It’s officially Spring, bringing it with the prospect of sunshine, longer days and warmer weather. So you could be forgiven for breathing a sigh of relief over falling energy bills. Not so fast.
Thousands of homeowners are set for energy bill hikes in the next two weeks, with 29 fixed-rate tariffs due to expire at the end of March. According to the price comparison website MoneySuperMarket, customers on these tariffs are likely to face automatic bill increases of up to £252, with providers rolling them onto standard tariffs, which are typically their most expensive.
Given the historic nefarious practices of some energy companies, it should come as no surprise that this is happening. Much the same process is employed by mortgage companies and savings firms when borrowers and savers come to the end of fixed term deals – they are automatically moved onto a standard rate which, in most instances, is less value for money.
Research by MoneySuperMarket reveals that one fixed deal from Extra Energy expires on 30 March and the other remaining tariffs, including British Gas, co-operative energy, First Utility and Sainsbury’s Energy, will expire on 31 March.
‘Shop around’ is a overused phrase in the world of personal finance, but it’s popular for a reason. In this instance, homeowners could make savings of up to £380 by moving to a better deal.
Even in the five examples where a provider’s standard tariff is cheaper than the fixed deal, there are still bigger savings to be made by swapping to the cheapest deal on the market. For example, anyone rolling off the British Gas Fixed Price March 2016 tariff will see their bills fall by £151, but could save an impressive £294 by swapping to the market leading tariffs.
Stephen Murray, energy expert at MoneySuperMarket, said: ‘Unfortunately for customers on the 29 tariffs ending in March, being moved automatically on to an expensive standard tariff means they will be hit by higher prices until they switch to a better deal, so it’s more important than ever that homeowners put the wheels in motion now and shop around to cut costs.
“Another 49 fixed tariffs expire in April, May and June, so even more bill payers will face this price hike. Shopping around for a new tariff can mean savings of up to £380, so taking action now is important. Some providers will charge a penalty to customers leaving their current deal before the fixed term ends but they cannot charge this once you are within six weeks of the tariff ending, so a carefully timed switch is important.’
There have been moves to make cheap energy deals more accessible, not least by the competition watchdog which said earlier this month that suppliers should offer more than the four tariffs currently allowed. Although rules limiting suppliers to offering four tariffs for gas and four for electricity were introduced in 2014 by the regulator Ofgem, the Competitions and Markets Authority said that it would ditch these rules as they have resulted in reduced competition. As with most things, the devil will be in the detail. Don’t wait for change. Act now to reduce your bills.
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