If you are a British Gas customer, your winter is about to get a lot more expensive. Britain’s biggest energy supplier announced this week that it will raise electricity prices for more than three million customers, adding £76 to a typical annual bill on September 15, just in time for the weather to cool.
The rest of the Big Six energy suppliers increased their prices in March and energy commentators warn that more rises could follow.
The good news is that the cheapest deals in the market have started to fall.
The average price of the cheapest ten tariffs on the market is £855 a year, which is £265 less than the cost of British Gas’s standard variable tariff this autumn, and British Gas’s deal is still the cheapest of the Big Six.
Summer is a good time to switch and lock into a decent low-priced deal before the cooler weather hits.
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There are 17 million people idling on a standard variable tariff, with a £618 difference between the worst and best deals on the market, according to the comparison website Uswitch.com.
A recent study by another site, Gocompare.com, found that UK households that don’t switch from the most expensive tariffs are more than £925 million a year worse off.
The cheapest deals are offered by the new disruptor suppliers, which have low running costs and overheads, so can charge lower prices. In the past two years 26 companies have entered the sector, 14 in the past year alone.
Iresa, the small Nottingham-based energy company, is offering the best deal, a Flex4 12-month fixed direct debit tariff at £834 a year for average energy users.
However, smaller suppliers can get overwhelmed by a deluge of customers, which can affect their customer service. Equally they may be keeping prices low by not investing enough in service in the first place. “Challenger energy companies regularly trounce bigger providers in the best-buy tables, but it also means that most of them will offer a bare-bones service, usually managed completely online,” says Ben Wilson of Gocompare. “It also means that many are unable to accommodate the same level of customers that the energy giants can, which means that tariffs can disappear from the market regularly.”
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This year Iresa stopped taking new customers after Ofgem cautioned it over customers waiting more than an hour to get through to the company on the phone.
Many disruptors pitch themselves as offering fantastic customer experience, however, as well as freebies or money-off deals to attract customers.
In the latest energy company satisfaction survey by Which?, the consumer champion, it was the smaller companies that came out best. The consumer group asked 8,917 energy customers to rate their suppliers on how they deal with complaints, value for money, accuracy and clarity of bill, and whether they saved money.
Ovo Energy was voted top for the second year running. The company also lets you earn 3 per cent “interest” on any in-credit balances you have. It was followed by PFP Energy, Ebico and Flow Energy. Npower fared the worst.
Another small company gaining a positive reputation is Bulb, which if you “refer a friend” to it, gives you and the friend £50, plus pays any early exit fees charged by your existing supplier.
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Engie, which offers 100 per cent renewable electricity at no additional cost for home customers, promises to “rollover” customers to its cheapest tariff at the end of a fixed period.
The cheapest renewable energy deal is only £8 a year more expensive than the cheapest energy deal on the market — last year it was £110 more expensive.
The best deal is from Tonik Energy, fixed for 12 months at £866, which is £272 a year less than the average Big Six variable plan.
If you want to lock into a deal, look out for a lengthy fix — the majority last about 12 months, but there are a few for 18, 24 and even 36 months. Bear in mind exit fees.
If you are eligible for the warm-home discount scheme, make sure you sign up to a supplier that offers it; many of the new, smaller companies do not. Those that have more than 250,000 customers are automatically obliged to take part. The discount is a one-off £140 applied to your bill between October and May.