The whole point of the European Union’s policy to deregulate the retail energy supply market in 1996 was to bring to consumers the freedom to choose one energy supplier over another. The hope was that competition would help raise quality of service and help keep prices down. A free market only works as planned, though, when the consumer is well-informed. Britain has the most open and free energy competition in Europe. Yet, a large part of the consumer base never uses the freedom it has to switch suppliers and find the cheapest electricity. The reason is that they are stalled by a number of myths about how the system works.
Being stuck in the old times
Back in the 90s, if you needed electricity, you turned to the local supplier for your region. If you didn’t like the supplier who supplied your part of the country, you could sit in the dark. With the market thrown open, though, the country has more than a dozen different suppliers of electricity. Many people still haven’t heard, though. They still can’t tear themselves away from the idea that they are tied to their regional supplier.
Others do know that consumers now have the option to switch energy suppliers. They believe, though, that the rules require that consumers who buy both gas and electricity from one supplier need to find another supplier who deals in both kinds of energy before they switch.
Often, it is cheaper to sign up to a dual fuel contract with one supplier if one is available. This isn’t necessarily true, though. Consumers are free to buy their supplies anywhere they want. It’s a good idea to shop around.
Believing that switching energy suppliers is a terrible hassle
There are a number of reasons why consumers tend to believe that switching suppliers is more trouble than it’s worth. While a couple of them are reasonable reasons, others are complete mythology.
The main way in which switching suppliers turns out to be a hassle is that you need to do a bit of work to find a cheaper supplier and work through all the options and plans available. Since suppliers tend to have extremely complex tariff systems, understanding your options and deciding on a plan can certainly involve some work. Using a free service like USwitch or the Which Switch energy supplier calculator, though, most of the hard work is taken care of for you.
The mythology that surrounds how bothersome switching energy suppliers can be is considerable. A sizable part of the population believes in one or more of the following.
- When you contract with a new supplier, they have to dig up your garden and your driveway to install new wiring.
- You need to pay the new power supplier for a new meter.
- As you switch from one supplier to another, you are forced to live without power for a few hours.
- You have to pay your current power supplier what you owe before you are allowed to switch.
None of this is true. When you change electricity suppliers, nothing changes but the name of the supplier on your bill (and the amount you are charged). The infrastructure – the wiring leading up to your house and the meter – remains the same. Nothing gets dug up, you don’t have to buy anything new and you certainly don’t need to do without power as they do the switch. If you are switching your gas supply as well, you still don’t need accept any hassle. Gas supply switching works as seamlessly, too.
The last point isn’t completely made up. If you owe your current supplier more than £500 in past electricity bills, you need to settle that before you are allowed to move on. If you owe anything less than £500, though, you are allowed to switch suppliers and settle your old dues later on. If you buy both your gas and your electricity from the same supplier, you are allowed to keep outstanding bills of up to £500 on each fuel.
Thinking that the price of your electricity is all that determines the size of your bill
It would be logical if your price per unit and the amount of power you consumed were the only major factors that determined the size of your bill. Unfortunately, the way you pay can have a major effect, too. If you set up a direct debit system where money automatically goes out of your bank account to pay for your power consumption, you get a cheaper price. If you pay the regular way after you receive your bill, things become much more expensive – by about £90 a year.
Thinking that you can’t switch suppliers if you rent your home
Mostly, renting doesn’t affect your freedom to find the cheapest gas and electricity with a different supplier. Most tenancy agreements will only state that you need to inform the landlord. You don’t need to seek permission.
Sam Jones the author is often approached by people looking for the cheapest gas and electricity. He recommends prices comparison website uSwitch as being a great resource to compare prices and switch provider.