Bill payers risk being stuck on expensive fixed rate energy tariffs or with poor customer service as exit fees have increased by 345% in the last three years.
Around three million UK households have opted for fixed energy tariffs and the latest Warm This Winter Tariff Watch report shows that the majority have exit fees of more than £100.
The report also reveals 76% of fixed tariffs have annual costs of £1,690 or more meaning they will pay more than the current price cap. The most expensive tariff is a 2 year fixed at £1,712 a year for a typical household – leaving them £84 worse off and with extortionate exit fees of £300.
More broadly, researchers found that exit fees have dramatically increased from an average of £42.06 in early 2021 to a peak of £187.21 on average today (a 345% increase).
High tariffs and high exit fees mean that some customers will be worse off and unable to switch to a cheaper tariff because fees would wipe out any potential savings from moving supplier. It also acts as a trap for those customers who have had poor customer service and are unable to switch supplier.
In the latest edition of Tariff Watch compiled by Future Energy Associates (FEA) who analysed the best deals on the market for customers warns that households could end up worse off if they fix now, even with the latest forecasts that prices could rise again slightly later this year.
A spokesperson for the End Fuel Poverty Coalition commented:
“Exit fees have gone from a minor irritation to a serious concern. Customers who have had poor customer service may now find themselves trapped with their supplier due to these penalties.
“The energy industry is quick to promote the idea that switching will save you money, but the reality is that the small print could leave struggling customers out of pocket.
“Households who are suffering the most are often the ones looking for the most security through a fixed tariff, but we would urge them to only fix if they are absolutely certain it is the right thing to do.
“Checking your bill to get your existing usage numbers and entering these details into price comparison sites is one way of testing the market – but always check that exit fees are under £100.”
Warm This Winter spokesperson Fiona Waters said:
“Yet again energy suppliers are letting customers down with many stuck in fixed rate deals they can’t get out of because of extortionate exit fees and it’s Hobson’s choice for those who want the peace of mind of a fixed rate but will probably end up worse off later in the year.
“It’s just ridiculous and unnecessary that bill payers have to navigate such a complex tariff system where they get ripped off at every level, from rising standing charges to profiteering gas companies, and still face bills that are 60 percent higher than three years ago.
“We need long term solutions from government such as expanding homegrown renewable energy and a mass programme of insulation to bring down bills once and for all.”
Future Energy Associates analyst Dylan Johnson, who helped compile the report, said:
“While we have seen the return of competitive market conditions we are worried about certain consumer groups being left behind. Our data shows evidence that specific suppliers are raising prices in certain regions to absurd levels.”
ENDS
Relevant to England, Scotland and Wales only. For full details, methodology and sources, the full report is available to download: https://www.endfuelpoverty.org.uk/wp-content/uploads/Tariff_Watch_4_Final.pdf