Thousands of EDF Energy customers face higher bills after the power giant overhauled some of its domestic products last week, despite Britain’s coldest winter for 30 years.
Some consumers could be almost £170 a year worse off unless they switch — £45 due to higher prices and £122 because they already pay more than new customers who take out EDF’s cheapest online tariff, Online Saver 5.
Eon and Scottish Power, in contrast, cut rates on some tariffs last week while First Utility launched a cheaper deal.
One EDF customer, writing on a consumer forum, said: “It’s interesting how [EDF] waited for the maximum use of gas to raise the price. The new tariff would increase our bill by 14% overall.”
About 165,000 dual-fuel direct debit customers on five of EDF’s online tariffs were moved to more expensive plans last Friday. Those on the Online Version 3 tariff already pay £122 more than on Online Saver 5. They will pay another £45 on the standard tariff, so are a total of £167 worse off.
EDF said: “We recently changed some online products to simplify our tariff structure. This will affect less than 3% of our customers. No customers are obliged to pay higher prices and could reduce their energy bills by switching. We have written to all the customers affected.”
This is an unusual move, given wholesale prices have been trending lower. It could signal tariffs will gradually start rising.
Ofgem, the energy watchdog, has told firms to cut prices this year and experts said they are finding clever ways to make up margins — just as the banks did.
Energy companies are becoming more like banks. They bring out new products that supersede the others and many customers remain blissfully unaware that there is a cheaper one out there.
We investigate four tricks of the trade.
HISTORIC TARIFFS
Energy firms regularly roll out cheaper tariffs to attract new custom — there were 13 launches or relaunches of energy deals in October, for example. However, in the same way as EDF, many also operate several so-called historic tariffs, which are no longer available to new customers.
For example, Npower has launched 14 versions of its online tariff since February 2006. Those on earlier tariffs are paying up to £1,136, compared with £907 on today’s version — Sign Online Version 17.
Energy prices have, in general, been falling but instead of cutting prices for all customers, firms launch lower tariffs only for new business. Firms generally fail to tell existing customers they could switch.
“The advice to consumers is not to rest on your laurels. You should check your online plan once a year and compare it with other offers to ensure you are getting the cheapest deal with that provider.”
EXIT FEES
Since 2008 energy firms have charged exit penalties for consumers who ditch their fixed-rate deals early. British Gas, for example, levies a £70 fee if you leave its dual-fuel fix before January 30, 2012. However, experts said the practice is rapidly spreading to other products.
For example, Npower’s Sign Online Version 17 is the cheapest online variable deal and includes a guarantee to be two percentage points cheaper than the firm’s standard variable prices until March 31, 2011. If you choose to leave before this date — or even to move between Npower tariffs — you will incur a £40 exit fee.
Scottish Power has a penalty of £50 on its guaranteed deals, while British Gas charges £60 for early exits from its variable Websaver 5.
“This is a relatively new phenomenon. They are, in part, a compensation for the price promise but only British Gas offers any meaningful guarantee of staying lower than standard rates.”
He would still recommend the Npower deal, even with the penalty, because it is the cheapest on the market — but be aware you will have to stick with the deal.
AUTOMATIC UPGRADES
Many suppliers upgrade customers on capped tariffs to a new capped deal automatically, which can be more expensive than a standard plan. For example, Scottish Power came under fire last September for moving customers on its then market-leading fixed-price deal, costing an average £1,037, to its more expensive capped deal at £1,156 unless consumers actively switched.
“Many providers don’t tell comparison sites about these new capped tariffs — they will simply write to the consumer to tell them it is the best deal for them. This makes it difficult for people to shop around. You should always be able to find your existing tariff on a price comparison site. If you can’t then you should move somewhere else."
MARGINS
In December Ofgem told suppliers to cut their bills as it emerged that profit margins were at their highest for five years. Dualfuel bills fell by only 6% in 2009 to £1,235 — despite a 50% drop in wholesale gas and electricity prices. Alistair Buchanan, Ofgem chief executive, said: “Consumers are not yet losers on the wholesale gap but will be by spring if things don’t change.”
Prospects for price cuts were slim, so grab a good deal while you can.
Our online comparison site - GET ME CHEAP BILLS.COM lists all of the above tariffs and all other tariffs available in England, Scotland and Wales.
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