Switch Energy Provider: How to Switch Your Gas and Electric Energy Providers
Compared to many other developed nations, the UK has a fairly competitive energy market. Yet, while we’re lucky to have ‘energy choice‘, fewer people take advantage of it than one would expect.
Why? Firstly, with the introduction of the energy price cap, many stuck on default tariffs already expect to see their bills reduced. Secondly, it takes an awful lot of work to shop around and switch.
So, is switching still worth it? Per Citizens Advice, even those who expect fairer deals with the price cap would always ‘be better off if they shop around’.
In this post, we will talk about switching electric and gas energy providers: why we do it, how to do it, the pros, and the cons.
Why do people switch energy providers?
Consider Canada. There, crown corporations own most generation, transmission, and distribution facilities. Unlike them, and many other countries where energy monopolies control the market, the UK is lucky to have energy choice.
But it wasn’t always so. ‘Energy choice’ is a rather young concept in our nation. Deregulation only started thirty years ago, with the Electricity Act of 1989. Before the Act, the nation’s generation, transmission and distribution companies were all publicly owned. With the Act, they slowly split into smaller firms and became privatised.
The Electricity Act also founded the current regulator, Office of Gas and Electricity Markets (Ofgem). Ofgem’s mandate was to protect the rights of energy consumers by promoting competition between suppliers. After its creation, Ofgem set price controls to ease new companies’ entrance into the market.
In the first decade post-deregulation, the UK’s energy market was dominated by the ‘Big Six’ energy suppliers:
- British Gas
- EDF Energy
- Scottish Power
As of 1997, many fledgeling private companies began to bite into the energy pie. The ‘Big Six’ were no longer on their own.
Then, the Competition Act of 2000 abolished Ofgem’s price controls, and market activities were allowed to go on unchecked. Since then, newcomer energy suppliers sprung up like mushrooms, numbering 70 in mid-2018.
As of 2020, a few of these went bust, thanks to the price cap and the ballooning wholesale prices. That said, the UK now has 60 private companies offering gas and electricity.
And while the vast majority of British consumers get their electricity and gas from one of the ‘Big Six’, supplier-switching has gained steam over the past 5 years. Even with fairer deals for those on default tariffs, shopping around can lead to savings of £200 per year.
So that’s the background. Now, let’s learn how comparisons and switches work, starting with:
How are energy tariffs calculated in the UK?
There’s a range of tariffs out there, so before you try comparing and changing providers, you should know which ones will work best for you. But before we dive into the different types, here is how tariffs work.
Every tariff consists of 2 parts:
- the standing charge, and
- the unit rate.
The standing charge is a daily fee that your provider collects, no matter how much energy you consume. It typically makes up a fifth of your bill, but the more you use, the smaller its portion compared to the total.
The unit rate is what the provider bills you for every kilowatt-hour of energy you use.
Both the standing charge and the unit rate vary between providers and tariff types.
Speaking of which – do you know what your tariff type is?
Below is a quick summary of the common tariffs in the UK.
This is the default tariff. If you’ve not had the chance to choose yours, this is what you’ll be paying. Its rates rollercoaster along with market fluctuations, hence its other name, the ‘variable rate tariff’.
Standard variable tariffs are typically the more expensive option a supplier has to offer. That said, these tariffs have no exit fees or contract end dates, so you’re free to leave anytime you like.
Fixed energy tariffs
Unlike their variable rate peers, fixed tariffs guarantee the standing charge and unit rate until a defined end date. In return for the peace of mind, many of these tariffs come with exit fees. (Not all do, however, so do your research well before you commit). What’s more, the current OFGEM rules allow consumers to leave without exit fees, as long as the cancellation happens 42-49 days before the contract’s end.
Fixed tariffs are typically much cheaper than a provider’s default tariffs. Just bear in mind that while they offer a degree of stability, you lose your opportunity to save if the market prices dip.
Online energy tariffs
A practical solution for the digital, pandemic age, online energy tariffs let you manage your account over the internet. You will upload your meter readings online, and all your bills will be paperless. These tariffs typically cost way less than their paper-billed counterparts. So if you need not keep a paper trail of your energy use and spending, and want a simple way to save some money, online tariffs may be a good fit for you. Your exit fees will depend on the supplier and the contract.
Dual fuel tariffs
Their name says it all. Dual fuel tariffs include both gas and electricity from the same supplier. Most standard, fixed and online tariffs offer dual fuel options, and choosing one often opens the door to better rates.
Their other benefit is that there’s one supplier and one bill to worry about, not two. That said, using separate suppliers for gas and electricity may still offer you a cost advantage.
Exit fees range by the supplier, so do your homework before you sign a contract.
