Leading energy deals - what are the catches?

Published:
18 September 2009
Topic:
News,Gas & Electricity

There's huge competition in the energy markets just now as providers try to undercut their rivals and offer the cheapest average bill. But just how good are the market-leading deals and are there any catches to watch out for?

So far, the end of summer has seen a flurry of activity in the energy markets. Many households fixed this time last year when energy prices were rocketing. Now a number are coming to an end.

EDF Energy's Price Freeze 2009 plan and Scottish Power's Fixed Price Energy Oct 2009 tariff will end on 30 September, while E.ON's Price Protection v16 and v17 finish on 1 October. And EDF's Price Protection 2009 comes to an end on 31 October.

If you are on one of these deals and do nothing, you may miss out on bigger savings elsewhere or alternatively you may even see your energy bills increase. It is therefore vital that you carry out a full comparison to find the right deal.

It's not just those with fixed rate deals who should be taking action. Millions of households have never switched energy deals and are paying their providers' standard prices. Yet you could save an average of £174 a year by moving to a better deal.

The most competitive deals are online tariffs and we've seen all the major providers trim their prices over the last few months. The market has been further shaken up by the arrival of two new suppliers, First Utility and Ovo Energy, which are offering cheaper deals than their larger competitors.

Of course, a number of things affect which provider will be the cheapest for you, such as your usage and where in the country you live. To find out the best deal for you, use our price comparison tool.

However, before you start, there are a number of clauses that aren't immediately obvious but which could catch you out if you're not careful. We've been through the leading deals with a fine-toothed comb and flagged up a few things that may surprise you.

First:Utility

Although it's been around for a while, this small independent energy supplier undercut the entire market recently with its new dual fuel iSave deal - average annual bill £964. This is a market-leading deal for many households and has caused quite a stir.

However, it is not as straightforward as it seems on the surface. That low annual price includes a dual fuel discount of 12.5%, which is deducted from the final bill.

So, your bills won't reflect this lower price rate until the end of the year and if you switch again part way through, you won't benefit.

Having said that, there's a £20 reward for submitting a meter reading every three months, which is an incentive that also helps keep your bills accurate.

Ovo Energy

Second in the league is Ovo Energy, with a fixed-rate tariff that comes a close second in the cheapest provider league. The average bill is £978.67, which isn't dependent on a discount.

Customers sign up for 12 months and there's a £30 early termination fee if they decide to switch before the end of the contract.

EDF Energy

Until the arrival of Ovo and First:Utility, EDF Energy was top of the charts for energy, with an average price of £982.49 with its Online v5 tariff.

Unfortunately, it was only top when it came to the charts. This market-leading tariff may have been the cheapest on average, but it wasn't the cheapest in any UK region - E.ON and British Gas held that position.

If you do decide this is the tariff for you then the discounted price will be fixed until the end of July next year.

E.ON

The Fix Online v3 is the cheapest deal this energy giant has to offer and has an average bill of £983.76.

In order to qualify for this tariff, though, you have to manage your account online and pay by monthly direct debit. You'll benefit from the fixed discount until December next year.

Should you decide to cancel, however, you'll pay a termination fee of £30.

British Gas

British Gas' cheapest tariff is its WebSaver 4 which has an average bill of £993.56 but, as the name suggests, you have to manage your account online and you also have to pay by direct debit to enjoy the full savings.

You're locked in until the end of February and will pay £30 for each fuel type - i.e. your gas and electricity - if you decide to cancel before then.

npower

This energy company's Web 16 tariff is really competitive for some households, especially those using more energy than the average home. The average bill on its Web 16 tariff comes to £1,018.54, but for some families it will be one of the leading low-cost options.

However, once again there are some things to look out for. For a start, there's a £100 direct debit discount, which comes off your energy bill only once you've made 12 consecutive direct debit payments.

There's no termination fee, which is good news, but if you do so in the first year you will lose out on the £100 discount.

ScottishPower

Coming fifth out of the big six and seventh overall is ScottishPower, with an average bill of £1,036.58 with its cheapest tariff Online Energy Saver 6.

If you're on this provider's standard tariff then switching could be a great plan, as the online option is guaranteed to remain at least 3% below the standard deal until the end of July next year.

However, once again you can only manage your account online and you must pay by monthly direct debit. If you decide to switch before the end of July, there's a £30 charge for moving your electricity and a £20 charge for gas.

Southern Electric

Last in the big league is Scottish & Southern, under the trading name Southern Electric. Its Standard Energy Online plan has an average bill of £1,114.99.

To secure this deal, though, you have to pay by direct debit and apply online.

There are no termination penalties with this product so you can switch again at any time without incurring a charge.

Leading deals at a glance

 Provider

 Tariff

 Average annual bill

 What to watch for

 First:Utility

 iSave

 £964

 Low rate includes discount - offered only at the end of the year

 Ovo Energy

 New Energy Plan

 £978.67

 12-month fix with £30 early termination fee

 EDF Energy

 Online v5

 £982.49

 Overall the cheapest average bill of the big six but not the cheapest in any region

 E.on

 Fix Online v3

 £983.76

 Account must be managed online and paid monthly by direct debit.

£30 early termination fee

 British Gas

 WebSaver 4

 £993.56

 Account must be managed online and paid monthly by direct debit

£60 early termination fee if you move both gas and electricity

 npower

 Web 16

 £1,018.54

 £100 discount only applied after 12 consecutive direct debit payments

 Scottish Power

Online Energy Saver 6 

 £1,036.58

 Account must be managed online and paid monthly by direct debit

£50 early termination fee if you move both gas and electricity

 Southern Electric

 Standard Energy Online

£1,114.99

 Account must be managed online and paid monthly by direct debit

 

Please note: Any rates or deals mentioned in this article were available at the time of writing.

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