How much can I save by switching my energy supply? – January 2019

This is a question we get asked a lot.

The simple answer is….typically about £300 a year but it will vary.

Summary

Right now, savings are lower than they normally would be. That is because Standard Variable rate tariffs have been cut by the first level of the Energy Price Cap which came into effect on 1 January 2019, whereas prices for the cheapest energy deals have been increasing due to rising wholesale energy costs. Therefore, typical annual savings of over £300 have dropped to £148 for a customer already paying by Monthly Direct Debit and £232 for those who still choose to pay quarterly by cheque or debit card.

Be careful. If you’re on a Standard Variable tariff this situation will not persist for long. Level 2 of the Energy Price Cap will be set in just a few weeks (February 2019) and will come into effect on 1 April 2019. Ofgem has already warned that the level of the Energy Price Cap is likely to rise and potentially significantly.

Dermot Nolan, CEO of regulator Ofgem, in a speech given at Ofgem’s Future of Energy conference on 10 January 2019, said;

“Next month, we will announce the updated level of the cap – to take effect in April.  While I cannot say today exactly what it will be, wholesale costs have risen significantly over the last year. As a result, it is likely that we will announce an increase – and potentially a significant one – in the level of the cap.”

So, the sooner you get yourself onto a decently priced fixed energy deal, the sooner you’ll pick up those savings. In the meantime, here is the graph and the analysis.

energyscanner-savings-from-switching-energy-uk-january-2019

Analysis

Based on our analysis (explained below) the typical annual saving for a domestic energy consumer on a Standard Variable Rate tariff, with average energy usage, has varied from £190 to £366 over the past 12 months with an average annual saving of £326.

Customers already paying by direct debit will see lower savings (approximately £40 less as they are already benefitting from cheaper pricing by paying in this way). Conversely, those paying quarterly by cheque or debit card can pick up £40 over the average as they are heavily penalised for paying in this way.

Current savings are at the absolute low end of the range because of the distortion created by the Energy Price Cap. The next level of the cap is expected to be materially higher and is expected to push savings much closer to historic levels.

Methodology

Savings shown compare the price of the Standard Variable Tariffs of the Big 6 energy suppliers with the cheapest* energy deal in the market at the beginning of the month.

Energy usage is based on current Ofgem average typical consumption values being 12,000 kWh a year for gas usage and 3,100 a year for electricity usage.

Analysis is based on Standard electricity meters only (does not include Economy 7 or night time usage meters). If you have an Economy 7 meter please use our comparison service to get a customised quote.

Bills are calculated for each energy region and then averaged. Average bills are calculated for the 2 main payment methods – monthly direct debit and quarterly by cheque or debit card.

These are then compared with the cheapest* deal in the market at that time. Cheapest* in our methodology means the tariff that satisfies all the following criteria.

  • Has a duration of 12 months or longer (short dated tariffs provide no certainty for consumers and cannot be compared on an annual basis).
  • Has national coverage (excludes regional tariffs)
  • Is widely available to consumers (excludes exclusive deals).
  • Does not have onerous payment conditions – for example taking money out of customer accounts before supply start date.

* There may be cheaper tariffs that do not meet these criteria but they are excluded from our analysis for comparability reasons.

Actual Savings

Your actual savings will depend upon your personal circumstances and are affected by the following factors; where you live, how much energy you use, how you choose to pay for that energy (it can make a big difference), your meter type and, most importantly, which supplier and tariff you are currently on. To get a customised quote please pop your post-code into the box below.

If you are new to switching you might want to read our Energy Switching Guide first.

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This page is updated monthly so please check back regularly to get the latest insights on what’s happening with UK domestic energy prices.

Last update; 16 January 2019