With prepayment tariffs, you can pay ahead of time for energy by topping up your prepayment meter with tokens, cards, or a key. This option appeals to customers who find it easier to manage their spending this way, much like a prepaid phone plan. Sadly, prepayment is the most expensive way to pay for energy, and the tariff options are somewhat limited.
You may also find it impossible to switch if you have over £500 of debt on your meter, and the limit can be lower with some suppliers. If you want to change your payment method, your supplier may charge you for a new meter and insist you pay off your debt before the switch.
Green energy tariffs
Much of the UK’s energy comes from fossil fuels; yet, a handful of companies are embracing renewable generation methods. When a tariff is referred to as ‘Green’, it may mean that the provider will match your usage with renewable generation. Or, It may entail the company’s support for environmental schemes with part of what you pay.
Curiously, green tariffs do not always command a premium, so you can still find a good deal while slashing your carbon footprint. Exit fees may or may not be written into your contract, so look out for those when you compare.
Differential, or Time of Use tariffs, are meant to offset the daytime energy demand by offering cheaper night-time rates. This way, the tariff incentivises consumers to use less in peak hours, in return for lower prices in off-peak times. Economy 7 and Economy 10 are examples of this scheme – these plans offer 7 and 10 hours, respectively, of discounted electricity rates in off-peak hours. The off-peak savings can be as substantial as half the standard unit rates, but the peak-time rates can cost more; the standing charges for these tariffs are typically on the higher end.
Whether differential tariffs are right for you depends on your daily routine and energy use patterns. Sadly, not all suppliers offer these tariffs.
Social energy tariffs
Social energy tariffs gave a discount to customers in fuel poverty, a condition where the energy bills make up 10% or more of the household income. After their phase-out nine years ago, Social energy tariffs got replaced with the Warm Home Discount. The scheme lets qualifying persons get a onetime, £140 rebate on their energy bill.
Feed-in tariffs put money back into your pocket if you generate your own electricity via renewable means, such as Photovoltaic panels.
How to compare utility prices?
Now that you know the different shapes and sizes energy tariffs can assume, it’s time to figure out how to compare and change them.
Here are your options:
- You can browse the energy suppliers’ sites and request quotes on your own.
- You can use one, or several of the price comparison websites that permeate the web; or
- You can subscribe to an auto-switching service.
Let’s be direct – unless you’ve got excess time on your hands, manual comparison is not practical. By the time an energy provider quotes you, another will have a better tariff you don’t know about. Besides, how would you go about scanning 60 providers, and the many tariffs they all offer, without automation? It’s not possible. The best you can do on your own is to ring up the ‘Big Six’ and get quotes from them. Big savings there.
The good news is that other people have built machines to do the scanning and comparing for you. Enter price comparison websites.
How do price comparison websites work?
These websites have access to 1,000s of tariffs, from dozens of providers. These are updated automatically in their system, so when you perform a search, you can see the best available deals of the day.
What’s more, comparison sites let you estimate your savings if you were to switch to a specific tariff. All you need to do is enter your postcode – rates may vary depending on where you live – your current provider, your annual or monthly usage, and bingo – you have a dozen or more other tariffs to explore.
If you fancy any of the rates the site just dug up for you, you can often apply for a switch right away. Most comparison sites will facilitate a switch for you, but there may be nuances that you’ll have to handle on your own, like final bills, exit fees, etc.
Having switched, you can check back with the same site after some time to see if a better tariff has popped up.
Here are some Ofgem-accredited energy price comparison sites for you to check out.
- Energy Helpline
- The Energy Shop
- Money Supermarket
- My Utility Genius
- Simply Switch
- Switch Gas and Electric
- Unravel It
But there are a few things you should know about price comparison websites.
While price comparison sites are an excellent tool that partly automates the swapping business, they miss a few handy features. For one, they won’t ‘keep an eye’ on tariffs for you. So, if a better rate emerges, you will probably miss it.
Also, the way their business is structured prevents comparison sites from offering you the best available tariffs. That’s because they work on commission. For every new customer they bring to a provider, comparison websites get a piece of the action. Which means that:
- They are incentivised to show you specific tariffs
- They omit providers who refuse commission fees, thus narrowing their pool of rates
If you want a less biased way to compare gas and electricity prices and do your own switching, consider using Citizens Advice Energy Comparison.
But if you’re looking for a full-service option, you may wonder:
How to switch energy providers?
Auto-switchers come with some of the features that comparison sites lack, and claim to offer better savings.
As their name suggests, these services switch you automatically. The entire process, from comparing rates to the cancellation and change, is in their hands. All you have to do is share your preferences with the auto-switcher. Most let you choose between regular or green-only tariffs, exclude specific suppliers, and specify the minimum savings before a switch is made.
