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Switch on to savings
If
you’ve moved into a new property, how do you decide which
company should provide you with your gas and electricity? Jane
Attwood explains how to choose your ideal provider and
how to switch to them
You
once bought your gas from British Gas and your electricity from
the electricity board in your region, and you had no choice in the
matter. However, this changed in 1998 and 1999 and providers were
allowed to operate all over the country, with new companies entering
the market. This gave consumers a choice of supplier and the ability
to shop around for the best deal.
Since then, about 50 per cent of consumers have done just that,
according to Energywatch, the gas and electricity watchdog. If you’re
among the remaining 50 per cent, you are potentially missing out
on considerable savings on your energy bills. So what are you waiting
for?
What’s your best fit?
To choose your ideal supplier, the cheapest is a good
start in the selection process. However, there are other criteria
to take into account to find the best deal to suit you personally.
After an initial flurry of new entrants into the energy market,
it has seen considerable consolidation. Only six big companies plus
a few smaller ones remain. This doesn’t mean that your choice
as a consumer has been restricted.
“As the number of suppliers has contracted, what each supplier
has done is increase the range of products on offer,” explains
Jo Malinowski, founder of The Energy Shop, an internet price comparison
service.
Some offer incentives and others concentrate on their customer service
record. So, to narrow your search, first think about whether you’d
prefer to pay by cheque (to know it’s always the correct amount
for your exact usage) or by direct debit (to spread your payment
and avoid having to remember to buy stamps and post your bill).
Or perhaps online is your payment method of choice.
There are other questions you should ask yourself. Would you prefer
to avoid paying a standing charge, or are you averse to paying a
two-tier pricing system, where you pay one price per unit for a
certain number of kilowatts you use and another thereafter? Is renewable
or green energy a priority for you? Or perhaps discounts or special
offers such as airmiles or incentive card points tempt you.
Georgina Walsh, spokesperson for Energywatch, explains: “All
these things need to come into play for a comprehensive assessment.”
Where to look
If you want to find out what price suppliers charge, you
can check with individual companies. The regulator for the UK’s
gas and electricity industries, the Office of Gas and Electricity
Markets (Ofgem), has a list of all suppliers on its website www.ofgem.gov.uk.
This is potentially a little more complicated and time-consuming
than it need be when Energywatch can carry out this price comparison
for you. Either ring 08459 06 07 08 or visit its website www.energy
watch.org.uk; simply provide your postcode and state whether you
are a low, medium or high user, and it will produce a chart showing
what the supply companies in your area are charging.
If you want to identify which suppliers match your other criteria,
an abundance of service providers can help you both over the telephone
and on the internet. There are nine Energywatch-accredited websites,
which include uswitch.com, energylinx.co.uk and the aforementioned
site theenergyshop.com. (See Contacts for full list.) These sites
work on a commission basis, but they’re forbidden from touting
for business for particular suppliers and follow a code of conduct
laid down and upheld by Energywatch.
These sites all use the same price data supplied by Energywatch,
but each works in its own way with regard to further options. At
The Energy Shop, for instance, Malinowski explains: “We include
just about all payment options first, then break down by category
such as green tariffs or financial offers attached to deals, such
as rewards and internet deals.”
Energylinx claims to be the only site of the nine to include every
single supplier. Ken Geddes, sales and marketing director at the
company, gives food for thought on this aspect of the comparison
service. “Technically, all databases are independent, but
if sites miss out certain information, it doesn’t give the
full picture. The result is only as valid as the information put
in.”
If you’re interested in buying green energy, several general
suppliers offer a green tariff, such as Scottish Power’s Green
Energy H2O, Powergen’s GreenPlan and Scottish & Southern
Energy’s RSPB Energy (linked with the Royal Society for the
Protection of Birds).
A further option is to approach specialist suppliers direct, such
as Green Energy, Ecotricity and Good Energy. Green Energy offers
a tariff where they replenish the National Grid with 10 per cent
of the electricity you use with the equivalent electricity from
a renewable source and one at 100 per cent. Good Energy and Eco-tricity
offer only a 100 per cent tariff.
There is debate in the industry as to what is true ‘green’
energy. A spokesperson for Ecotricity makes some suggestions: “We
would advise people to ask any green supplier how much they’re
investing in building new green sources of energy and when their
current energy source was built. We’re independent and invest
all our profits into building new green sources of energy.”
