Vulnerable energy users switch to avoid rationing
Persistent anxiety over rising energy bills is forcing around 2.8 million pensioners to ration their energy use during cold weather according to new data. Read on for the full story on the issue impacting large swathes of older Britons.
How does pensioners’ energy use change in colder weather?
About 23% of people over 65 expect to have to cut back on their heating when temperatures drop.
In the wake of a cluster of destructive storms this winter, 48% of elderly householders were preparing themselves for increased energy bills research by Compare the Market has shown.
Compare the Market head of energy Peter Earl said the survey results “should make sober reading for policy makers and energy company chiefs alike.”
“We hear a lot of commentary about how today’s over-65s are more financially secure than previous generations, but such a broad-brush perception risks leaving millions of elderly people out in the cold and overpaying for their energy in silence,” he said.
The investigation found that people over 65 were also more likely to be paying “disproportionately over the odds” for their energy, with 2.1 million of them signed up to poor-value standard variable tariffs (SVTs).
For people over 65, there are a number of government-backed grants and schemes that have been set up to help with energy costs. Click the links below for our guides to the assistance available.
- Warm Home Discount
- Winter Fuel Payment
- Cold Weather Payment
- Pension Credit
- Energy Company Obligation (ECO)
Why should you switch away from a standard variable tariff?
SVTs are usually the highest tariff offered by suppliers and you will often be put on this rate by default if you don’t choose another better-value when you sign up or if your previous tariff has ended.
Many suppliers, especially larger ones, make a lot of money from people who don’t realise how bad their existing energy deal is compared to what’s available on the market.
Changing your tariff or supplier could potentially save you hundreds of pounds.
In January, the average Big Six single variable tariff cost £337 more than the lowest-priced tariff basket on the market.
This is a limit on how much a supplier can charge you per unit of electricity and gas and it also puts a ceiling on the daily standing charge.
Although tariffs from smaller suppliers are often well below it, many larger firms respond to Ofgem’s price adjustments by lowering or raising their tariffs to within a few pounds of the new cap.
Indeed, the average single variable tariff from the Big Six for a typical dual fuel customer paying by direct debit was just £1 less than the default tariff cap.
However, you should bear in mind that the cap does not put a ceiling on your total energy bill, that still depends on how much energy you actually use.
It’s also important to remember that the energy price cap is there to protect customers who fail to look for better deals and if the price cap is the only thing limiting your tariff it means you are spending much more on your energy than you need to.
How much could you save by looking elsewhere?
There are now 80% more energy deals on the market under £1,000 than in January 2019 when the price cap was brought in.
The 50 cheapest tariffs currently available are an average of around £103 less than the 50 cheapest offers on the market in January 2019.
Almost 20% of the best-value deals are less than £900 a year, compared to zero under that amount in early 2019.
“If the average person aged over 65 on a SVT switched provider, the saving would be more than the annual cost of a TV license,” Comparethemarket’s Peter Earl said.
“The energy market is more competitive than ever before, and there are many cost effective fixed deals available.”
How easy is it to change energy suppliers?
Many people still believe the process of switching to a new energy provider is complicated or time-consuming.
That really isn’t the case, indeed making the switch has never been simpler or faster.
In fact one in five households did just that in 2019. That’s 6.4 million who switched last year, the highest amount of people changing suppliers since 2003.
The trend shows no sign of losing momentum this year either.
The energy industry’s trade association, Energy UK, reported that 446,750 customers chose a new supplier in January 2020, a 17% increase on the number who switched in the same month in 2019.
The majority, 154,707 customers, made the move from larger providers to smaller or medium-sized ones.
Customers who move energy providers are well-protected by Ofgem.
The watchdog has even brought in an automatic compensation system for the small number of customers who sometimes experience delays or minor errors during the change of companies.
Why should you consider changing energy suppliers?
Unlike the big companies, smaller energy suppliers know they can’t count on marketing or uninformed customers to bring in and retain new business.
This leads to these providers generally offering lower prices and better customer service with higher levels of customer satisfaction.
However, as the research shows, some elderly people are often not aware of how much more they could save by moving to a new energy supplier and they may also be unable to engage with apps or websites as readily as younger generations.
If you know someone who could benefit from cutting costs, giving them a little helping hand could go a long way to improving their quality of life and their finances.
by J Mccrossan