Once you’ve told them what you want, your auto-switching service will assess your current energy usage and contract, and check the market for a better tariff. After the first switch, the service continues to scan for upcoming and available energy tariffs and switching you when a better one pops up on their radar.
One thing to keep in mind with auto-switchers is that they execute the swap, then tell you about it later. They pounce on new deals quickly to lock you in before the tariff disappears. When they start the switch, you’ll get an email with the tariff and company details, and the new supplier will still be picked with your preferences in mind.
That said, if you don’t like the new tariff, expect some back-and-forth with the auto-switcher to get it cancelled. Luckily, all auto-switching sites give you a 14-day cooling-off period, during which you can rescind any deal they’ve made on your behalf.
You may wonder now, how do these auto-switchers make their money? There are two distinct approaches. One is free for the customer, the other works like a paid subscription service. Let’s start with the former.
Switch Energy Provider: FREE Auto-switchers
Free auto-switchers have a similar business structure to price comparison sites. They charge the supplier a fee for every customer they bring. The customer, in turn, enjoys free auto-switching.
What are some popular free auto-switchers?
Around since 2017, Look After My Bills offers a fully automated provider flipping service. They look for tariffs monthly and switch you if you’re bound to save £50 per year or more. If you have a prepayment meter, they’ll search for tariffs yearly, and switch you if they can save you £15 or more. You never pay them a penny. As they admit on their website, though, you’ll only get switched to providers who pay them a commission.
Look After My Bills works with standard, prepayment, and Economy 7 electricity meters, and has over 200,000 subscribers.
The crucial difference is that paid auto-switchers charge the customer, rather than the energy supplier. And while the fee may seem off-putting, given the plethora of free switching sites, this business structure expands the supplier pool. Without commission fees to pay, more companies list their tariffs on these sites, giving you access to more savings.
What are some popular paid auto-switchers?
Editor’s update 2022: Unfortunately, Flipper are now defunct.
A pioneering auto-switcher, Flipper charges £30 per year to use their service. That said, you only pay this fee once Flippers finds you savings of £50 or more. So even without a free plan, Flipper vows to save you no less than 20 quid. The average savings, according to their site, are £395 per year, while some Trustpilot reviewers claimed economies of £700.
Flipper also boasts an intelligent, tariff-searching algorithm named Joules, which (who) accounts for your current usage patterns to find you the optimal tariff.
Unlike Flipper, Switchd is a hybrid auto-switcher. They offer a free plan that only swaps you to commission-paying providers. Then, they have an array of paid plans, all of which give you access to the full database of tariffs, but offer different levels of customer support. The paid plans range from £1.99 p.m. to £4.99 p.m.
Like Flipper, Switchd will not start charging you the subscription fee until they save you £50 or more.
What to keep in mind when switching providers?
Are you thinking about switching your energy supplier? Here is what you should remember, regardless of how you switch.
- The switching process can take up to 21 days, although you may not get your last bill from the old provider for 6-8 weeks.
- You have a cooling-off period of 14 days after your switch occurs. If you used an auto-switching site, spend some time to research the provider and tariff on your own.
- You may have to handle the cancellation process with your old supplier, especially when there’s debt on your account.
- If switching on your own, check if the supplier you selected has signed up to the Energy Switch Guarantee.
- If you’re using an auto-switching service, you can specify which suppliers to exclude from their search.
- Take advantage of these free energy switching resources from Ofgem and Citizens Advice:
Even with the new price cap, regularly changing your energy supplier can save you money. In this post, we’ve talked about several means of switching, so let’s review these and see which work best for you before we wrap this up.
If you want complete control over comparisons and switching, you can try to do it yourself. You may come across better deals here and there, but you will not have access to the thousands of available tariffs.
To get a more efficient search of your supplier options, you can turn to price comparison websites. Not only will they display the best alternatives to your current rates, but also facilitate the switch. Just keep in mind that you’ll have to check back regularly if you don’t want to miss newer, better tariffs. Keep in mind, too, that these sites only list suppliers who agree to pay them a commission.
For simple, get-it-and-forget-it switching, consider an automated service. These take the weight off your shoulders and perform swaps for you, then keep on finding better deals.
Free auto-switchers work on commission, just like their price comparison site cousins, so beware of missed opportunities with suppliers who don’t pay them. Paid auto-switchers, on the other hand, leave you with the bill for their service, but offer a more extensive range of rates and suppliers.
Is there anything we missed? If you have something you’d like to add or share your own experience with switching energy providers, kindly leave a comment for our readers and us!