As we all know, over the past few years energy prices have been soaring and despite some recent small cuts to the standard tariffs, this trend looks set to continue. As prices rise faster than inflation, the percentage of net income which is taken up by fuel bills grows and we can no longer afford to stay with the same supplier for convenience. We need to be sure we are getting the best deal and that means switching supplier regularly.
Fortunately, switching has become a fairly straightforward process. It can be completed online or over the phone in around 4 – 6 weeks, usually without the need to contact your existing supplier meaning you can avoid that painful conversation where the customer service rep tries desperately to convince you to change your mind as though you are taking money right out of his pocket instead of the balance sheet of a faceless multinational with a turnover measured in billions. There are just a few steps you need to take to make sure the process goes smoothly.
Consider Discussing the Best Deals Available With Your Current Supplier
Above I mention avoiding getting into a conversation with your current supplier about switching but actually, if you are generally happy with them other than the size of your bill it can be worth talking to them. You might be surprised about what they can offer you if the alternative is that they lose a customer. Whatever you are offered though, do not agree to anything there and then on the telephone. Don’t be taken by the old “this deal is only available today” line, they are not going to turn away your business for the sake of a few days and this is just a tactic to trick you into entering into a contract without having the chance to have a proper look at all the options.
Instead, take the details of the deal they are offering and do a comparison check with other providers to see if you can do any better.
Fixed Rate/Capped Rate Contracts
Many contracts can be broken without penalty but if you are on a fixed rate or capped rate contract you may have to pay penalty charges when you switch. A fixed rate contract is where you pay the same rate throughout the term and a capped is where you pay no more than the starting rate throughout the term but can potentially benefit from a cheaper rate if the supplier decides to reduce its tariffs (say because of a fall in crude oil prices).
If you are going to incur penalty charges then you will need to take these into account when deciding whether it is worth switching. You should therefore find out what you will be charged if you are on a fixed or capped rate deal.
Be Aware that You Will Need to Settle Any Arrears
Unless you receive a quarterly bill which you settle in full in the traditional way and you switch at the end of the quarter, you will mostly likely be in arrears or in credit at any given time. You will often pay a fixed monthly amount which the supplier calculates based on your previous years’ fuel usage. Roughly speaking they will take the previous years’ total actual usage and divide by 12. In reality however you will not use fuel at an even rate through the year. You will use more in winter and less in summer, so if you switch at the end of winter for example you may well be in arrears.
Obviously the company you are leaving will want to be paid the final bill. In fact if you pay by direct debit, you may find that the outstanding amount will be deducted automatically from your account so make sure you know how much it is and that you have budgeted for it. You are less likely to be in arrears at the end of summer when you have been through a period of low energy usage.
Preparing to Choose a New Supplier – Find Out Your Existing Tariff and Usage
Not every customer of a given energy supplier will pay the same rate for their fuel. This is because each supplier offers a range of different tariffs. As you need to be able to compare what you currently pay with the other available tariffs to secure the best deal, you will therefore need to find out what your current tariff is called. This should be on your latest bill; alternatively you can speak to your supplier.
Users are split into three categories of usage, low, medium and high. Each supplier can tell you what their boundaries are but you should find out your annual usage either from your past bills or from your supplier as different tariffs will apply depending on your level of consumption.
Find a Price Comparison Website and Choose a Deal
Once you have all the information to hand, find a price comparison website. You could visit each supplier individually but a comparison website will often be more convenient as they will collate lots of different tariffs from different suppliers in one place. Find a tariff you like the look of and work out what your annual saving will be. Remember to deduct any penalty charges you will have to pay to break your current contract. Remember also that if you are choosing a new tariff which is fixed or capped you’ll be tied in for a period.
Once you have found a deal you like it always worth contacting the supplier directly to see if they can offer you it any cheaper than the comparison site.
Completing the Switch
Once you have chosen a tariff your new supplier should do most of the legwork. It will usually take around 6 weeks to switch. You will need to sign a contract with your new supplier and on switch over will need to take meter readings and settle the final bill. If you are in credit you’ll need to make sure your old supplier provides you with a refund. Make sure you cancel any existing direct debits with your old supplier and new any new direct debit is properly set up.