Variable energy tariffs can be an excellent way to save on energy bills, but with many energy companies not passing on savings, the benefits of these variable tariffs seems to be almost gone.
The main benefit of a variable tariff, as opposed to a fixed tariff, is that as energy prices go up and down, the cost of your energy goes up or down. With the current drop in wholesale oil and gas prices, people on variable tariff plans should be seeing the savings now. However, surveys carried out recently have shown that more than 13 million families are not receiving the drops in prices and are being short-changed by their energy companies. More than 60% of energy customers in the UK are using variable tariff energy plans, but the average annual price of these tariffs is upwards of £250 more expensive than many of the fixed price plans available from most of the largest UK energy suppliers.
The Competition and Markets Authority have said that they are investigating into what extent the Big 6 businesses (E.ON, NPower, EDF, British Gas and SSE) have been abusing their market position and exploiting customer’s lack of awareness of the changing prices of wholesale energy, which had led to almost £2.8 billion of extra costs on customer energy bills. The Department of Energy and Climate Change has recently announced its ‘Power to Switch’ campaign that will give people the information and impetus they need to look carefully at the cost of wholesale energy, the prices of their tariffs, and what else could be on the market. The CMA have said that the people most affected are those that have been with the same energy company for many years and have not looked at competitor prices as they were loyal to their long time energy supplier. This approach is commendable in most scenarios, but with energy costs dropping, it’s a good time to shop around.
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