Why you should consider swapping energy supplier

Is it worth shopping around for a cheaper energy supplier?

Swapping between different energy suppliers isn’t a new concept – USwitch, one of this countries leading comparison sites has been helping consumers swap for over 15 years now.

It has been hard to avoid the Government’s current marketing push on these comparison sites though – the £5m advertising campaign has hit radio, TV and print since the middle of Feb, all encouraging consumers to swap – but why the big push?

Well it turns out that 60% of households here in the UK haven’t bothered swapping energy supplier (so either gas / electricity or both) in the last 3 years.

For the Big Six energy companies this must be music to their ears – they supply gas and electricity to 85% of homes in the UK, so people not swapping ensures they have stable cash flows running through their business. It is estimated that 40% of British Gas customers have been with the company for over 10 years and they are one of the most expensive suppliers!

The Government were so worried about the state of this and the Big Six’s monopoly on supplying gas and electricity in the UK market, they have enlisted the help of the Competition and Marketing Authority (CMA) to investigate.

Obviously the savings from shopping around for cheaper energy suppliers vary from household to household but for those on dual-fuel standard variable tariffs the savings could be as much as £200 per year – although we have seen far higher when we have done this with customers in their homes!

So why then are people resistant to swapping energy supplier? Well there are a few common lines of argument – but hopefully upon reading this you will see there is no excuse!

I have never heard of the company that provides the cheapest gas and electricity in my area – I don’t trust them!

This is the dream argument for the Big Six, they have millions of customers and this trust thing is very important – it allows them to get away with charging more for supplying energy and gas.

The truth is, any energy company operating in the UK is governed by the legislation set out in the Electricity act of 1989. This legislation is designed to to protect the interests of consumers in relation to electricity conveyed by distribution systems, wherever appropriate by promoting effective competition between persons engaged in, or in commercial activities connected with, the generation, transmission, distribution or supply of electricity.

In addition the energy industry is overseen by OFGEM the regulatory body to ensure that consumers don’t get a rough deal, and penalise any company that does wrongdoing. In fact, the smaller companies tend to have a better customer service and consumer satisfaction record, so you may be better served with a smaller provider.

So while you might not have heard of them – they are all highly regulated, so have no fear!

I am worried a smaller energy company might not have the capability to supply me with gas / electricity 24/7

There is a common misconception that the energy you buy is supplied directly to your house by the supplier you pay to provide it.

Electricity is generated in power plants – whichever power plant is closest to your home is the one that is more than likely going to be providing the electricity to your home.

Likewise with gas, if there is a gas terminal 2 miles from your house and one 100 miles from your house, chances are the gas you burn in your home comes from the closest one.

While these power plants / terminals might be owned by a particular energy company, all the electricity produced and the gas supplied gets fed into the National Grid which in turn sends it to where there is demand – but obviously the Grid favours supplying locations close to where it is produced, both to minimise transmission losses and reduce transport costs.

If there ever was an issue with a power plant or gas terminal, this would impact all people in the local area – it is completely irrelevant who they buy their gas and electricity from.

I am worried about the quality of the electricity / gas supplied by a smaller company!

To be brutally honest, you shouldn’t be. Every kilowatt of energy, be it gas or electricity that you use in your home comes from the nearest power plant. Therefore the quality of electricity and gas will be exactly the same no matter who you are with. So all you are changing is the customer service. Even if you are on a plan, which suggests renewable energy is being used, it isn’t. It just means that the supplier who you are getting the electricity from has purchased a certain amount of electricity from renewable sources, that will, unless you live close by, be used to power homes in close proximity of the wind farm or solar PV farm. This means that there is no reason not to pick a smaller energy supplier, and in many cases they even provide a better customer service. However, the beauty of these price comparison websites are that they pick out the best tariff available for you at your specific postcode. So that’s not to say that a company like OVO or FirstUtility will always be the cheapest, you may find one of the Big Six the best choice.

So when it comes down to it, be careful and take your time. Don’t be sucked into long contracts unless they offer you a great price and don’t be swayed by the big guns. Have a look at the prices, reviews and speak to your neighbours, find out who they are with.

Think we missed something? Do you have a different opinion?

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