Check your tariff: 15 million households ‘sleepwalking’ towards higher energy bills
A survey by comparison site Comparethemarket found over half (56%) of UK adults don’t know that when their fixed tariff deal expires, they’re automatically moved on to a pricier standard variable tariff (SVT).
In fact, the survey revealed widespread confusion about the difference between fixed deals and SVTs.
One in five (21%) of people surveyed didn’t know the difference between them, with some believing that being ‘fixed’ to a tariff simply means you’re locked in and unable to switch, while others think it means you can only use a ‘fixed’ amount of energy for the duration of the tariff.
A fixed tariff offers guaranteed standing charges and unit rates, usually until a defined end date. Customers on an SVT pay a variable price each month which can go up and down depending on movements in the wholesale energy market, among other things.
The research found even savvy consumers on competitive fixed price tariffs don’t know when their deal ends, leaving them at risk of being automatically moved onto an uncompetitive SVT – 41% of households on fixed tariffs didn’t know when their tariff expired.
It also revealed nearly a fifth of households don’t know whether they’ve been rolled onto an SVT and 12% don’t know the type of tariff they’re currently on.
The findings are particularly concerning because the government’s energy cap has recently gone up, meaning people already on an SVT or about to be moved onto one are likely to see their bills increase.
Peter Earl, head of energy at comparethemarket.com, said: “This research highlights one of the fundamental issues with the energy market – a large proportion of the UK don’t understand what tariff they are on and how much they should be paying for it.
“Many people who don’t understand energy tariffs are unfortunately unaware of the consequences of not knowing.
“Even if you are one of the growing group of energy shoppers looking to save money on their energy bills, you may fall into the trap of forgetting when your fixed deal comes to an end.
He added: “Ofgem has introduced new principles around customer communications, instructing energy companies to make it clear to households when their tariff is due to expire. We hope that Ofgem will police these new regulations rigorously.”