year for electricity and 13,500 kWh per year for gas:

  1. Extra Energy, First:Utility and Flow Energy’s one-year fixed-rate dual-fuel energy plans are the cheapest dual-fuel energy plans on the market.
  2. First:Utility’s two-year fixed-rate dual-fuel energy plan is the cheapest fixed-rate plan with a duration of two years and over.
  3. EDF Energy’s one-year fixed-rate dual-fuel energy plan is the cheapest of the Big Six electricity and gas suppliers, and one of the cheapest on the market.
  4. Spark Energy’s dual-fuel variable tariff is the cheapest variable tariff on the market, though SSE offers the cheapest variable tariff among the Big Six electricity and gas suppliers.
  5. Ovo Energy’s one-year fixed-rate dual-fuel energy plan is the cheapest “green” tariff, though Good Energy, though more expensive, is the only supplier with a green energy certification.
  6. Daligas and Zog Energy’s one-year fixed-rate tariffs are the cheapest gas-only plans on the market.
  7. Extra Energy, First:Utility and isupplyenergy’s one-year fixed-rate tariffs are the cheapest electricity-only plans on the market.

Saving on bills by switching energy suppliers - a little advice

It is possible to save significant amounts of money on yearly bills by switching suppliers, even if most households do not realise this yet. However, there are over 80 electricity and gas plans in Great Britain so a careful comparison of available tariffs and energy plans is required before switching.

Indeed, potential savings are indexed on household electricity and gas consumption; the figures above are only indicative, even if hopefully they will encourage you to compare energy suppliers to check whether you are on the best plan and, if not, switch to the most advantageous tariff.

Furthermore, potential savings, important though they may be, are not the only issue to take into consideration when comparing energy suppliers in view of switching:

  1. Flexibility might be important: Variable tariffs or fixed-rate plans with no cancellation fees ensure that you have the leeway to switch whenever a better tariff becomes available, though these plans may be more expensive initially.
  2. Customer service is often crucial: Although one hopes never to have to call customer care, it is important to look beyond prices and see whether the supplier offering the best deal (i) has a competent customer service, (ii) deals with complaints adequately.
  3. Increasingly, clean energy is a priority: The greenest suppliers are never the cheapest but their tariffs are no longer the most expensive and if this is a priority it might be worth giving up a few pounds to promote renewable or clean electricity.

As you can see, the best energy deal stems not only from potential savings from switching energy suppliers but on a range of factors that need to be taken into account when comparing what the market offers.

Are you tempted to switch electricity and gas suppliers? This article looks into how to switch: prepare, reflect, compare and switch.


Step 1: Have your switching information ready

If you are not moving home, all the information you need to switch electricity/gas suppliers except banking and credit card details is available on past energy bills.

Postcode

Energy prices change from one region to another. Why? Because there are different transmission and distribution areas in Great Britain and energy suppliers pay transmission and distribution networks different fees according to where electricity and gas is physically delivered. Therefore, you will only get an accurate energy quote if you have your postcode with you.

Consumption

Getting an accurate energy quote when switching energy suppliers implies knowing how much electricity and/or gas you use each month, quarter or year.

If you are not moving homes, you can look at past bills to get an idea of how much electricity and gas you use in kWh, or check how much you pay per month or quarter in GPB.

If you are moving homes, you will need to know how large the new home is, what type of appliances it has (and whether they run on electricity or gas), how many occupants the new home will have, and when they will be around using energy.

Payment

Energy suppliers offer various payment methods: prepaid plans, direct monthly or quarterly debit, or quarterly payment on receipt of bill. You will need to know which best suits you (see below) and, if you want a direct debit plan, you will need to have your bank account or credit card details ready.

Meter numbers

Energy plans are associated to specific electricity and/or gas meters (MPAN for electricity, MPRN for gas). It is always useful to have this information ready in case the meter cannot be found simply by using your current or future address. Meter numbers tend to be on energy bills; alternatively, you can call the Meter Number Helpline on 0870 608 1524.

Current energy plan

Getting an accurate price comparison is faster if you provide your current energy supplier’s name and know which tariff/plan you are on. All of this is available on your bill.


Step 2: Think about what you need from your new supplier

The energy market in Great Britain offers much to choose from in terms of prices, customer service, energy mix, payment method, account management options, etc. It is a good idea to establish your priorities before starting your comparison to avoid being confused by the many electricity and gas plans available.

Electricity and gas prices and tariffs

How much you can save is often a deciding factor in switching energy suppliers. Potential savings are highest when switching to a one-year fixed-rate energy plan with online account management and monthly direct debit. The exact amount customers save by switching electricity and gas suppliers depends on their energy consumption but with an average household electricity (3,200 kWh/year) and gas (13,500 kWh/year) consumption savings average around £200 per year.

Electricity and gas prices also depend on the type of tariff customers choose. They can be fixed (fixed-rate energy plans) or variable (standard variable energy plans). However, fixed-rate plans often tie customers into a contract for a certain period of time (anything from one to three years) and involve early exit fees customers have to pay should they decide to switch again before the end of the tariff duration.

Find out more about electricity and gas.

Customer service and complaints performance

You may also want to switch energy suppliers because of a disappointing experience with your current supplier (who may have taken too long to answer the phone, not dealt with your issue adequately or ignored your complaint). Energy suppliers are rated:

  1. By customers, on online fora, with regards to customer service, so it is a good idea to have a look around at what complaints existing or former customers usually have and whether or not suppliers have dealt with them;
  2. By suppliers themselves, in annual and quarterly complaints reports, where electricity and gas suppliers publish their number of complaints, their number of complaints per 100,000 customers (which makes it easier to compare), how quickly complaints are resolved and often what customers complained about.

