finance

Customers ‘tricked’ into paying £500 more for energy – here’s what to watch out for


SNEAKY energy firms are tricking households into signing up for rip-off fixed tariffs costing £500 more than the cheap variable deals.

One major supplier is offering cashback to customers for committing to pricey fixed rates.

Major energy firms are offering costly fixed price deals

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Major energy firms are offering costly fixed price deals

British Gas, EDF and Scottish Power were caught touting them by a Sun Money probe.

Many fixed deals cost up- wards of £1,800 a year for the average household, against £1,277 on variable tariffs, pegged to the price cap.

Providers are pushing these packages by writing to customers, advertising expensive deals on their websites — but not the cheaper rates — and laying on cashback if people sign up.

British Gas — the country’s biggest energy company with 12million customers — says to “switch and save on your fuel bills” on its website.

‘They are trying to seduce you’

But potential customers who click for quotes are shown prices for expensive fixed rates, with no mention of the firm’s cheaper variable option.

Existing customers recently migrated to British Gas from the defunct People’s Energy are only offered fixed prices when they compare fees.

There is no explanation that it could cost them hundreds more than their current cheap variable tariff.

EDF’s website quote search also only returns fixed charges, not its cheaper variable rate.

It even says on the results page: “Our fixed tariff may help you save in the long term.”

Scottish Power has teamed up with cashback websites to entice people with payments if they sign to fixed tariffs. New customers, for fixed deals only, get £40 cashback via TopCashback and £32.80 via Quidco.

The Quidco offer says: “Only fixed tariffs are eligible for cashback.”

MoneySavingExpert’s Martin Lewis said: “Beware firms using ‘fixing to save’ in their marketing to move people off the price cap.

“Ignore ‘time to fix’ letters from energy firms.

“They are trying to seduce you into fixing. Stay on the price cap.”

Suppliers insist they are losing money on variable-rate price-cap deals due to the high cost of wholesale gas. Sun Money asked British Gas, EDF, Scottish Power, E.ON and Ovo to comment.

British Gas, which confirmed it is not promoting its variable tariff, said: “We’re confident we’re meeting our licence obligations.”

EDF said: “We say on our website homepage and first quote page that switching is not necessarily in customers’ best interests.”

Here, we guide you through the energy industry’s game of stick or twist . . . and show how to play your power cards right.

Q&A: How to avoid fixed tariffs?

FIXED tariffs are always cheaper, right? Wrong. They used to be. The cheapest fixed deal is now £1,650 for an average home, £373 more than the £1,277 price cap, which is the maximum a variable tariff can charge.

Why don’t fixed deals save money any more? Record wholesale gas prices mean energy providers need to charge customers more.

How can I avoid being put on a pricey fixed tariff? Ignore offers from your own or other energy suppliers to sign up. Just stay on the standard variable rate, which is the cheapest tariff available.

If your firm went bust and your new provider has put you on a fixed deal, phone the company and demand that it moves you on to the variable tariff. It should not have done that.

If it refuses, complain in writing. If still not resolved after eight weeks, contact the Energy Ombudsman at ombudsman-services.org.

What if I’ve just signed up for a fixed deal without realising it is more expensive? Good news – you have 14 days to cancel, without any charge.

I switched to a fixed deal a month ago. How can I escape this rip-off? Switch again but to a standard variable tariff which falls under the price cap. But you may have to pay an early exit fee, which can be up to £60.

What is the safest way to switch and avoid expensive fixed tariffs? Don’t switch unless you are in the situation above. Use a price comparison website such as MoneySuperMarket, Compare The Market or GoCompare. Read the small print.

What will happen to the price cap when it is reviewed in April? It will jump, possibly by £300, pushing variable tariffs towards £1,600 for an average household. Fixed deals are set to stay high.

‘Suppliers should be up front’

A DAD whose energy firm went bust avoided being sucked in by fixed tariff deals – and bagged a bargain variable rate deal instead.

Alex Lee Pan, 49, was shunted from collapsed Green Network Energy to EDF earlier this year. But EDF halted his fixed deal in October.

Manufacturing manager Alex, who has two girls, aged five and eight, did not go straight for another fixed deal – traditionally the cheaper alternative but now expensive.

Instead, he compared prices and chose EDF’s lower-priced variable tariff.

Married Alex, from Wandsworth, South London, said: “EDF gave me a tariff at the same price as Green Network Energy. But the deal ended in October.

“I compared prices and found fixed deals had sky-rocketed, so made sure we moved on to the variable tariff, now cheaper than fixed deals.

“Suppliers are businesses and need to make enough money.

“But it’s not transparent not to show the variable tariff on websites so people can compare prices to fixed tariffs.

“If your energy deal is ending, make sure you compare fixed prices with the variable rate.

“And check advice websites for whether it would be a good time to switch or not.”

British households contain more than £20 billion worth of unused technology – including old smartphones, laptops and tablets

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