The second Warm This Winter Tariff Watch report has revealed that the energy market has 337 fixed price tariffs that are more expensive than the current Ofgem price cap. 206 tariffs will still be more expensive than the predicted January price cap.
Consumers on these tariffs will be paying a penalty for having fixed their energy bills and with an average exit fee of £138, many households could feel trapped into remaining on tariffs which now represent a bad deal.
The report also reveals an unwelcome league table of the exit fees some energy firms charge for leaving a tariff early. [1]
Just one in twenty (6%) British Gas tariffs come with no exit fees – and the firm’s average exit fee is £62. Among the other main suppliers, 12% of EONs tariffs have no exit fees, 14% of EDF and 15% of Ovo’s tariffs are free of exit fees. Ecotricity, Utility Warehouse, So Energy also had small proportions of their tariffs with zero exit fees.
On the other hand, almost all tariffs for Good Energy, Octopus and Cooperative Energy come with no exit fees. However, one smaller supplier, Ecotricity, charges the highest exit fees, averaging £150.
As unit costs have come down in recent months, but are expected to increase again in January 2024, the report reveals that customers could save money over the next 12 months if offered a “one year fixed” tariff with unit rates and standing charges below the current price cap. [2]
These rates for a direct debit customer are as the below:
- Standing Charges: Electric 53 p/day, Gas 30 p/day
- Unit Rates: Electric 27 p/kWh, Gas 7 p/kWh
However, the analysis shows there just ONE dual fuel fixed tariff currently on the market is below these levels. For the best variable deal, the report authors predict that the current best offer could be with two different suppliers.
The report also reveals that energy firms’ operating costs are making up £242 (an average of 13%) of customers’ bills.
In an analysis of firms’ operating costs, the report reveals that energy firms may be spending almost as much on marketing, which includes sponsoring football teams, event venues and creating TV adverts (c.11% of operating costs), as they do on operating customer contact centres (c.12% of operating costs).
Operating costs, which go into the standing charges paid by households, also consist of central overheads, such as office rents and the cost of maintaining energy meters.
The report also reveals that suppliers are now expected to make an additional £140m in profit on the nation’s energy bills over the next 12 months, thanks to changes to the Ofgem price cap which came into force on 1 October.
The new rules mean that firms now make an average £64.70 profit per customer per year, up by £4.70 per customer. The projected 12 month profits for all energy suppliers has hit £1.88bn, an increase of £140m from the previous Warm This Winter Tariff Watch report (an 8% increase).
The predictions are in addition to any profits which firms have already made in 2023, which stand at a conservative estimate of over £2bn. [3]
A spokesperson for the End Fuel Poverty Coalition, commented:
“With energy prices subject to change, customers should exercise extreme caution when thinking about switching and fixing and we would call on companies to waive exit fees so people can switch easily to the cheapest tariff available.
“And while households suffer, the Government sits on its hands and refuses to introduce longer term tariff reforms which could bring down bills and help people stay warm this winter and every winter.
“Indeed, with the Prime Minister recently halting work to improve the energy efficiency of buildings, Britain’s households will be trapped in cold damp homes for years to come.”
Fi Waters, spokesperson for the Warm This Winter campaign which commissioned the report, said:
“Energy firms spending £242 per customer on operating costs adds insult to injury for UK households struggling to stay warm this winter. Customers should not be subsidising fancy headquarters, entertaining and marketing when these companies are making billions. That money should be used to end energy debt and lower bills. It’s yet another example of our broken energy system which the government and energy firms seem to be in denial about.”
ENDS
This press release refers to England, Scotland and Wales only. For full details, methodology and sources, read the full report available at: https://www.endfuelpoverty.org.uk/wp-content/uploads/Tariff_Watch_2_Final_Oct_2023.pdf
[1] Minimum, maximum and average single fuel exit fees per supplier for fixed tariffs in the last two years.
| Energy firm | Minimum exit fee | Maximum exit fee | Average exit fee | Count of zero exit fee tariffs | % with zero exit fees |
| Ecotricity | £100 | £200 | £150 | 0 | 0% |
| Utility Warehouse | £25 | £75 | £46 | 0 | 0% |
| So Energy | £5 | £75 | £27 | 0 | 0% |
| Shell Energy | £30 | £75 | £44 | 1 | 1% |
| British Gas | £30 | £100 | £62 | 7 | 6% |
| E.ON | £25 | £30 | £29 | 3 | 12% |
| EDF Energy | £15 | £200 | £66 | 29 | 14% |
| OVO Energy | £30 | £75 | £37 | 30 | 15% |
| SSE | £30 | £75 | £40 | 19 | 33% |
| ScottishPower | £30 | £150 | £66 | 66 | 40% |
| Outfox the Market | £30 | £300 | £62 | 24 | 47% |
| Sainsbury’s Energy | £30 | £30 | £30 | 9 | 69% |
| Affect Energy | £75 | £75 | £75 | 25 | 93% |
| Ebico Living | £75 | £75 | £75 | 33 | 94% |
| Co-operative Energy | £75 | £75 | £75 | 85 | 98% |
| Octopus Energy | £75 | £75 | £75 | 249 | 99% |
| Good Energy | £0 | £0 | £0 | 4 | 100% |
[2] Best tariff prices correct as of 2 October 2023. The energy market is constantly changing and customers should always check for the best deal based on their actual usage. The information on suppliers is solely a reflection on tariff prices and takes no other factors into account (e.g. customer service levels, support for vulnerable households etc). Households should always think before they fix.
Advice provided in this press release should not be seen as formal financial advice. Energy prices are volatile and subject to significant changes at short notice. Ofgem updates its price cap calculations every quarter. Future Energy Associates advise that households who suspect they may be on overly expensive energy tariffs should explore alternative options on price comparison websites, consult with their energy suppliers, or seek guidance from consumer advocacy groups, such as Citizen’s Advice to determine the most suitable steps for them.
[3] Declared profits from 2023:
- British Gas: £969m (H1 2023)
- Eon: £730m (€839 million) in 6 months for its UK arm
- Scottish Power retail: £576m in 6 months
- Good Energy: £13.1m profit before tax in 6 months
Among the firms which also provided energy, but whose supply side profits are harder to quantify EDF, profits lept to £2bn (€2.3 billion) in the first half of 2023. Ofgem is consulting on plans to make profits reporting more transparent.