By SIMON BAIN
Energy customers on fixed prices who have failed to shop around saw their bills rise by up £140 for the medium user as nine tariffs expired on Friday.
In what has become a fiercely competitive market, the ‘big six’ utilities remain under intense political scrutiny and the small army of challenger suppliers is mopping up customers.
Perth-based SSE revealed recently it had lost another 50,000 customers since April and its supply profits would be hit, but failed to follow rival British Gas in cutting prices. British Gas will cut gas prices by five per cent on August 27 for 6.9m gas customers, its second five per cent cut this year, but comparison site Gocompare.com said: “It doesn’t come close to matching the serious savings that are being achieved by savvy switchers at the moment.”
It says the British Gas price cut is worth typically £35, compared with a potential saving of over £300 from jumping ship. Less than a quarter of UK households have switched supplier in the past 12 months, while 27 per cent haven’t switched for at least three years, and 25 per cent have stayed loyal to their original supplier.
Last month a report by the Competition and Markets Authority estimated that 70 per cent of households are still on providers’ standard variable rates despite a price war that has resulted in some of the cheapest tariffs on the market for years. Gocompare’s Caroline Lloyd said: “It is also clear from the report that there is unlikely to be a quick fix, so it is imperative that consumers take control of their own energy requirements.
“In the longer term, the industry needs to follow the lead of the banking sector and work towards smarter, faster switching. For example, midata has transformed the visibility around bank current account switching, allowing consumers to find and switch to accounts that reflect their actual usage and behaviour – and there’s potential to develop services that can deliver a similar step change in the energy market.
British Gas, EDF, Scottish Power, First:Utility, Sainsbury’s Energy and Co-operative Energy all have tariffs which have just expired, leaving customers facing a near five per cent rise in bills when they are rolled onto their suppliers’ standard tariffs.
First: Utility, for instance, biggest of the new breed of suppliers, has a standard tariff costing medium users £1,135 a year, but the expired tariff was saving some customers £327 on that price and others £98 or £140. Cooperative Energy’s fixed offer was £100 cheaper than their standard tariff, and Scottish Power’s was £90 lower.
Meanwhile the big firms have failed to improve on their poor complaint-handling, according to Citizens Advice. Its latest quarterly figures found five of the big six had more customer complaints than a year ago, with Scottish utilities at the top and bottom of the list. SSE continued to perform best, with only 55 complaints per 100,000 customers, but ScottishPower continued to blame its new billing system introduced at the end of 2014 for 20 times more complaints at 1154 per 100,000.
Citizens Advice Scotland's chief executive Margaret Lynch said the rise was disappointing against the background of the CMA investigation. She added: “Low levels of trust in the industry mean consumers are less likely to shop around and therefore miss out on hundreds of pounds of savings. Consumers deserve so much better.”
However recent price cuts mean that not all fixed rate deals were offering savings. Customers on the British Gas July 2015 tariffs, with or without EnergySmart, will see bills drop by £37.21, as will people who were on the July 2015 Sainsbury’s Energy tariff, which is powered by British Gas.
Ms Lloyd said: “However, despite this cut, customers would save even more money by switching to one of the top 10 cheapest fixed deals on the market than by sticking with their existing supplier.”
According to Gocompare, the 10 cheapest dual fuel tariffs at present are led by GB Energy Supply’s variable tariff at an average annual cost of £870 for the medium user.
But close behind is the only offer from a ‘Big Six’ supplier, the £899 cost of SSE’s one-year fix, though with a £30 per fuel exit fee – all the other offers have £25 or £30 fees.
Next comes first:utility on £905 for its fix until December 2016, then GnERGY’s September 2016 deal at £909, followed by deals from extraenergy, Flow Energy, Green Star, and Sainbsury’s. Many customers will not take the plunge and switch to an unknown name. In 2008, two minnows did go bust, but regulator Ofgem ensures households are never without gas or electricity and can appoint a "last resort" supplier if necessary.
The bigger issue is likely to be customer service, and a check on consumer surveys of smaller company performance may be a wise precaution before committing to one of the smaller players
Smaller firms (those with under 250,000 customers) do not have to offer discounts to vulnerable customers or participate in green energy schemes - and that helps their competitive edge. Cold weather and winter fuel allowances are paid by the Government regardless of supplier.
CASE STUDY
Nev Stokes, an Edinburgh-based web developer, switched from npower to Good Energy when he moved into his new flat.
While npower has struggled in the consumer ratings, Good Energy has come top in the annual complaint-handling and customer satisfaction survey carried out by watchdog Which? in three of the past four years.
Stokes says he also began looking outside the big suppliers “because of their double-digit price and profit rises”. He has had no regrets at the switch, applauding the small supplier for responding promptly to e-mails and having “a personal touch”.
In the Which? survey published earlier this year, npower came bottom for the fourth year running with a rating of 35 per cent, followed by ScottishPower (41 per cent), EDF Energy (49 per cent), British Gas (49 per cent), E.ON (50 per cent) and SSE (50 per cent).
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