Faster Energy Switching Could Prove Catalyst to Lower Bills

Nov 13, 2014   //   by Keith McDonald   //   Home and Living, Money Saving Tips  //  Comments Off on Faster Energy Switching Could Prove Catalyst to Lower Bills

We’ve not yet reached the winter, but the inquisition about energy bills has already started. According to Citizens Advice, more than 3 in 4 people are concerned about their winter fuel bills.

Energy SuppliersThis year, for a little extra festive spice, the finger has been pointed not just at the energy companies but also towards price comparison sites.

The Big Deal, which uses mass-market forces to negotiate lower tariffs with suppliers, has become embroiled in an almighty row with the price comparison marketplace.

But while this rumbles on, something more important has happened that could prove to be the genuine catalyst for competition in the market.

Faster energy switching has finally arrived.

Switching energy suppliers has always been an incredibly cumbersome process. Believe it or not, it can be quicker to exchange contracts on a mortgage than to arrange an alternative energy supplier.

Bosses at smaller companies have always been frustrated by this. If far more complicated products such as current accounts and mortgages can be switched more quickly, they say, why on earth can’t the energy industry do something about it?

Well, the breakthrough has finally occurred, ahead of what promises to be a tough winter. Energy giant SSE has now halved the switching time to just 17 days, with smaller provider First Utility also joining ranks.

It’s a change that’s been in the air for a while. Energy watchdog Ofgem said it hoped that faster switching would be in place by the end of 2014. There is little chance that all major suppliers will be co-operating by then, and the regulator is not known for its strictness over the major players in the market.

But what this breakthrough is likely to do is spark up genuine competition.

We’ve seen it happen in the market for current accounts. The new seven-day switch system introduced last year may have only increased the number of people moving banks by 22%, but the quality of accounts on offer has seen a major improvement. Those that have decided to move on are targeting accounts offering in-credit interest, bonuses and cashback.

And, as if by magic, there’s already signs that the energy market is getting itchy. Take E.ON, for example. Rarely one to lead on pricing, it has recently issued a market-leading new tariff that’s difficult to ignore.

Provided that you opt out of paper statements and pay by direct debit, the new tariff (Fixed 1 Year v12) is estimated to cost the average dual fuel customer £965 per year.

This has prompted a response from one of the the smaller providers, Extra Energy, which comes in only £9 behind – at £974 per year.

It can hardly be a coincidence that the launch of faster switching from two providers has prompted new cost-cutting deals from two others. Rather, it suggests that as it gets easier to switch your energy supplier, providers are going to have to work harder to attract your custom.

As the winter approaches, it’s going to be worth keeping an eye on tariffs. There’s a fair chance of making substantial savings on your energy bills.

Agreeing a Payment Plan

One difficulty you may encounter when it comes to switching suppliers is that your current supplier has to agree for you to leave. This could be problematic if you still owe them a substantial amount of money.

The best route you can take here is to admit to your supplier that you’re having difficulties in making repayments. Suppliers have to help you arrange an affordable payment plan. If your situation deteriorates, it will benefit you if you can show that you opened dialogue with your supplier at the first opportunity.

Not only will this help you reduce your bills to a point where you’ll be granted a switch to another provider, but it also reduces the temptation of you turning to expensive forms of short-term credit just to keep your lights on.

Could you save by switching suppliers? Why not compare gas and electricity prices today?

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