Nearly 250,000 households could be automatically switched onto more expensive ‘default’ energy tariffs in March if they do not switch tariff or provider when their deal comes to an end.
In March, there are 182 fixed energy tariffs coming to an end, according to new research by comparethemarket.com. Rolling off fixed term deals onto default tariffs could collectively cost UK households over £41 million a year compared to their current energy costs.
Analysis of the fixed tariffs ending during these months finds that the average increase to energy bills could be £166 per household. comparethemarket.com ’s data and analysis reveal that if customers do not switch when their fixed tariff ends, energy companies are set to benefit from a huge ‘inertia windfall’.
| Month |
|
Est. number of customers affected |
|
Total cost to consumers |
|
Number of tariffs ending |
|
Average increase |
|
| March |
|
247,199 |
|
£41,104,729 |
|
182 |
|
£166.28 |
|
Households that do not switch before April also face an additional increase to their bills. Ofgem, the energy regulator, recently announced that the default energy price cap will change from its current level of £1,042, to £1,138. The increase of £96 includes an additional £23 that the regulator has allowed suppliers to recuperate from unpaid bills from households that have experienced financial difficulty during the pandemic.
Separate research from comparethemarket.com ’s Household Financial Confidence Tracker shows that annual energy costs would only have to rise by an average of £85 in order to tip households with children at home into financial difficulty.
Peter Earl, head of energy at comparethemarket.com, said: “Households that do not switch when their fixed tariff ends very often face a significant increase to their energy bills, as they will be automatically moved to their supplier’s higher priced standard tariffs. Added to this, the decision to increase the price cap will potentially add another £96 on average to the bills for those on standard tariffs from 1 st April. If you are coming to the end of a fixed term period with your energy supplier, it’s the right time to take action and see if you can get a better deal by moving to another provider.
“The impact that the pandemic is having on many people’s finance is becoming particularly stark, and as our latest research shows, the price cap increase is likely to push a number of households, particularly those with children at home, further into financial difficulty.”
