In this article
- Myth 1: I can’t switch energy provider if I live in a rented house
- Myth 2: Variable price tariffs are cheaper than fixed tariffs
- Myth 3: I have to tell my old energy supplier I’m leaving it
- Myth 4: I pay for what I use so it’s not possible to overpay for energy
- Myth 5: I can’t switch energy providers if I’m on a prepayment meter
- Myth 6: I need a prepayment meter if I live in a rented property
- Myth 7: Switching energy provider means I’ll be without power for a while
- Myth 8: Prepayment meters are a cheap way to pay for energy
- Myth 9: Someone needs to be at home when the switchover takes place
- Myth 10: I could be left without power if my energy supplier goes bust
There are many myths regarding energy switching - we’re setting the record straight so you know how easy it is to change suppliers and how much money you can save.
There’s a lot of misinformation around about switching energy suppliers
This confusion could result in 75% of households paying more for their energy than they need to*
Switching suppliers isn’t complicated at all – the savings are well worth the time investment
Myth 1: I can’t switch energy provider if I live in a rented house
A survey by TotallyMoney found that 64%* of people believed that because the landlord owns a rented property, he or she has the final say on which energy provider tenants must use. But this simply isn’t true. If you’re paying the energy bill, it’s your decision about which supplier you use and which tariff you pick. If you’re a tenant switching to a cheaper energy tariff could save you hundreds of pounds each year.
Myth 2: Variable price tariffs are cheaper than fixed tariffs
On a variable rate tariff, the price you pay per unit of energy can go up or down. Your supplier might change the price if there are changes to wholesale energy prices.
They can be great if wholesale prices fall and your supplier passes on this price cut to customers. But your supplier is also free to increase the unit price whenever it chooses – and energy price hikes are depressingly common.
Fixed tariffs have a set price per unit of energy – and this won’t change for the duration of the fix. So you don’t have to worry about wholesale prices affecting your bill. Another plus is that fixed tariffs are often deliberately cheaper to entice new customers.
If you believed the myth about variable tariffs being cheaper, you’re not alone. Our survey found that three quarters (75%) of people* were not aware that fixed tariffs are usually the cheaper option.
However be aware that if you go for a fixed tariff and the price of energy falls, you could get stuck paying above the going rate for your gas and electricity.
Although you will be able to get out of your contract, you should expect to pay early exit or cancellation fees.
This could mean that overall you end up paying more than what you would have on a variable tariff.
You should always think carefully about your financial situation before deciding which energy tariff to go for.
Myth 3: I have to tell my old energy supplier I’m leaving it
Our survey found four in five (81%) people* thought switching energy suppliers is a lot more complicated than it actually is.
But it’s pretty easy. You only have to speak to one supplier: your new one.
Your new supplier will tell your old supplier you’re leaving and arrange a switchover date to ensure you’re not billed twice for any period of time.
So there’s no need to have an awkward conversation where you tell your old supplier you’re ditching it.
Myth 4: I pay for what I use so it’s not possible to overpay for energy
Some people think that paying for energy is like eating at a restaurant: you pay at the end and are only billed for what you had.
But that’s not how it works. If you have a direct debit set up for your energy bills, you could be using less energy than you’re paying for. Billing errors and incorrect meter readings could also mean you’ve overpaid for your energy.
Our research found that more than six in 10 (63%) people didn’t realise they could be in credit to their energy supplier.
If you end up in credit, you are entitled to claim that money back. If you give your supplier a call, it will refund the money to your bank account.
Myth 5: I can’t switch energy providers if I’m on a prepayment meter
Many people think that just because a particular energy company has installed a prepayment meter in their home, they have to stick with that supplier forever.
But this isn’t true. If you have a prepayment meter, you can still shop around for a new tariff and switch suppliers if you find one that suits you.
An even better thing to do is to switch away from a prepayment meter tariff altogether. Having a standard meter installed will give you access to much cheaper tariffs. You should speak to your existing supplier if you want to switch from prepayment to a standard meter.
Myth 6: I need a prepayment meter if I live in a rented property
Some landlords have a prepayment meter installed in case tenants run up a large energy bill then leave the property without paying.
But there’s no legal obligation to use a prepayment energy meter if you rent. You are free to replace a prepay meter with a regular meter - but only 20% of people realised this when surveyed.
If you’re paying the bill, it’s up to you what kind of meter you have.
Prepay energy tariffs tend to be more expensive than other types of tariff, so swapping your meter and choosing a cheaper standard tariff could save you hundreds of pounds. You’ll need to speak to your existing supplier to arrange for the meter to be changed from a prepayment meter to a standard meter. Once the standard meter is installed, you’ll be free to switch suppliers and tariffs.
It’s worth checking your tenancy agreement as changing meters may count as an alteration to the property so you might be asked to switch back to the original meter when you move out.
Myth 7: Switching energy provider means I’ll be without power for a while
TotallyMoney found that more than half (57%) of people worry that they’ll be cut off for a time when switching suppliers.
But don’t worry, you won't be without electricity or gas when you switch, not even for a second.
Energy is generated at power stations and then connected to your home by local distributor network operators.
Your supplier buys the energy at wholesale rates and then sells it onto you. It's all the same energy, from the same source, just charged on a different tariff.
Myth 8: Prepayment meters are a cheap way to pay for energy
repayment meters can be a good way to budget for your energy use. By topping up a meter you can control how much energy you use, and you won’t ever be on the receiving end of an unexpected bill.
But a prepayment meter can cost you more in the long run – in fact, they are usually the most expensive way to pay for energy. These tariffs have some of the most pricey unit costs on the market.
Switching to a standard tariff will save you money. If you opt to pay by direct debit you can budget how much you spend on energy. By checking your energy account each month you can check you’re not running up a deficit.
Myth 9: Someone needs to be at home when the switchover takes place
TotallyMoney research found that two thirds (66%) of people think someone has to be at home on the day you switch between tariffs or providers. But this isn’t true.
The switch happens entirely at the supplier’s end, not at your home or within your house. Unlike switching broadband, the engineer doesn’t even need to come to your street.
You might need to provide a meter reading so your final bill can be accurately calculated – but you can do that yourself.
Otherwise, you probably won’t notice anything has changed until you receive your bill.
However, if you’re switching the type of meter you have installed, someone may need to be at home when the engineer comes.
Myth 10: I could be left without power if my energy supplier goes bust
Many people are hesitant to switch to a smaller or unknown supplier as they fear they could be left without power in the event the supplier goes out of business.
But while a handful of energy firms have gone bust over the past couple of years, it’s nothing to worry about.
If a company ceases trading, Ofgem, the energy regulator, will appoint a new supplier — referred to as the “supplier of last resort” — to take over your supply. Ofgem’s safety net ensures you won’t be cut off while this happens.
You can either stay with the new supplier or switch to a different provider and tariff.
So, now you know the truth about energy switching, you can compare energy tariffs here (link to energy switch page).
TotallyMoney's Financial Awareness Survey 2020 is a nationally representative survey of 2,000 UK adults, commissioned by TotallyMoney and carried out by OnePoll, survey date 20/01/2020 - 22/01/2020