You are here: Home - Household Bills - News -

Households to be automatically switched to cheaper energy tariffs

Written by: Emma Lunn
The government plans to trial automatic switching for customers on expensive default energy tariffs, saving some households hundreds of pounds a year.

About 5.8 million households switched energy supplier last year, saving an average of £290. But research by Ofgem suggests that less than half of British households regularly shop around for a better energy deal.

As a result, the government is taking action to tackle the ‘loyalty penalty’, where energy companies place longstanding customers on the most expensive tariffs.

Business and energy secretary Kwasi Kwarteng has published proposals to trial automatic switching. Under the plans, some consumers on costly tariffs would be automatically switched to cheaper ones unless they opt out.

The proposals include creating a framework for ‘opt-in switching’ by 2024, where consumers on the most expensive tariffs would receive personalised switching advice to switch to a better value tariff.

The plans are designed to protect customers from rip-off energy deals, saving consumers money on their energy bills, and increase competition by encouraging suppliers to introduce fairer tariffs.

Ministers hope the plans will also mean that more consumers will switch to tariffs powered by renewable electricity.

Kwasi Kwarteng, business and energy secretary, said: “We want to unleash a wave of competition within the energy market and keep energy bills low so households across the UK can keep more money in their back pockets.

“Although more of us are now shopping around for the cheapest tariffs, the existence of better deals on the market is not sufficient in itself to drive consumer behaviour. That’s why we will make the switching process even easier so we can tackle the ‘loyalty penalty’ and ensure everyone pays a fair price for powering their homes.”

In another move to better protect the most vulnerable energy consumers, the government is also extending the Warm Home Discount Scheme until 2026. This will knock £150 off the electricity bills of many pensioners and low-income families, supporting an extra 750,000 consumers.

Tom Lyon, director of energy at energyhelpline, said: “Opt-in switching is a proven initiative that will drive positive outcomes for the most disengaged consumers. We welcome these proposals and believe they could generate levels of long-term competition into the energy market like we’ve never seen before.

“Previous opt-in switching trials helped significant numbers of consumers switch energy suppliers than otherwise would have; a widespread rollout will empower customers to drive down the cost of their bills.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you wanted to know about ISAs…but were afraid to ask

The new tax year is less than a fortnight away and for ISA savers or investors, it’s hugely important. If yo...

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week