Every one of the 43 active suppliers in the UK energy market is required by law to have a default tariff that has variable prices that go up and down with the market, commonly known as their 'Standard variable tariff' (SVT). For a long time now, suppliers with multiple tariff options have been luring customers in with their lowest, 'Best', tariff (that’s the one that appears at the top of price comparison sites) for a fixed period of around 12 months. The problem comes at the end of that fixed period when, without realising it, customers are bumped up onto the more expensive SVT. More often than not, these tariffs are hundreds of pounds more expensive than their fixed Best on offer and this 'ramp up' in cost from best to SVT means people are paying huge amounts more for their energy without realising it.
Considering less than 5% of us are ‘serial switchers’, which means we don’t switch on a regular basis, this has led to the vast majority of people settling on long term expensive variable tariffs. Ofgem recently put the number of people paying too much for their energy on an SVT at nearly 70%.
This practice isn’t restricted to the Big Six either. According to our most recent review, 85% of suppliers that offer deals on price comparison websites have a more expensive single variable tariff than their best deal. From small suppliers to large, this practice is widespread and goes to the heart of why people don’t trust the energy industry.
And we’re talking serious amounts of money too. In the worst case, Scottish Power and E.ON, there is over £300 difference between their best tariff and the SVT. Just to be clear – this isn’t special energy. It doesn't make your toaster pop higher or your washing machine clean your whites better. This is the same energy just being charged at a higher rate… why? Well, you’ll have to ask them.
And to top it off, even if people realise what’s about to happen at the end of their contract and want to get out early, over 50% of suppliers force them to pay an exit fee.
At Bulb, we believe it’s our role as a supplier to keep things as simple as possible for our members. We’re one of five other suppliers (alongside Ebico, Ecotricity, Utilita, and Good Energy) that don’t distinguish between Best and SVT.
For Bulb the whole point is they are one and the same. We only have one deal, and it's our Best. Oh, and of those five “good guys”, we’re about £200 cheaper too. Just saying…
We don’t believe in offering people unsustainable deals for fixed periods and then ramping up prices later. But, we can't tackle the lack of trust in the energy industry alone. We think all suppliers should make a clear commitment not to ramp up their prices and price comparison sites should make sure people are aware of this tactic at the point of switching. Basically: don't fleece your customers. Not much to ask, right?