Special offers may mask poor value energy deals

Signing up to an energy deal that offers shopping vouchers, free gifts or other ‘added extras’ could add hundreds of pounds a year onto energy bills, according to a new investigation from Which?.

Energy customers are being offered incentives like football merchandise or carbon offsetting when they sign up to some energy tariffs. But new Which? research shows that it could be far cheaper instead to sign up to the lowest price energy tariff available and use the extra cash to buy the offers (or ‘freebies’) separately.

Research found incentives offered to lure customers into poor value schemes include:

> Free merchandise: For instance Npower’s Football 45 gives you up to £90 of vouchers to spend in any Football League club shop, but it costs £127 more than the cheapest tariff currently on the market, meaning customers would be better off switching to a cheaper deal and buying the football merchandise separately.

> ‘Green’ tariffs: SSE’s Oplan is a ‘green’ tariff that offsets CO2 emissions and costs £210 more than the cheapest deal on the market. But if customers offset the same amount of CO2 using a carbon offsetting company it would only cost about £20.

> Voucher incentives: M&S Energy promises up to £70 of M&S vouchers, but by switching to the cheapest deal on the market customers would have £148 to spend at a store of their choice.

Which? executive director, Richard Lloyd says:

“With major suppliers warning of price rises to come, it’s essential for people to consider switching to the cheapest tariff now and avoid being sucked in by incentives which could mask poor value deals.

“The Big Switch uncovered a staggering 1,435 different tariffs, so consumers have clearly got a bewildering number of offers to choose from. We urge everyone to check they are on the best deal for them as they could save significant amounts of money by switching.”

– Ends –

Notes to editors

For the further examples of tariffs offering incentives that might not provide the best value please contact Oliver.Mitchell@Which.co.uk

Examples provided are based on the following calculations:
> Average annual cost for a dual fuel customer on a standard credit meter, using 16,500kWh of gas and 3,300 kWh of electricity per year. Paying by monthly direct debit and based In the East Midlands region. Prices have been rounded and are inclusive of VAT. Your regional price will vary from that shown.

> Cheapest deal quoted above refers to First Utility iSave dual fuel v10, which costs £1,004 per year at average consumption. Cheapest deal as of 14 May 2012.

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