If you’re keen on saving cash, getting on the right energy deal is a must – but for those who’ve already fixed, savings shown on comparison sites aren’t what they appear to be.
Comparison sites are a great way of seeing what tariffs are on the market and how much they’ll cost you over a 12 month period. They also let you easily make a switch. If you pay a standard (ie not fixed) energy price, you can possibly save up to £200 by fixing your supplier.
If you’ve already fixed, it’s another matter.
I’m regularly fixing and switching my energy provider to make sure I’m on the best deal possible. My deal has another six months to go, but when I looked this week at a few comparison sites, I was told I could be saving over £100 a year. Yes there are new companies out there undercutting the big boys, but since I last fixed, prices have gone up. £100 was just too much. Something didn’t ring true. So I’ve investigated.
How comparison sites work out savings
Common sense says a comparison would be between my existing deal and the newer tariffs available. So if I’m paying £x for each kilowatt per hour now, the new prices shown will be based on £y for each kilowatt per hour. Then any saving would be the difference between the two.
Here’s how USwitch, MoneySuperMarket, Which? and many of the others actually do the calculations. They all use personal projections of the next 12 months. If a fix ends during that time, it uses the prices from your networks standard tariffs for the remainder of the year. Some also factor in seasonality – so more gas in winter.
You’ll struggle to find explanations on many of the sites. MoneySuperMarket is one of the websites which actually gives an example of how a comparison is calculated:
- They say the remaining 35 days on a fixed tariff costs £100
- Then the 330 days left in the year on a standard tariff would cost £1300. That’s a total of £1400
- The new tariff they find would cost £1225 a year, meaning a saving £175.
How is that different to my expectation of how it would be calculated? In the above example, 12 months of the original fixed tariff would actually cost £1043. That means the new fixed tariff would cost £182 more a year.
So splashing a big “You’ll save £175” on the comparison results feels misleading. The majority of the sites would have you think you can save that much money by switching now. Actually each year you’d be paying £182 extra than you currently do!
You’re probably be paying more by switching early
The personal projection system does work for people who pay a standard – non fixed – price. But those who have fixed before are surely likely to fix again?
Once there’s less than a year of a fix to go, anyone who compares deals would probably see an annual saving in their results. This is dangerous as people could be switching early based on this saving. Instead it’s likely they’ll be out of pocket!
How do you accurately see what you could be paying?
There’s no easy answer as all sites are different. My advice is to:
- Use exact figures from your bills to show how much energy you use in a year
- Ignore annual saving figures
- Look for the lowest new annual cost. If it’s more than you’re paying now, stay with your current deal until just before your fix ends.
- Ideally only compare when you’ve two months left of your fix (it can take this long to switch) or if there is a price drop.
The system does work for those who haven’t fixed and are on standard tariffs though. If that’s you, savings really could be as much as £200. You can read about how to do it in my 7 Steps to cheaper energy guide.
Why aren’t sites clearer?
It was surprising how difficult it was for me to find out information on this. I couldn’t find any details about how sites such as CompareTheMarket and Confused.com perform their calculations, while it wasn’t easy to find on sites which did (MoneySuperMarket, uSwitch and Which?).
It looks like Ofgem (the government’s energy body) want to make “Personal Projections” a requirement for accredited comparison sites, which would make this worse. I found this response to a government consultation from Money Saving Expert showing they’re against this system for the same reasons as me, but it implies that they too calculate this way.
There’s lots in the press about comparison sites needing to be open about commissions – how about they’re open about how they compare too?
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