Find out more about customer service and complaints reporting here.

Energy mix and type

Energy suppliers purchase electricity and gas on the wholesale market from specific electricity generators and gas producers. While natural gas is always the same, electricity is generated from a variety of sources: coal, natural gas, nuclear energy, renewable energy, etc.

By switching suppliers, you may also be supporting the development of a certain type of energy. While most customers do not pay much attention to suppliers’ fuel mix, you might want to check how green your potential suppliers are, how much nuclear energy appears in their fuel mix, whether or not they rely extensively on coal, etc. Furthermore, contrary to common perception, green suppliers are no longer that much more expensive than other suppliers, if at all.

Payment methods

How you pay your energy bills can have a significant impact on your comfort and on the size of your energy bill itself. There are three main payment methods.

  1. Pre-payment is a good option if you want to avoid nasty surprises and be in control of your energy consumption and bills. However, prepaid tariffs are usually higher than others, per unit.
  2. Monthly/quarterly direct debit is the cheapest and often simplest option to pay energy bills. However, mistakes take longer to rectify since it is automatic (e.g., if you estimated consumption is higher than your actual usage).
  3. Quarterly payment on receipt of bill tends to be more expensive than direct debit but enables better control of payments if there is a mistake. However, it can be a hassle to remember to phone in to pay electricity and gas bills by credit card or to remember to send your cheque in.

Find out more about the various payment methods here.

Account management options

Customers have the option of managing accounts by post and telephone or online.

  1. Online account management often leads to a discount in electricity and gas prices. It is a convenient option if the energy supplier’s online accounts system works efficiently. It can be a real hassle if this is not the case (e.g., if the meter reading system does not work when you want to send in your meter readings, or if customer care agents do not answer emails).
  2. Postal and telephone account management tends to be more expensive but it can be reassuring to have a person on the other end of the telephone. However, if customer service never answers, this option can become frustrating very quickly (see customer service for more detail on the various suppliers’ performance).

Step 3: Compare electricity and gas plans

Once you have decided on priorities for your next energy supplier, you should start a detailed comparison with your postcode and consumption.

Initially, you will need to enter your postcode, meter type, consumption, supplier and tariff type.

Most comparison websites will offer to show you:

  1. All energy plans that are compatible with your home
  2. Only the energy plans they can switch you to.

A list of energy plans with supplier name, tariff type and conditions, annual savings and, when possible, the option to switch immediately will appear.

You should be able to filter the results by payment method, tariff types, account management options, extra advantages (loyalty points, vouchers, etc.) and fuel type (green or not) to reach a smaller number of energy plants in line with your priorities.


Step 4: Switch energy suppliers

Switching process

Once you have selected the energy plan that best suits you, you can either (i) click on the switching link if the website you are on makes it possible, or (ii) find a website that switches customers to the supplier you want if this is not the case.

Either way, you will need all the information mentioned step 1: personal details, physical supply address, bank account details, etc. If you have selected a direct debit plan, you will probably receive a copy of your direct debit instruction, which will have been filled in automatically as you entered your banking details.

Furthermore, you will be required to accept your new supplier’s terms and conditions, the comparison/switching website’s terms and conditions, and state that you have read the tariff information label (TIL). Often, you will be asked whether you accept to receive marketing material from your new supplier and/or its partners.

Useful switching information

Switching energy suppliers takes up to five weeks and should not take longer than that. Should you wish to reverse the switch, there is always a “cooling off” period of seven working days.

If you are in debt with your old energy supplier, this debt can be transferred to your new supplier.

Switching statistics

In its State of the Market Assessment, the national energy regulator Ofgem points out to surprisingly low switching data given how long energy retail market competition has existed:

  1. Only 11-12% of consumers switched energy suppliers in 2012.
  2. 62% of consumers have never switched energy suppliers.
  3. 14-16% of consumers have switched energy suppliers only once.

Most consumers switch because they expect to save money on bills (76% of electricity and 75% of gas customers), with the other consumers switching because they move home (5% of electricity and 6% of gas customers), because they expect better customer care (5% of electricity and 6% of gas customers), or because they wanted to have a single supplier for both electricity and gas (4% of energy customers).

Of the consumers who decide not to switch energy suppliers, 55% based their decision on their satisfaction with regards to their current supplier, 27% considered that switching would be too much of a hassle, 17% thought that switching was not worthwhile and 12% believed they were already on the best energy plan and would not save money.

Last year (2013):

  1. 3.4 million electricity customers switched suppliers, out of 27.8 million customers (12%).
  2. 2.3 million gas customers switched suppliers, out of 21.8 million customers (11%).

Trends show a relative decline of the number of customers switching suppliers since the early 2000s. This is mostly because energy suppliers have had to stop what was considered aggressive door-to-door marketing practices. Switching numbers increase most when energy suppliers make price change announcements.

For example, November 2013 price change announcements led to 609,000 electricity and 481,000 gas customers switching suppliers, compared to 385,000/227,000 in October 2013 and 310,000/276,000 in December 2013.

Therefore, by and large, energy customers do not yet have the reflex of regularly comparing what the electricity and gas market offers to their current energy plans even though potential savings are considerable and there are many offers to choose from.

Category
Energy Guides