Switching Suppliers
Free, practical consumer advice and information on energy-related matters for the citizens of Scotland
Overview of Switching Suppliers
Switching supplier may appear to be a good idea if it will lead to lower costs and/or better service but there are cautionary measures that you should take before switching to ensure that a change in supplier goes as smoothly as possible.
Check your contract to see if an exit charge will be applicable. Some suppliers have fixed rates on the energy costs, which may have meant entering a contract for a defined period. You should also check if you have any arrears and how long you have had them. Additionally, you should check that your meter is compatible with the new supplier because they may have to change it. You should also compare the tariffs of different suppliers to find the best price for your current circumstances and usage.
Energy Cost Considerations Before Switching Suppliers
Winter is a time of year that requires you to prepare for increased energy consumption. Unpredictable weather and falling temperatures mean that your energy costs will likely be higher and energy usage will be more difficult to predict. There are three key considerations you must make while preparing for these colder months:
- You must check if you are in arrears. If so, you must also find out how much you owe and how long it has been owed for. This is especially important if you are a prepaying customer because your supply can easily be cut off by suppliers for arrears, leaving you vulnerable to the extremes of winter temperatures. It is very much in your interest to pay off arrears in advance of the winter months if you can.
- If you are unsure if costs can be met on the current tariff, or you want to spend less on energy, you should research possible alternatives. It is advisable to use an Ofgem accredited price comparison site to do this. Compare pricing with your annual energy consumption will allow you to build a more accurate picture of what will be charged on a new tariff.
- You should prepare increased monthly budgets because your energy bills will be higher than other months.
If an energy supplier is increasing their prices, they have an obligation to give you a reasonable amount of notice before it is put in effect.
The exceptions to this requirement are staggered tariffs (where the prices change on set dates that you were previously informed about) and tracker tariffs (where prices change on a regular basis). If you want to avoid price increases, it is wise to compare different tariffs.
If you change tariffs or suppliers, the transfer must be completed by the new or current supplier within 20 working days of the request.
Pricing of energy may be framed as an average, but it is important to consider if this reflects what will be used. An average rate of energy is calculated for the UK and each energy region within it, but this is not necessarily representative of what you as an individual consumer would be charged for energy. The average is more of a generalisation than an indication. A better indication of energy use can be found by finding your annual usage from a correct previous bill or consumption statement. The cost of energy for using individual appliances can be calculated in Kilowatt hours (watts used per hour should be on the appliance or its packaging), or cubic feet/meters for gas.
Gas and electricity bills are calculated partly on how much energy is used, as well as things like network and wholesale costs. Usage depends on many factors, including:
- size of home
- energy efficiency of home
- how many people live in the home.
- the energy efficiency of appliances and how often they are used.
- health
Suppliers and switching sites will work out what the cost of a new contract will be. If the customer is paying by direct debit, they will calculate a monthly cost.
There is various information the supplier can use to calculate this cost such as:
- Previous annual usage
- TDCV (Typical Domestic Consumption Value)
TDCV
Caps on energy prices, like the Energy Price Cap or the Energy Price Guarantee, limit the cost of energy per kWh. Sometimes the typical values below are used to explain what bills might look like for homes with low, medium, and high energy use:
Annual Usage
Customers can get their annual usage from a previous bill or consumption statement, and this will give a more precise indication of what the cost will be. If the customer has newly moved into the property, they should be aware that the annual statement may not reflect their usage. The customer might use more or less energy than a previous tenant due to differences in household size and lifestyle.
Energy Usage
Energy usage is measured in Kilowatt Hours (KwH) for electricity or cubic metres or feet for gas (m3 or f3)
Electricity
A kilowatt hour describes a kilowatt (1000 watts) being used for an hour. Working out the amount each appliance consumes/will consume in electricity can be found by multiplying the wattage of the item with the number of hours used and divide by 1000, e.g. a 100-watt appliance used for 10 hours will use 1000 watts. Dividing this by 1000 results in 1 Kilowatt hour.
Gas
Gas usage is measured in cubic meters or feet, with the consumption showing on the bill or statement as an ‘m’ or ‘ft’ with a small number ‘3’ next to it.
‘Cubic metres’ describes the ‘metric’ measurement and ‘cubic feet’ the imperial measurement. It is important to understand what a meter is measuring to ensure correct billing, and this should be displayed somewhere on the meter. Smart meters may have the option for both displays. There should be a calculation showing on the bill to convert one into the other.
Process of Switching Suppliers
It is in your economic interest to consider if your desired supplier has the best price. The amount of choice in suppliers and the details of pricing makes comparison an essential part of this process. Government regulator Ofgem has a list of accredited price comparison sites that can reliably assist in this comparison. It is important to know how energy is measured and averaged in pricing when using these sites.
