- Large energy suppliers take in £900 million by switching customers to expensive tariffs after initial deal ends
- Research finds that UK households overpay by up to £348 after 12 months with Big 6 (Source: Octopus Energy)
- Energy contracts draw customers by using cheap deals before hiking prices up to 48%
- Octopus Energy offers transparent fair pricing across the UK
As winter approaches, customers who stay with the Big 6 energy suppliers could be charged up to £348 extra per year, according to research by Octopus Energy.
Octopus Energy Research: 12-Month Hidden Costs
The Big 6 UK energy suppliers consist of British Gas, EDF Energy, E.ON UK, npower, ScottishPower and SSE, and currently supply close to 85% of British households with gas and electricity (uswitch.com).
These large companies draw customers in by offering cheap deals before increasing prices up to 48%.
Big 6 Hike Prices to Unsuspecting Customers
The longer a customer remains with a big energy company, the more likely they are to be moved to a higher tariff, widening the gap between the initial deal and what they end up spending.
The graph by Octopus Energy shows Customers sign ups represented by the blue prices and what they end up paying in orange, once the fixed period expires. For example, a typical customer supplied by npower would pay on average £724 for the first year, however, this would then rise by a staggering £348 at the end of the fixed period.
If they stay with the same energy company for a further two years, this would cost £696 more than what they signed up for. Add another two years on top of that and the customer would be on average £1392 worse off than the deal they initially signed up to.
Six of the top 10 deals advertised over the past 6 months by each supplier had potential price hikes of over 38% (that’s £284 or more).
Big 6 Criticism and a Move to Alternative Energy Suppliers
In April the Big 6 energy firms charged UK households up to £132 extra over one of the mildest winters, gaining £1 billion.
Only two in five households saw charges fall and about 8 million households on fixed direct debit were believed to be owed money.
As reported in the Daily Mail, some customers overpaid by as much as £400 and around eight million households on direct debits were thought to be owed money.
Households are gradually becoming savvier as they are now ditching big name energy suppliers in favour of smaller independent suppliers, such as Octopus Energy.
A report published in 2015 by Cornwall Energy assessment of Ofgem data found that more than three million households are now customers of small suppliers.
Big Companies Biggest Price Hikes
|Most Expensive Switches by Energy Suppliers||Percentage Rise|
|1. FIRST UTILITY||53% rise First Fixed July 2017 (£745.61) to First Variable (£1,139.89)|
|2. NPOWER||48% rise Price Fix July 2017 (£724.2) to Standard Energy (£1,071.85)|
|3. EDF||47% rise Energy Simple Fixed may 17 (£727) to Standard Variable (£1,068.4)|
|4. EXTRA ENERGY||45% rise Fresh fixed Price Oct 2017 (£752.91) to Variable Price (£1,094.97)|
|5. SCOTTISH POWER||45% rise Online Fixed Price Energy June 2017 (£728.84) to Standard (£1,030.84)|
|6. BRITISH GAS||43% rise HomeEnergy Exclusive June 2017 (£720.22) to Standard (£1,030.84)|
|7. SAINSBURY’S||38% rise Fixed Price June 2017 (£746.71) to Standard (£1,030.84)|
|8. CO-OP ENERGY||37% rise Fix For Longer Sept 2017 (£757.67) to Pioneer v5.2 (£1,041.79)|
|9. SSE||37% rise 1 Year Fixed v9 (£752.48) to Standard (£1,027.98). Paperless|
|10. E.ON||36% rise MSM fixed 1 Year Collective March 2016 (£758) to Energy Plan paperless (£1031.3)|
5 Advantages of Signing Up to Octopus Energy
- Transparency: Greg Jackson, Founder of Octopus Energy said, “We’d encourage people to check what sorts of rates suppliers charge after the fixed period.” Unlike the Big 6, Octopus Energy has standard variable tariffs that are very similar to their fixed price deals.
- Octopus Energy is the UK’s largest investor in solar farms. The farms they have funded generated 40% of all the UK’s large-scale solar- enough to power over a quarter of a million homes.
- Offers 100% renewable electricity with full carbon offsets for gas. Carbon neutral: leaves no footprint on the planet.
- Fair, affordable cost without big unforeseen price hikes.
- 154 solar farms in the UK built, with 66 sustainable projects in France
Most Consumers Who Stuck With Big 6 Waste Money on Energy
Despite the fact that consumers save money by switching energy suppliers away from these terrible deals most choose not to.
Octopus Energy found that 53% of consumers never changed energy suppliers.
19% changed every 2-3 years and only 11% switched every year.
They also discovered that the majority of customers never agreed on a better deal with their energy supplier.
This suggests that many customers blindly accept payment plans without a thorough investigation, or knowledge that their energy supplier was overcharging them.
Switch to Octopus Energy Today
Greg Jackson, Founder of Octopus Energy said:
“We’d encourage people to check what sorts of rates suppliers charge after the fixed period. Does the company you’re switching to treat loyal customers well, or try to squeeze them as soon as it can?”
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