As the cold winter months continue, more than 300,000 households could be automatically switched onto more expensive “default” energy tariffs in February.
If customers do not switch tariff or provider when their deal comes to an end companies could reap an “inertia windfall,” benefitting from financial inaction.
This month, there are 167 fixed energy tariffs coming to an end, according to new research by Comparethemarket.com.
The average annual cost of a fixed rate energy tariff ending in February is £918 ($1264). Rolling off fixed term deals onto default tariffs could collectively cost UK households over £20m a year compared with their current energy costs.
The average increase in energy bills equates to a potential £66 hit per household per year.
The data and analysis showed that if customers do not switch when their fixed tariff ends, energy companies are set to benefit from a huge “inertia windfall.”
Energy bills have been under pressure over the past year as lockdowns hit home. Households that do not switch before April also face an additional increase to their bills.
Ofgem, the regulator, recently announced the default energy price cap will change from its current level of £1,042, to £1,138, for dual fuel typical consumption households.
The increase of £96 includes an additional £23.69 that the regulator has allowed suppliers to recuperate from unpaid bills from households that have experienced financial difficulty during the pandemic.
Peter Earl, head of energy at Comparethemarket.com, said: “Time and time again we see people fall into the inertia trap. If you do not switch your supplier at the end of your fixed term it is almost certain that you will end up paying more for your energy than you should be.
“Those in a position to switch should consider doing so, as it will help reduce the overall amount you pay for energy and ensure you are getting better value for money. There is no better way to cut down on the cost of energy than by switching provider.”
Top 10 tariffs according to Comparethemarket.com data
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