Big six energy player E.ON hits back with a market-beating new tariff
Big six energy supplier E.ON has hit back at small energy suppliers’ dominance of the best buy table with a market-beating new tariff. However, it was quickly followed by Extra Energy launching its own tariff which will slightly undercut the E.ON deal unless E.ON customers take paperless billing.
The E.ON Energy Fixed 1 Year v12 tariff will cost the average UK household £964.71 a year if they select the paperless billing option which provides a £5 per fuel discount. An average customer in the Eastern transmission region could pay just £925.99 a year.
The tariff also comes with E.ON rewards such as Tesco Clubcard points and high street discount vouchers, but there is a cancellation fee of £5 per fuel if the customer switches away before the end of the one year guarantee period, which starts on the day that E.ON begins supplying the customer’s energy. The cancellation fee is waived if the customer switches to another E.ON tariff.
This move by E.ON could mark the start of a fight back by the ‘big six’ energy companies, who have seen smaller energy suppliers dominate the best buy tables this year and customers flocking to the likes of First Utility, Ovo Energy and Extra Energy for their electricity and gas.
Extra Energy launched its new Fresh Fixed Price Dec 15 v1 tariff soon afterwards, which will cost the average UK household £974 a year. This is an online only tariff so you must be prepared to manage your account online and receive and view bills online. The early cancellation penalty on this tariff is £25.00 per fuel compared to £5.00 per fuel with E.ON.
The timing of these deals may prompt customers whose fixed-term tariffs are about to end, and who haven’t yet arranged their next energy deal, to compare what’s available and switch if necessary to avoid rolling over to a standard tariff.
On Friday 31 October, 12 fixed energy deals will come to an end, with eight from just one supplier – ScottishPower – due to expire. This could result in an average annual bill increase of 10% – or £104 – for consumers who haven’t taken action and shopped around for a new energy tariff.
Suppliers with tariffs expiring at the end of the month are: British Gas, Scottish Power, Npower, Sainsbury’s Energy and iSupplyEnergy.
Those who are currently on Npower’s Online Price Fix October 2014, and live in Yorkshire, could see the largest average bill increase of £205.01, or 20.67%.
Anders Nilsson, spokesperson at Gocompare.com, said: “This move by E.ON could really shake up the market at a time when consumers should be reviewing their energy tariffs ahead of the peak usage months through the autumn and winter seasons. We’ve had a mild start to autumn but with temperatures set to drop in November householders will want to make sure they’re not paying over the odds when they’re heating their homes.
“We’ve become used to seeing small energy providers dominating the best buy tables throughout 2014, so perhaps this move by E.ON could mark the start of a ‘big six’ fight back. In our experience customers have been flocking to the more competitive smaller energy suppliers such as First Utility, Ovo Energy and Extra Energy, and it seemed that the big players were happy to sit mid-table, or even not on the top-ten table at all, rather than aim for the top. It will be interesting to see if more of the energy giants follow E.ON’s lead.
“Extra Energy’s new tariff would suggest that the smaller energy providers may not be ready to surrender the top spots just yet. But with wholesale energy prices remaining relatively low conditions are ideal for more of the big six to cut prices and attempt to win back customers.
“When tariffs are coming to an end it’s important that householders compare the deals available to ensure they remain on a competitive tariff that’s suitable for their needs. While many fixed tariffs have early exit fees, which can be as high as £30 per fuel, Ofgem has made sure that customers on soon-to-expire fixed tariffs can shop around without being penalised. Under these rules, once you receive notification from your supplier of your fixed tariff coming to an end – typically 42 to 49 days before it’s due to finish – you can switch without being charged an exit fee. That may seem like a long notice period, but it can take that long to complete the switch to a new supplier, so acting quickly will help ensure you don’t pay more than you need to for longer than is necessary.
“Inaction can be expensive as energy suppliers’ standard tariffs are often the worst option if you’re looking to save money.”