As regards price, green energy tends to be more expensive, but some
tariffs or suppliers match the standard price of regional suppliers
in each area.
Suppliers often come looking for you, too. In fact, Hunt reveals
that most business is done through cold-calling door-to-door and
on the telephone. He is quick to warn that these salespeople represent
only one company, so it is advisable to use them as an information
source only.
Walsh agrees: “You don’t always take in everything on
the phone and you have no chance to look at the details and think
about it. It is better for you to see what you’re committing
to in front of you in written form.”
How to switch
First, you need to calculate how much you are currently
paying for your fuel each year from your last four bills.
If you’re a current or recent homebuyer, you might not have
this information. Walsh offers advice in this situation. “The
thing to do is ask the vendor who their supplier is and request
a rough estimate of how much they pay. But remember, they might
have been a different type of user, so you won’t get a direct
comparison.”
If you were unable to get even this information, call the Transco
Meter Number Helpline on 0870 608 1524 and they will be able to
tell you who your supplier is.
Alternatively, some price comparison sites such as Uswitch and Energylinx
devise a profile of you if you have no historic information. They
ask a range of questions from how old your property is to how often
you use the washing machine and work out your average consumption.
Once you have selected your ideal supplier, use the cooling-off
period – usually about 14 days – to read the contract
they send you and think it over. Give your current supplier 28 days’
notice (right after a bill is a good closure time), and then sign
the contract with your new supplier. Transfers normally take about
six weeks. Make sure you take a meter reading on switch day (your
new supplier will advise when this is), pay your outstanding bill
with your old supplier and cancel any direct debits.
If you’ve used a switching site, it will give your details
to your selected supplier, which will then give notice to your current
supplier on your behalf. The sites will usually monitor the transfer
to keep things going smoothly.
The benefits
The major benefit of switching is that you can save money
on your bills – an average of £60 on a single fuel and
up to £120 if you switch both gas and electricity, known as
dual fuel. As a general rule you will save more if you switch both,
if you pay by direct debit and, more recently, if you pay online.
Nor does it have to be a one-off saving. “Once you have switched
away from your original monopoly provider, don’t put up a
psychological barrier and think you can’t switch again. Treat
it like other financial services such as credit cards and insurance,
and switch whenever necessary to get the best deal,” urges
Hunt.
If your supplier announces that a price-rise is in the offing, and
you decide to switch, by law they have to keep you on the old price
for the duration of the transfer.
The other major benefit if you opt for green energy is that you
will help to cut the UK’s carbon dioxide emissions and reduce
your consumption of the world’s fossil fuels.
The pitfalls
“There are no particular pitfalls, but things can
go wrong. One in three (or about 53,000) transfers a week requires
hands-on intervention by suppliers or by us,” explains Walsh.
One risk, however, is that you could be ‘erroneously or inadvertently
transferred’. This is when an unscrupulous representative
from a doorstep-selling agency switches you without your knowledge
by forging your signature, by saying you are signing purely to confirm
the visit or by misrepresenting what you could save. However, after
a meeting with Energywatch last December, all suppliers now take
responsibility for this and a code of practice is in place where
agents are banned if they break it. Remember – simply ask
them to post you the details!
Ofgem has fined four of the
big suppliers for ‘unfairly blocking’ customers
from switching. In these cases, the supplier treated direct debit
customers as though they were in debt when they weren’t. One
way to avoid this is always to take your own meter reading on receipt
of every bill and ask your supplier to adjust the amount of your
direct debit payment accordingly.
A clearer future
More companies are looking to increase their investment
in the generation of renewable energy. This is good news for the
planet and for you, because at some stage the price of renewable
energy will come down below that for non-renewable energy.
Greater transparency is also on the cards. In 2002 the EC came to
Ofgem and said suppliers had to provide ‘energy labels’
by 5 August 2004. The label provides information about the power
sources. For instance, 60 per cent might come from a gas-fired station,
25 per cent from a nuclear station and 15 per cent from a hydroelectric
station.
The British Standards Institute is campaigning for a standardised
bill format, which every supplier would use. The first prototype
is hoped to be complete by the end of the year. This combined with
energy labels should help to make your switching process easier.
Walsh provides some final advice: “Don’t think you have
to take a passive role. Believe that you can organise things to
your benefit. Go in with your eyes wide open, armed with all the
weapons you need – and, as the saying goes, ‘sign in
haste, repent at leisure!’”
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