Are you being overcharged by your electricity provider?

We recently interviewed Jon Fletcher, CEO of Big Clean Switch, and he told us that an astonishing 50% of homeowners in the UK haven’t switched electricity providers in years, and this is one of the reasons that Ofgem (the UK’s independent energy regulator) has implemented the default tariff cap to prevent consumers from paying astronomical amounts for their electricity and gas. Since starting the My Home Farm sustainability blog, we have been contacted by hundreds of people about renewable heating and heat pumps, and I’m amazed by the way people generally approach paying for electricity.

Most households are in a “monthly budget” mindset where they set up direct debits to pay for their electricity, and they have not taken unit tariffs or standing charges into account. This becomes all too apparent when you visit an electricity provider’s website to get a quote – you input your annual consumption and you’re presented with a quote per month and what your annual bill is likely to be. On most websites you have to click several times to find out what the actual kWh tariff is. Based on this, I can understand why the regulator stepped in to prevent electricity providers from overcharging, and frankly ripping households off.

Now, more than ever, as the energy crisis in the UK rages on, homeowners should start to pay close attention to their utility bills. Our supplier was one of the many that went bankrupt this autumn and winter and our account was assigned to E.ON Next. We’ve received several emails from E.ON updating us on the progress of shifting our account, and the very first email we received informed us that we would be placed on their default Next Flex tariff at 23.17p/kWh with a standing charge of 28.04p per day.

In the very same email they wrote, “If you set up a Direct Debit, you’ll benefit from lower prices than shown here.” We waited for a few more weeks before we could create an account on the portal, and set up our direct debit as suggested. We then received another email, “Remember: you’ll benefit from lower prices if you pay by Direct Debit, and it’s quick and easy to set up in your online account.”

On Friday, the entire process was completed and we signed into the portal. The direct debit has been successfully set up, our balance from the previous provider has been carried over, but our tariff remains unchanged. It’s still 23.17p/kWh with a standing charge of 28.04p per day.

The obvious issue here is that E.ON might be relying on homeowners to not notice this, and it’s an easy way to make some extra money at a time that electricity providers are stretched. But there are rules and regulations in place, and it’s going to be a very tough winter financially for many households in the UK, especially for those that are running heat pumps to heat their properties, so every little saving will help.

The other cause for concern in our case is that this tariff, E.ON Next’s default tariff, exceeds the cap amount for a direct debit in our area. To check what your cap amount is for where you live (this is valid from October 2021 to April 2022) please refer to this link (thanks Kev M for finding this) then compare it to what you’re being charged by your provider.

We lodged a formal complaint with E.ON today and I’m going to be very interested to see what they say in response. I’ll update this article when we receive their reply.

In closing, if you’ve been switched recently, make sure that the tariff that you’re on does not exceed the cap. While this article is primarily about electricity tariffs and the potential impact on heat pump owners, the same will apply to your gas tariff, so please double and triple check this, because it could save you money this winter.