Ofgem declares UK households can save on their energy bills by switching to the cheapest deals from the same supplier. According to the latest reports from the energy regulator, it was found that nearly 20 million homes pay a lot more than they need to on their energy bills. The basic reason for the overspending is that they are still stuck with the standard variable tariff of their supplier. Normally, the standard variable tariff is around £200 more expensive than the cheapest deals offered in the energy market.
When talking about the Standard Variable Tariff (SVT), there is something which each consumer should know. Please bear in mind that energy suppliers with whom you are registered would need to offer you a tariff even if you have not selected any. At this point, they would go with the SVT, which is the plan you would be on, if you have not made a switch. Again, you would be automatically shifted to the SVT when your fixed rate tariff expires and you do not choose to switch to another plan.
The worst part for the consumers is that SVTs are the most expensive plans that any supplier would offer. This means if you forget to switch to a better plan once your fixed rate deal expires then you are automatically put on a plan that has higher charges. Therefore, you need to be aware about switching to the right plan even if you stick to the same supplier. To prove this, Ofgem studied the data of the ‘Big Six’ Energy supplier Npower and discovered that the customers which are on SVTs of Npower are paying £261 more annually than the ones that have chosen its competitive deals.
This clearly suggests that by making a comfortable switch to another plan that offers the cheapest energy prices, you can save a big deal of money from the same supplier. To the regulators surprise, it was discovered that there are millions of people on SVTs of the leading energy companies. Utility Warehouse has 94% of its customers on SVT, SSE has 91% of its customers still on SVTs and British Gas has 74% of customers on SVTs.
The following table gives details about companies and their customers on SVTs:
| Supplier | No. customers on SVT | Proportion of customer base on SVT | Average annual cost of SVT | Difference between SVT and suppliers cheapest tariff | Difference between SVT and the average of the cheapest tariffs from the 10 cheapest suppliers |
|---|---|---|---|---|---|
| British Gas | 6,639,056 | 74% | £1,044 | £129 | £174 |
| Co-operative Energy | 96,158 | 42% | £1,121 | £245 | £252 |
| EDF Energy | 1,943,277 | 56% | £1,069 | £136 | £200 |
| E.On | 3,170,499 | 73% | £1,057 | £41 | £187 |
| Extra Energy | 36,641 | 14% | £1,130 | £154 | £260 |
| First Utility | 74,581 | 9% | £1,071 | £157 | £201 |
| Npower | 1,737,642 | 59% | £1,077 | £261 | £208 |
| Ovo | 225,952 | 35% | £1,064 | £67 | £194 |
| Scottish Power | 1,541,307 | 50% | £1,081 | £129 | £211 |
| SSE | 3,864,044 | 91% | £1,068 | £98 | £198 |
| Utility Warehouse | 503,955 | 94% | £1,012 | £150 | £143 |
Ofgem, the energy regulator clearly suggests that households do not need to make a switch to another supplier. They can actually save around £140 on average by choosing a better plan from their existing supplier. Moreover, if they have the patience and time to switch to another supplier then they can save up to £200.
Shay Ramani, founder of the energy comparison site FreePriceCompare.com, expressed his views on the latest finding by Ofgem by saying that “This is an important message that needs to be delivered to the UK energy consumers so that they can save on their energy bills. Customers need to become more prudent as it seems nearly 20 million of them are making the mistake of sticking to the standard variable tariff. If they really like their supplier and are happy with their service then they can stick with them and save by choosing their cheapest energy plans.”
As this is an important piece of information, it should reach all the households in the UK. If they do not know how to check their energy tariff then they can contact their supplier or simply check their energy bill. If it states SVT then they should ask the supplier about other deals or go on an energy comparison website like FreePriceCompare to see all the options. It takes just a couple of minutes and they will know the exact prices and savings on each tariff.
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