How the population could save by ditching their traditional energy suppliers

posted on 18/03/2013 16:54:01 by Scott Byrom

A close look at potential savings on a region-by-region basis

light-switch
Switching on: Comparing the most popular tariffs available against standard tariffs offered by regional 'incumbents' shows how the UK population could save on their energy bills

Once upon a time, many moons ago, there were fourteen regional companies called public electricity suppliers. The history is complicated, but privatisation came in 1990 and these suppliers became regional electricity companies (RECs). After that, they were gradually acquired by companies that the industry now refers to as the 'big six'. These are the major energy suppliers that are now household names - brands like npower, e.on and EDF.

This legacy of privatisation is the reason why certain companies dominate certain regions - for example EDF in London and the South, npower in the Midlands and Yorkshire. We call these the 'incumbent' energy suppliers. They were there in the first place and - given that a large majority of households have never switched their energy supply - by-and-large they still are.

The situation with gas is more clear cut. British Gas, the private version, became the incumbent supplier for all fourteen regions and, having acquired many electricity customers following the advent of "dual fuel" contracts, they are the market leaders in home energy by some distance.

The legacy of privatisation is the reason why certain companies dominate certain regions, but the reality is that any home can be supplied by pretty much any energy supplier out there.

However, the reality is that any home can be supplied by pretty much any energy supplier out there - and this extends beyond the 'big six' to around twelve smaller suppliers that you may have never heard of.

Given that a huge number of non-switching customers inevitably still receive energy from their incumbent suppliers, I was interested in what potential savings looked like on a region-by-region basis. I've assumed an average level of consumption across the whole country, and then looked at the annual gas and electricity bills on the incumbent suppliers' standard tariff. I've then compared that to the cheapest 'dual fuel' energy tariff on the market and looked at the price difference between them.

It turns out that people in Yorkshire, whose incumbent electricity supplier is npower, come out top of the pile in terms of potential savings. They can reduce their energy bills by £296.85 - a reduction of 22.7% - against a national average of £282.79 (21.4%). People in the Midlands are not far behind - but the outlook even looks rosy for Wales, the region at the bottom of the pile in terms of savings.

They suffer from the fact that the best deal is more expensive in their region (so they might find something even cheaper if they look hard enough) but still come out of a switch with a saving of £254.86, slashing their energy bill by a not-to-be-sniffed-at 19.3%.

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Information correct on 20th March 2013.
Based on gas usage of 16,500 kWh and electricity usage of 3,300kWh.
*Spark Energy 'Spark Advance'
**Scottish Power 'Online Fixed Sept 2014'
Traditional supply regionIncumbent Gas SupplierGas BillIncumbent Electricity SupplierElectricity BillTotal BillBill on cheapest tariff*Save by switching to cheapest tariff% off billBill on most popular fixed tariff**Save by switching to popular fixed tariff% off bill
Eastern British Gas £803.00 e.on £518.06 £1,321.06 £1,025.12 £295.94 22.4% £1,141.43 £179.63 13.6%
East Midlands British Gas £789.14 e.on £512.03 £1,301.17 £1,031.06 £270.11 20.8% £1,145.50 £155.67 12.0%
London British Gas £810.27 EDF Energy £506.18 £1,316.45 £1,025.12 £291.33 22.1% £1,223.93 £92.52 7.0%
Manweb (North West) British Gas £803.69 Scottish Power £555.05 £1,358.74 £1,068.97 £289.77 21.3% £1,247.74 £111.00 8.2%
Midlands British Gas £824.65 npower £514.25 £1,338.90 £1,040.85 £298.05 22.3% £1,145.73 £193.17 14.4%
Northern British Gas £801.44 npower £517.12 £1,318.56 £1,042.46 £276.10 20.9% £1,201.33 £117.23 8.9%
Norweb (North West) British Gas £794.51 e.on £530.44 £1,324.95 £1,045.46 £279.49 21.1% £1,177.36 £147.59 11.1%
Scottish Hydro (Northern Scotland) British Gas £782.03 SSE £537.15 £1,319.18 £1,059.76 £259.42 19.7% £1,238.32 £80.86 6.1%
Scottish Power (Southern Scotland) British Gas £782.03 Scottish Power £527.26 £1,309.29 £1,025.62 £283.67 21.7% £1,203.90 £105.39 8.0%
Seeboard (South East) British Gas £819.97 EDF Energy £510.42 £1,330.39 £1,034.73 £295.66 22.2% £1,212.12 £118.27 8.9%
Southern British Gas £819.80 SSE £502.84 £1,322.64 £1,036.20 £286.44 21.7% £1,190.32 £132.32 10.0%
SWALEC (Wales) British Gas £796.24 SSE £525.71 £1,321.95 £1,067.09 £254.86 19.3% £1,238.87 £83.08 6.3%
SWEB (South West) British Gas £810.10 EDF Energy £535.82 £1,345.92 £1,064.57 £281.35 20.9% £1,241.91 £104.01 7.7%
Yorkshire British Gas £791.39 npower £513.56 £1,304.95 £1,008.10 £296.85 22.7% £1,122.71 £182.24 14.0%
National Average         £1,323.87 £1,041.08 £282.79 21.4% £1,195.08 £128.78 9.7%

You may have noticed that the table also contains a comparison with the most popular fixed deal on the market right now. In this comparison, the Midlands pips Yorkshire to the top of the savings table, so people supplied by their incumbent suppliers in Coventry, for example, can save £193.17 (14.4%) against today's prices on a non-fixed contract.

The saving figures for switching to a fixed tariff are not as dramatic - but they're still significant and the prices are guaranteed, in this case, until September 2014. This type of tariff gives families the chance to budget more effectively - you pay more than the cheapest variable tariff available, but it's still less than a standard contract from an incumbent supplier (£128.78 is the average saving nationally) and the price won't change until the end of the contract. This tends to work out well for customers and means the real saving could potentially be much higher because prices on a variable contract are liable to change at a moment's notice. And as we know, changes in energy prices only tend to go one way.

Scott Byrom

Scott has worked in the energy sector since 2006 and is a regular commentator on consumer issues in the industry in the UK media. Scott joined Make It Cheaper and its sister company UK Power in 2012 to use his passion and expertise to empower UK consumers to spend less and use less energy in their homes.

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