Why Energy Users Should Compare Prices


Oct 8, 2015
Why Energy Users Should Compare Prices

Switching energy supplier has never been easier, whilst competition between the energy suppliers has never been greater. 

 
Historically, the energy market has been dominated by the “big six” suppliers, British Gas, SSE, EDF Energy, E.On, ScottishPower and npower and they maintain that commanding position. However, in recent years, their market domination has been whittled away by smaller, independent energy suppliers, with 11 per cent of British homes (representing over 3 million households) now using them as their preferred supplier. Recent analysis suggests that this trend is increasing and with a total of 31 suppliers to choose from the opportunity to shop around for the best energy deal has never been better. So why do the big six retain their dominance? 
 

Are People Switching? 

Despite these facts, however, the vast majority of consumers have never even considered changing supplier and many of them are paying the most expensive tariffs that their existing suppliers are offering. The Competition and Markets Authority (CMA) reported in July 2015 that the average British household presently outlays approximately £1,200 in energy bills every year. Energy bills now make up one tenth of the annual household expenditure of the poorest in society. The report also found that dual fuel energy users could save around £160 a year by switching to a cheaper deal and that around 70% of consumers are presently on the ‘default’ standard variable tariff (SVT) even though there are many cheaper, fixed-rate deals available. Despite all this, a survey of 7,000 people in Great Britain found that over 34% of the consumers who responded had never even thought about switching energy supplier! 

switch energy suppliers

Why Not? 

The view of the CMA is that consumers are sticking with their energy suppliers, without even considering whether a better deal may be available elsewhere, for a variety of reasons. These include a lack of knowledge about the different deals that can be accessed, complicated and unreliable bills and the real or imagined problems associated with switching. The reluctance of these customers to switch is felt to act as an encouragement to the main energy companies to maintain their higher prices.   

Addressing the Issue 

It is clear that steps need to be taken to help people to understand that considerable savings on their energy bills can be achieved if they shop around rather than simply relying on their big six supplier to provide them with the best deal available. The CMA recommends that positive action is taken to help consumers to engage in the market, without which competition will continue to be hindered. Consumers need to be made aware that there are an increasing number of small, independent energy suppliers who are often able to offer considerable savings on their annual energy bills.   

How to Compare Prices and Switch Energy Supplier 

There are many online comparison sites that provide the opportunity to compare the prices of various energy suppliers. They also offer the facility to change your energy supplier online. 

When using one of these sites care should always be taken to ensure that they compare a broad range of suppliers, including the smaller, independent companies, before deciding whether to switch energy supplier. The results of a comparison of the prices of energy suppliers may well demonstrate that significant savings could be achieved by changing to a different one, not least in the light of the emergence of the many new suppliers and the competitive deals that they have brought to the market to challenge the big six.  


Ashley Shepherd is an Over 50s Personal Finance Expert

ashley shepherd

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