Can you find the cheapest energy deals with a little help from your friends?
The cheapest energy deals can’t be found on suppliers’ websites. Nor on comparison site tables. Despite falling energy prices, the best energy deals are actually being reserved for groupon-style collective switching deals. Power to the people.
Fixed energy tariffs are standing at a ten year low and have dropped below £900 a year –the cheapest deal on the market currently being £899 from GB Energy Supply for an average family usage. However, there are cheaper deals available by signing up to one of the growing number of collective switching programmes, where, a bit like price-drop TV, energy companies compete to offer the lowest tariff to a defined group of committed switchers.
An £876 tariff offer by the Telegraph (newpaper) has just sold out, snapped up by 8,000 people, and today, online comparison service uSwitch has offered a matching tariff with E.On which is available for group switchers until May 23.
The idea is, of course, that the energy companies benefit by instantly getting thousands of new customers without having to woo potential switchers with pricey advertising campaigns. And they’re still making money, as these cheapest deals are actually £419 cheaper than the average energy bill owing to the fact that three quarters of customers are on standard tariffs.
But how likely is it that the lowest collective tariffs are pinching at the profits of the energy giants anyway? Global crude oil prices are less than half what they were in mid-2014 prices, but energy bills are still flying relatively high, resulting in a Government investigation in January into why energy bills were not falling despite a drop in wholesale costs.
The "big six" energy firms claim they buy wholesale gas and oil months in advance, so absolutely totally cannot pass these savings on to consumers straightaway. And we all remember how they didn’t pass on any earlier increases in the wholesale costs as well…
There has been some movement, even in standard tariffs, with “token” price cuts that reduced annual bills by around £35 a year. However, research by our friends over at Which!!!, used hedging models to allow for such short- and long-term forward planning, and they think there is still scope for lower prices, suggesting that gas costs could drop by at least 8.8% and that a standard electricity tariff could fall by 10%
So if you’re looking to switch your energy bills, keep your eye out for a collective bandwagon upon which to jump, and if your fix is finishing soon, watch out for, possibly, even lower prices on the horizon.