All the sneaky fees energy firms are hitting customers with – and how to avoid them
AS temperatures fall and people have been switching on the heating, everyone is thinking of ways to cut energy bills.
But no matter how hard people try, many are hit by other hefty fees.
Energy prices are set to rise again in January, adding an extra £21 to bills, and households could end up paying hundreds of pounds extra due to sneaky charges.
Here, Laura Purkess outlines ways energy firms are slapping these hidden costs on customers – and how you can try to avoid them . . .
EARLY EXIT FEES
MOST energy suppliers charge an exit fee if you want to switch providers before the end of your fixed term.
Around three million households were on fixed energy tariffs as of April.
A recent Tariff Watch report by Warm This Winter — a campaign run by a coalition of charities — found most fixed energy tariffs have exit fees of more than £100 with some as high as £187.21.
Typically, you will have to pay an exit fee if you leave your contract 49 days before the fixed term ends.
Check the terms and conditions of your energy supplier and the date your tariff ends before asking to switch, or you could be hit with a nasty unexpected bill.
Fiona Waters, from Warm This Winter, 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.”
You can usually leave your contract within the first 14 days, if you change your mind, and incur no exit fee.
BROKER FEES
CERTAIN energy customers who arrange their tariff through a broker, such as small business owners, may have been ripped off by sneaky “broker fees”.
This is where customers are charged extra in commission, which is paid to the broker.
Energy firms are expected to owe billions of pounds after a small business won a landmark court case over hidden broker fees in its bills earlier this year.
So-called “micro business” owners are thought to be most affected.
Watchdog Ofgem introduced new rules to improve transparency around broker fees in April, but many have already been overcharged without realising.
Contact your supplier and raise a complaint if you think you have been affected.
STANDING CHARGES
WHILE everyone has to pay standing charges, they don’t form part of your bill for the energy you actually use.
Instead, they are charged for keeping households connected to the grid and help maintain the energy network.
Households typically have to pay around £379 a year in standing charges, up from £182 five years ago.
Consumer champion Martin Lewis has called the charges an “unfair energy poll tax” that “dis—incentivises people from cutting bills”, as reducing your energy usage does not lower your standing charges.
You may be able to get a cheaper standing charge with a different supplier, but it won’t be a huge difference.
However, it’s always worth checking your energy tariff’s standing charge costs as well as the unit prices before locking into a deal.
PAPER BILL FEES
CUSTOMERS who opt to keep receiving their paper communications could be hit by a sneaky new charge of up to £18 a year.
Sun Money recently revealed Ovo Energy is introducing a new £1.50 monthly fee for customers who opt to keep receiving paper bills from this month.
This will not apply to certain vulnerable customers or those on the Priority Services Register.
Meanwhile, we found E.On charges customers £1 if they request a paper bill.
It is understood that Octopus Energy, British Gas and Scottish Power do not currently charge these fees.
If you can access an online account, ask your supplier to switch to paperless bills to avoid being charged.
Ovo said: “We send digital communications to most customers. We still offer paper communications to anyone on the Priority Services Register, those who receive adapted communications, and anyone needing financial support.”
E.On did not respond to requests for comment.
GREEN DEAL CHARGES
ENERGY customers may be charged extra fees if they use a government scheme called the Green Deal.
It helps people to make energy-saving improvements to their homes, such as insulation, draught-proofing or installing solar panels.
But you have to pay any costs covered by the scheme back through your energy bills, and some customers have complained they are paying more than they are saving.
The real kicker is that if you buy a house with a Green Deal attached, you become liable for the outstanding loan and this is added to your energy bill.
Look out for any Green Deal charges on your bill.
You may be able to complain to the Green Deal provider if you are unhappy.
OAPs banking fuel cash
HUNDREDS of thousands of pensioners have started to receive Winter Fuel Payments worth up to £300.
The Government confirmed that the cash began to land in bank accounts on Monday.
More than 1.3million vulnerable households in England and Wales will receive the money to help with their energy bills.
Previously, the payments were made to anyone over the state pension age.
But cash is now means tested, so pensioners only qualify if they are on certain benefits, including Pension Credit, Income Support or Universal Credit.
They must also have received the benefit in the “qualifying week” of September 16 to 22.
People born between September 23, 1944, and September 22, 1958, will receive £200.
Those born before September 23, 1944, will get £300.
Payments should land in bank accounts automatically in the coming months.
Those who are eligible should look out for a code on their bank statement.
It is their National Insurance number followed by “DWP WFP”.
If you are due a payment but have not received it by January 29, contact the Winter Fuel Payment Centre on 0800 731 0160.
Those who are eligible for Pension Credit but have not yet applied have until December 21 to claim to also get a Winter Fuel Payment.
This is because Pension Credit claims can be backdated by three months.
They may also be able to get up to three months of backdated Pension Credit, worth up to £3,900 a year.
Mortgage window is cut
A MAJOR bank has reduced the amount of time borrowers have to lock into a new mortgage before their current offer ends.
NatWest customers now have four months before the end of their existing mortgage to find a new deal.
Previously, homeowners could choose a new mortgage up to six months before their existing one was due to expire.
A fixed-rate mortgage means you agree to pay an interest rate for a set time, which is usually two or five years.
This means your monthly payments will stay the same for that period.
Mortgage rates constantly rise and fall for a range of reasons, including Government policy and the cost for banks to borrow money to lend to customers.
Being able to choose a new deal before your current one ends means you can get the lowest interest rate possible on your home loan.
If you find a better deal before your current mortgage expires, you can swap without paying a penalty.
NatWest is the sixth bank to slash its product transfer period.
Halifax, Lloyds, Nationwide and Santander customers also have four months to lock in a new rate.
Barclays allows three months.
A NatWest spokesperson said: “We’re seeing customers choosing to lock in new rates much closer to the end of their current term.
“To align with this, and like others in the market, we have moved to a four-month window for choosing a new product.”