Switching gas suppliers
It can be difficult knowing when to switch gas suppliers – are prices going up, are they about to fall, or are we in a period of relative stability? The answer could influence whether now is a good moment to switch. For those who have never switched gas suppliers, however, it is widely accepted that a change could result in significant savings on their gas bills.
Dealing with the easier group of consumers first, it is generally reckoned that those who have never switched suppliers before could be saving 20% on their gas bills. The reason for this is a combination of the consumer’s inertia – staying with the same supplier at the same tariff, whatever is happening to prices in the wider, competitive market – and the supplier’s reliance on that very same consumer inertia to maximize the returns on the sale of energy. Consumers who have never switched will be long-term customers of British Gas (or Scottish Gas north of the border) and stand to gain a significant reduction, therefore, simply by switching suppliers at any time.
For those consumers who have taken a keenly healthy interest in what they are paying for their energy bills, however, it is more difficult deciding whether now is the right moment to switch. Whether prices are about to rise, or even if they are about to fall, all suppliers are likely to follow suit and adjust their prices accordingly, but there is no way of knowing whether each company will maintain its relative price differential in the market after the price adjustment. You could end up paying relatively more with a new supplier, compared with the one from which you had recently switched.
Switching gas suppliers, therefore, is more safely and certainly done when prices have reached an assumed degree of stability and all of the companies are therefore playing on the same level playing field.
If you have decided that switching gas suppliers could lead to savings on your monthly expenditure, the following might be some of the points you want to take into account when comparing prices and choosing a tariff:
Whichever supplier you choose, remember that payment of the monthly account by direct debit is nearly always going to be cheaper (up to 10% in some cases). This way, the supplier knows that they will always be paid and, in the event that they have not been able to take a meter reading, will send an estimate which invariably results in your overpaying for that month.
Switching suppliers could give you the opportunity to choose a so-called “capped” tariff which effectively fixes the price for which you will be paying for your gas over the following two to three years. Although you will be paying slightly more for the certainty of a fixed price, at least it can help you to budget for a known amount and you are freed from any worry about price rises that you cannot afford. If the supplier’s prices are reduced, however, you will lose out.
For the past year or so, the energy regulator, Ofgem, has allowed gas suppliers to require their customers to sign up for a yearly contract of supply, thus preventing ay switch to a competitor supply during the term of the contract. Not all of the suppliers demand such a contract, so if you value the freedom of switching gas suppliers whenever you choose, you might want to avoid those who will “lock you in”.
