Tumbling energy tariffs make switching essential

Lower global energy prices are at last filtering through to hard-pressed British households.

energy switching

Some of the country’s biggest energy suppliers have cut the cost of their cheapest tariffs over the past six months as the price of wholesale energy has come down.

MoneySuperMarket research shows that of the ‘big six’ firms – British Gas, EDF Energy, E.ON, npower, Scottish Power and SSE – four have lowered the price of their best-buy energy tariffs.

Biggest drop

The biggest price drop is at npower. In May, the firm’s best-buy tariff was the Online Price Fix April 2016 with an average bill of £1,157.

The cheapest deal now is the Online Price Fix January 2016 at £968.

The term of the fix is slightly shorter, but the price has dropped by 16%, or £189. An npower customer who is currently signed up to the standard energy tariff at £1,205 a year could save a whopping £237 by switching to its cheapest deal.

Sub £1k tariffs

There has been a big reduction at Scottish Power, too. The Online Fixed Price July 2015 was the best deal in May at £1,076. It is now offering an Online tariff fixed until January 2016 with an average bill of £970, a saving of £106.

EDF Energy and E.ON have also cut prices, by about £10 a year on average.

Shock increases

But shame on British Gas and SSE. They have not only failed to lower the cost of their best deals, but have actually increased the prices. The cheapest tariff at British Gas has gone up by more than 10%, or £117.

Small is beautiful

The price cuts by four of the big six suppliers are certainly welcome, but they are still not quite enough to send them to the top of the best-buy tables.

Smaller companies have consistently offered the cheapest tariffs over the past six months, and they are still ahead of their larger rivals.

Extra benefits

The cheapest tariff is Extra Energy’s Fresh Fixed Price December 2015 v3 with an average annual bill of £958, a saving of £61 or 6% on the company’s best deal in May.

Or you could opt for the iSave Fixed March 2016 (v37) from First Utility at £960. First Utility’s best offer in May was a fix until August 2015 at £992.

However, the price falls do not affect the standard tariffs on offer from energy firms.

In other words, you can only take advantage of the cheaper deals if you are prepared to switch.

Savvy savers

“Smaller companies have consistently offered the cheapest tariffs over the past six months, and they are still ahead of their larger rivals...”

Stephen Murray, energy expert at MoneySuperMarket, says: “It is clear that energy providers are relying on the apathy of the majority of customers by only passing on the reduction in wholesale prices to those people who are savvy enough to be proactive and switch themselves.

“While it is good to see the cost of energy finally falling, providers should play fair and pass on the saving on standard tariffs as well in order to help hard-pressed households just as we head into the most costly period for energy usage.”

Straightforward switching

The switching process is pretty straightforward – and could net substantial savings.

If we look back six months, only one supplier was offering a tariff with an average annual bill of less than £1,000.

There are now five, with a further three firms coming in at just over £1,000. Some customers could therefore save about £300 a year on their energy bills by switching to a cheaper deal.  

Check your bill

Suppliers must now inform their customers if they offer a cheaper tariff and outline the potential savings. So, if you are on a standard tariff, but could save by switching to the firm’s online deal, the information will be on your bill.

Or, you can visit our energy channel to search for the best deal across all energy companies.

Watch out if you are switching from a fixed tariff as there is usually a penalty fee if you transfer before the end of the fixed term.

Your utility firm should, however, give you between 42 and 49 days’ notice of the end of a fixed-term contract – and there are no penalties for switching during the notice period. 

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

* 51% could save at least £199, MoneySuperMarket Data, September 2014

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