You can view this list of Ofgem approved comparison sites:
- A supplier can stop one of their customers switching to a new supplier if they have debt from a period of longer than 28 days. Customers may need to clear the debt before applying to switch.
- If the debt is £500 or less, the debt may be able to be transferred to a new supplier.
- If a supplier blocks a transfer, they must notify the customer that they have blocked the transfer, why they have done so and how the customer can dispute or resolve the issue.
The supplier should also provide information on if there are any other tariffs at the current supplier that would be more suitable for the customer as well as energy efficiency and debt management advice, or signposting to where they can access that advice.
This rule if different for prepayment customers. If you have prepayment meters arrears, you may change supplier unless the arrears are larger than 500 pounds (for either gas or electricity).
When switching suppliers, the new supplier might want to fit a smart meter to replace a traditional meter, or because the customer has an old smart meter that is not compatible.
Older smart meters were not able to be switched to a different supplier.
If a customer does not want a smart meter, they need to confirm that it is not necessary for that specific contract or tariff.
Before switching, you must consider the possibility that your meter will not be compatible with the intended new supplier.
Certain types of meters will be required for certain companies, necessitating a change. For example, the rollout of smart meters in the UK will not be completed until 2024 and suppliers will not be obligated to use or provide them until that deadline.
Even if the desired supplier uses smart meters, they may have to replace the one you have due to incompatibility.
There should be no upfront cost for installing a smart meter.
- Customers can switch by contacting a new supplier on the phone or online. In some cases, they may be approached by a salesperson at their door or a representative in a shopping centre or similar. Customers can also use online switching sites or third-party brokers. Brokers are much more common in non-domestic energy.
- Customers should check if there is any exit charge for their current contract. Most variable rate tariffs have no exit charge, but a fixed rate tariff may have one.
- Once the customer has agreed to the new supplier, they should take note of the transfer date.
- Once you ask to switch and set up your new contract the switch should be completed within 5 days. If it is not completed, the customer is entitled to a one of compensation of £30.
- Contact the supplier that you wish to change to, and they will organise the transfer (this can be done online most of the time).
- Take a meter reading on the day that the transfer takes place, calculating the energy used under the old supplier. This will prevent you from being overcharged by the new supplier for energy that you have already paid the old supplier for.
- Pay the final bill with the old supplier after checking this is correct. This bill will include any arrears that you have with the old supplier.
- The supplier may contact you to install a different energy meter if your current one is incompatible, or they are rolling out smart meters.
What are Erroneous Transfers?
Erroneous transfers refer to cases whereby consumers are switched over from one energy supplier to another (sometimes by accident) without their explicit consent and permission to do this.
Energy consumers are protected under the Erroneous Transfers Customer Charter and typically this specific issue is rare to encounter.
Erroneous transfers usually occur mostly due to a mix up over addresses or simple human error.
When an erroneous transfer case has been raised, companies will act quickly to work together and try to ensure the problem is resolved.
Consumers are notified by letter within five days when an erroneous transfer case has been acknowledged, informing them that the issue is being addressed. An additional letter is sent within twenty days to confirm that the consumer is being moved back to their original supplier.
It is important to recognise that there will be no change in service. This refers to the fact that the service a consumer is provided with is completely unaffected by an erroneous transfer. Therefore, there consumers will not be cut off and bills are not affected.
New Compensation Rules for those Affected
Gas and electricity customers that are affected by issues involving switching suppliers will receive automatic compensation. You may receive compensation for being switched without your explicit permission, or if your credit balance is not refunded within 10 days of your old supplier sending you your final bill.
With regards to both cases here, you should expect to receive £30 or more, and you will not be required to ask for it since the compensation is automatic. The rules, or guaranteed standards, have been established by the energy regulator Ofgem, and companies are liable to pay compensation should they fail to adhere to such obligations.
Am I entitled to Compensation?
As of the 1st of May 2019 onwards, consumers should receive compensation for switching problems as defined by the standards and regulations set out. Therefore, this applies only to switches that start on or after 1 May.
Unfortunately, if consumers already had problems before the 1st of May 2019, you are not entitled to compensation.
The maximum compensation entitlement for this is £120 if a consumer’s supply is not transferred back to your original supplier within a reasonable period. £30 is offered to consumers if their suppliers fail to repay any money owed within 10 working days of sending them a final bill.
How do I get compensation for my energy switch?
Suppliers are obligated to offer compensation to their customers automatically if they breach the standards, they are legally required to adhere to, and will need to choose a ‘suitable means of payment’.
