September 17, 2020

Beware of Energy Supplier Exit Fees

Energy supplier exit fees (cancellation or leaving fees) are applied to fixed-term energy tariffs with a fixed price and contract end date. If a customer wants to switch energy and leave your provider before the end of the contract, an exit fee could apply.

A new report by Flipper, the UK’s first auto-switching energy company, sheds light on the hidden world of energy supplier exit fees.

The UK's average exit fee from all fixed rate tariffs that charge an exit fee is £31.26.

Nearly two-thirds of all energy tariffs don’t have exit fees, Including 50 fixed rate tariffs. Of the fixed rate tariffs with exit fees, only 23% are under £30 (per fuel). And 12% of fixed tariffs with exit fees are over £50 (so it could cost as much as £100 in exit fee charges for gas and electricity).

The highest energy exit fee in the UK is £100 per fuel by Engie - that’s £200 for both gas and electricity. It’s worth noting that Engie offers tariffs with exit fees of around £30 and a few tariffs with no exit fees at all.

The second highest energy exit fee belongs to First Utility who charge customers £75 per fuel (£150 for gas and electricity) to switch energy providers.

There are some fixed tariffs without any exit fees and one of the lowest fixed tariff energy exit fees is by So Energy at just £5. So Energy is also voted Citizens Advice's number one rated energy supplier for customer service. (2018)

When do energy supplier exit fees apply?

Ofgem, the energy industry regulators, state that If you are in the last 49 days of your fixed-term contract, you are not obliged to pay the exit fee and have the right to switch to any other energy supplier without being charged.

This means you have 49 days before the end date of your fixed-term tariff to switch to another energy deal.

All variable tariffs don't include exit fees. Because the price of a variable tariff changes month on month, energy supplier exit fees do not apply.

Beware of fake energy savings

Energy price comparison websites (PCWs) reel in customers with cheap tariff deals. But these cheap tariffs don’t lead to long-term savings. Some PCWs don’t calculate exit fees when comparing energy prices, so what looks like a good deal, can end up costing you more.

Case in point: The price of attractive low-cost variable energy tariff can change within three months, meaning you could get stung with a hefty bill without realising and don’t want to go through the same hassle of switching again which some suppliers depend on and any initial savings end up being cancelled out.

Popular cheap energy providers Outfox the market, Pure Planet and Bulb have all increased their energy prices for the third time this year. Pure Planet was caught in a Twitter storm when customers realised their energy bill had more than tripled.

There have been as many as 57 price rises in 2018.

Not something the average person can, or wants to keep up with. If you don’t switch to a new energy deal at the end of your fixed-term contract, you won’t be rolled onto another fixed-term tariff. Instead, you’ll be rolled automatically onto a standard rate tariff (SRT) supplied by your energy provider. This is also known as a default tariff or standard variable tariff. (SVT)

Standard rate tariffs are usually the most expensive, so switching energy 49 days before your contract is due to end will save you money on your energy bills.

Some energy suppliers rely on customer ignorance. Energy customers aren’t always notified clearly when they’ve been switched onto the more expensive standard rate tariff. So, always check your energy statements for price hikes.

Where can I find information about energy suppliers exit fees?

If you’re on a fixed-rate tariff (a fixed monthly fee and an end date) check your contract for details or information about exit fees. Those on variable tariffs won’t have to pay an exit fee, but you’ll need to keep an eye on those price hikes. (57 in 2018 alone...) Check the supplier’s website FAQs for energy exit fee information.

How Flipper manages energy exit fees

Flipper calculates savings with energy exit fees included. Savings figures tell customers how much they stand to save after exit fees are deducted.

Flipper’s algorithm—Joules—takes current energy supplier exit fees into account when checking the whole market for energy deals to make sure customers get the best long-term savings.

Flipper (Joules) checks when customers won’t receive any penalties for terminating their contract early. Flipper will calculate whether the customers is better off waiting until the 49 day exit free period before switching. There’s usually a spike in the number of people who flip (Flipper’s term for switching) during this period. This is because the exit fee doesn’t need to be deducted from the savings price, meaning bigger savings are to be had.

So rather than worrying about it - Let Flipper do the monthly checks to monitor any price hikes, let Flipper check which tariff you’re on and calculate any exit fees and the next best deal for you - Switching you automatically to the cheapest energy, forever.

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