NEWS

As the UK government’s energy bill subsidies end, some suppliers may not be playing fair with their customers. 

Since October 2022, the government has capped the unit price consumers pay for their electricity and gas through its Energy Price Guarantee. While this support has now ended, from July 2023, the good news is that the current Ofgem price cap is lower than the rate previously set. In theory, customers should be able to switch their tariffs and take advantage of the new, lower energy prices.

However, some customers are tied into tariffs that are higher than the price available on the open market, and when they try to switch, their suppliers don’t seem to be playing fair. Instead, these suppliers charge high exit fees to customers who want to switch during the life of their deal. Customers and industry experts alike are not happy, accusing these suppliers of profiteering at a time when consumers are still struggling.

In this article, we’ll look deeper at this issue. Which suppliers are helping their customers switch and save, and which are not? Let’s get started.

Ovo and EDF customers in limbo

Around 1.55 million customers are currently tied to fixed tariffs that are more expensive than the latest Ofgem price cap. As the Energy Price Guarantee is withdrawn, their bills are due to rise. 

While some suppliers are automatically switching their customers to cheaper tariffs, or letting them switch between tariffs or even move to other suppliers free of charge, others are not playing ball. Ovo and EDF have been identified as the worst offenders, charging fees of up to £300 to customers wanting to switch deals. Industry experts have urged Ovo and EDF to follow the lead of other suppliers like Utility Warehouse and Octopus and waive these exit fees. However, at the time of writing, they’re refusing to bow to pressure.

Industry criticism

Critics of these suppliers argue that energy firms penalising 1.55 million customers by trapping them in expensive tariffs is little more than profiteering. These deals were initially marketed to consumers during the energy crisis, but they’re no longer a good deal. As a result, the fair thing to do would be to offer them an easy way out by waiving any exit fees.

However, some industry observers argue that suppliers charging punitive exit fees is a reflection of a broader problem, and that the government should regulate energy companies more stringently to protect consumers. They argue that at a time when inflation is high and many people are struggling, it is unfair for some energy customers to be on tariffs that are double or triple the price cap while others receive discounts thanks to smart tariffs.

Suppliers happy to waive exit fees

At the same time, other suppliers are leading the way by waiving exit fees for customers switching tariffs:

• Octopus Energy recommend customers on higher tariffs switch to its standard variable tariff to get the lowest price with no exit fees
• Utility Warehouse has abolished exit fees for customers switching to its other tariffs or switching to a different supplier
• British Gas, Eon and Scottish Power do not charge exit fees for customers wishing to switch tariffs internally

The debate continues

It seems that at a time when many people are struggling financially, charging excessive and punitive exit fees to customers wishing to switch energy tariffs is bad practice. It’s also terrible from a PR perspective.

The best course of action for these suppliers would be to waive these fees immediately. If they address this price disparity and protect their customers voluntarily, it could lead to better results. The consequences of not doing it could be more government regulation in the future, which could hold back the entire industry. 

We’ll keep an eye on what happens as the debate continues.