Should consumers encounter one of these issues but do not receive automatic compensation for this, they should notify the supplier immediately since they are entitled to claim the money.
For erroneous transfer cases, the supplier must ensure they put reasonable effort into locating and compensating customers whose details they do not have.
If compensation is not delivered on time, customers will be permitted to claim extra compensation.
Compensation Arrangements
If an issue has not been fixed or you have not received the compensation, the first step is to contact your supplier to inform them about this. If you are still unhappy with the response you get, you should consider issuing a complaint.
Guaranteed standard | Compensation |
Suppliers fail to agree if a switch is valid or erroneous within 20 working days of you telling either supplier. | £60 (£30 from each supplier) |
Suppliers confirm the outcome of their investigation into an erreneous switch within 20 working days of you contacting them. | £30 by contacted supplier |
Supplier restores connection to previous supplier within 21 working days of agreeing a switch is erreneous. | £30 by former supplier |
Supplier refunds money owed on a credit balance within 10 working days of sending a final bill. | £30 by former supplier |
Property switched by mistake. | £30 by new supplier |
Switch completes with 15 working days. | £30 by new supplier |
Supplier sends a final bill within six weeks of a switch. | £30 by former supplier |
*Effective from 1 May 2019. |
|
Figure 1: Ofgem guidance for compensation
Suppliers may contact you regarding issuing a compensation payment. However, it is advised to be cautious and ensure that you ask for further information before giving out your personal details.
NOTE: You will not get switching compensation if you are a business energy customer or if your supplier has gone out of business.
Further Advice and Information:
If a client wishes to receive further advice and information on energy related affairs, please visit the Energy Advice | Energy Advice | energyadvice.scot website.
Switching To or From Prepayment
If you want to switch to a prepayment meter, consider whether using one would be in your best interest. The following issues should be considered before choosing to switch, because using a prepayment meter may result in increased costs and the potential loss of your energy supply in situations where you have not or cannot top up the meter:
- Your prepayment meter will need to be topped up with credit to pay for energy usage. Once the supplier has installed a prepayment meter, credit will need to be put on it to function. On a traditional meter, this is done by key cards that can be bought from a shop or post office. It is not advisable to get this kind of meter if you have limited mobility to go out and buy these cards or to reach the meter to top up.
- It is possible to use a prepayment mode on your smart meter as an alternative to getting a prepayment meter installed. A prepayment smart meter can be topped up online or by a phone app. There is no obligation for your supplier to provide you a smart meter if you do not already have one.
- It is important to note that if you are on a prepayment meter that is in arrears for more than 28 days, the supplier can automatically cut off your energy supply. This is known as ‘self-disconnection’. There are legal restrictions on who can be ‘self-disconnected’ and certain companies have agreed to not disconnect a wider selection of groups, including vulnerable customers.
- Not all suppliers offer prepayment as an option and those that do will have a reduced selection of tariffs to choose from. These tariffs can be more expensive than credit meter alternatives.
- In addition to tariff prices, prepayment meters have a daily standing charge for simply using prepayment. You must pay this daily charge regardless of whether you use energy from the meter or not. This can be a significant issue if you are not using the meter through the summer because you will still need to top up the meter to pay the standing charges. In a worst-case scenario, you could be left in arrears for the standing charges when winter arrives, when you need the energy supply the most.
If you are a tenant, you may have less freedom to choose prepayment options than owners do. Although the landlord’s permission is not required to install a prepayment meter, the landlord can obligate you to change the meter when the tenancy has ended. You are liable for any service charges for installation of a new meter (there are no upfront charges for the installation of smart meters).
If you are content with these potential risks and considerations, you can switch to an old-style prepayment meter or switch your smart meter to prepayment mode by contacting your supplier. If it is a prepayment meter, the supplier should not charge for installing it. The supplier should put the meter somewhere you can reasonably be expected to access but not necessarily where your previous meter was. The supplier should provide a prepayment meter guide that tells you how the meter functions, what should be done if technical issues arise and how to change back to a credit meter.
It is possible for you to change a prepayment meter or a smart meter on prepayment mode back to a credit meter or credit payment mode. If you are using a prepayment meter, a guide should have been provided to you that explains how to switch to a credit meter. The switch can be done by contacting the supplier and asking them to switch to credit mode or a credit meter. The supplier is less likely to agree if you are in arrears but will consider your circumstances (e.g. disability, looking after young children) in their decision. If the supplier refuses to do this and you owe less than 500 pounds in arrears for both electricity and gas, changing to a new supplier may be warranted. You must pay back the arrears in the final bill to the old supplier if choose to do this.
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