Bill payers are stuck in expensive fixed rate energy tariffs paying as much as £716 more than April’s reduced price cap because exit fees have increased by a staggering 345 percent in the last three years, the new Warm This Winter ‘Tariff Watch’ report reveals.
Around three million [1] UK households have opted for fixed energy tariffs and the report shows of the 383 fixed tariffs available on the market, 256 (67 percent) have exit fees of more than £100.
Researchers found that exit fees have dramatically increased from an average of £42.06 in early 2021 to a peak of £187.21 today (a 345 percent increase). [2]
The report also reveals 292 of fixed tariffs (76 percent) have annual costs of £1,690 which means the majority of households on fixed energy tariffs are worse off if they want to switch to a cheaper tariff because of the exit fees - meaning they are stuck paying hundreds more than the current price cap.
In fact, UK customers considering fixing their energy tariffs could be £716 worse off at the end of the year according to the latest edition of Tariff Watch compiled by Future Energy Associates (FEA) who analysed the best deals on the market for customers.
It reveals that there are 11 new fixed tariffs now available to new customers under the April price cap but warns consumers could end up worse off if they fix now, even with the latest forecasts that prices could rise again later this year.
The most expensive of these is the EDF Energy Essentials 2yr Apr 26 v2 and the Ecotricity 2 Year Fixed Green Electricity V24.1 fix, which costs £1690 and £1,712 a year for a typical household and would leave bill payers £62 and £84 worse off, but with extortionate exit fees of £250 and £300 respectively if customers to try and get a better deal based on current forecasts.
Warm This Winter spokesperson Fiona Waters said:
“Yet again energy suppliers are letting customers down with many stuck in fixed rate deals they can’t get out of because of extortionate exit fees and it’s Hobson’s choice for those who want the peace of mind of a fixed rate but will probably end up worse off later in the year.
“It’s just ridiculous and unnecessary that bill payers have to navigate such a complex tariff system where they get ripped off at every level, from rising standing charges to profiteering gas companies, and still face bills that are 60 percent higher than three years ago.
“We need long term solutions from government such as expanding homegrown renewable energy and a mass programme of insulation to bring down bills once and for all.”
Simon Francis, coordinator of The End Fuel Poverty Coalition commented:
“Exit fees have gone from a minor irritation to a serious concern. Customers who have had poor customer service may now find themselves trapped with their supplier due to these penalties.
“The energy industry is quick to promote the idea that switching will save you money, but the reality is that the small print could leave struggling customers out of pocket.
“Households who are suffering the most are often the ones looking for the most security through a fixed tariff, but we would urge them to only fix if they are absolutely certain it is the right thing to do.
“Checking your bill to get your existing usage numbers and entering these details into price comparison sites is one way of testing the market - but always check that exit fees are under £100.”
Tariff Watch found there were five out of 32 fixed tariffs worth considering, these are any fixed tariff that has a total annual cost of less than £1,635 and an exit fee less than £100.
Of note, are: Utility Warehouse Fixed Saver 16 (bundled), Outfox the Market Fix'd Mar 24 v1.0 (only outside of Scotland), Octopus Energy Loyal Octopus 12M Fixed March 2024, Octopus 12M Fixed March 2024, EDF Energy Essentials 1yr Apr 25 v3
In terms of variable tariffs, the Tariff Watch report recommends customers should look for the Home Energy, Home SVT Mar 2024 v1 (£1,627), or the Octopus Energy Flexible Octopus (£1675) for dual fuel tariffs. If you are electricity only, Tariff Watch recommends the Fuse Energy, Fuse Saver £836 annual cost.
Consumers should also be looking at standing charges below the Ofgem price cap for electricity 60.10 p/day and gas 31.43 p/day.
Future Energy Associates analyst Dylan Johnson, who helped compile the report, said:
“While we have seen the return of competitive market conditions we are worried about certain consumer groups being left behind. Our data shows evidence that specific suppliers are raising prices in certain regions to absurd levels. One example of this is OutFox the Market, which while offering consistently cheaper fixed prices and offering some zero exit fee tariffs are at the same time charging a staggering £2,413 per year in a DNO region in Scotland.” [3]
ENDS
This press release refers to England, Scotland and Wales only. For full details, methodology and sources, the full report is available to download here.
[1] Ofgem: https://www.ofgem.gov.uk/publications/welcome-fall-price-cap-high-debt-levels-remain
The new report estimates that some customers are stuck in fixed rates which they cannot leave because of hefty exit fees which have risen 345% in the last three years and wipe out any potential savings by switching. Of the 383 fixed tariffs that could still have households on the average exit fee cost is £143, and 256 (67%) have exit fees more than £100. This is problematic as 292 (76%) of those fixed tariffs have an annual cost of more than the April 1690, meaning the household is worse off than the current price cap.
[2] Skyrocketing exit fees: Is it time Ofgem steps in and regulates how much suppliers can charge as an exit fee? At what point is it too much?
[3] Consistent high prices charged from Outfox the Market in Scottish Hydro (the northernmost region of Scotland).
