What is automatic energy switching and how do services like LookAfterMyBills, Switchcraft and WeFlip work?

Scottishsun

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22 October 2018 15:24

AUTOMATIC energy switching providers have boomed in popularity in the last few years giving customers better tools to cut the amount they spend on energy – here we take a look at how it works.

By switching energy provider you can cut your energy bill by up to £300 a year, but many people still don’t bother.

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By switching energy provider, you can save hundreds of pounds a year

In fact, more than a third of UK households – or nine million – didn’t change gas or electricity provider between 2012 and 2017.

This means they lost out on £1,500 in savings over that period, according to figures from energy regulator Ofgem.

But for customers who aren’t bothered to scroll through comparison websites or hate shopping around for the best deal, there are new tools out there which automatically switched customers to a new, cheaper tariff.

How to auto-switch

You’ll need to register with an automatic switching provider and give personal details such as your address and how much energy you consume.

An algorithm then identifies the right moment to switch by comparing thousands of tariffs and pinpointing the best deal.

Once you’ve been switched, these services will then automatically check everyday to see if there is a cheaper tariff available – including any exit fees to leave your current deal.

Once there is a difference of around £50 – including fees – these services automatically move you onto the new, cheaper deal.

This process usually takes two weeks and customers can expect to be switched two or three times a year.

Before the switch is made, customers usually also get the option of deciding whether they’d like to stay with their old provider or switch to the new provider with a lower cost.

If anything still goes wrong in the switch, customers will as of next year automatically get a £30 payout.

What automatic energy switching services are out there?

There are a number of automatic energy switching providers in the UK, and they are all quite similar in the way they are run.

They make their money in two different ways: those that charge an upfront fee and compare deals from the entire market; and those that charge customers nothing but receive a fee from a smaller panel of suppliers each time a customer is switched to them.

This means that the services that are free may not offer the cheapest deal.

By switching providers through cashback websites instead, you can also save as much as £100 on your energy bills.

But if you want a company to switch the provider for you, here are some of your options:

  • Flipper

This provider charges an annual £25 subscription fee, but you can opt of the membership at any point.

  • Look After My Bills

This provider switches its customers free of charge.

At the end of August, Look After My Bills had 15,000 customers.

  • Migrate

This energy switching service launched today. It switches customers for free, and also donates £10 to local good causes for every new customer sign-up.

  • Switchd

It costs from £1.99 a month for a subscription, but Switchd guarantees to save each household at least £50 off their annual energy bill before it takes a payment.

It also has a free version where customers are switched to deals that pay a commission but aren’t the cheapest.

  • Switchcraft

This provider switches its customers free of charge.

  • WeFlip 

The new service, which comparison website GoCompare launched last week, also switches its customers free of charge.

Is it safe to switch to a small energy supplier?

FED-UP with sky high energy prices and poor customer service from the Big Six energy firms? Then you could save a packet by switching to a smaller firm.

Research from Which? has found customers with smaller and medium sized firms, such as Utility Warehouse, Flow Energy and Octopus Energy are much happier than those with the major firms.

The biggest risk of choosing a small provider is that it goes bust.

But remember that if the firm does go under you won’t be cut off, and Ofgem will try and get a new supplier in place as quickly as it can.

Once it has done this, the new firm will contact you. It doesn’t have to honour the deal you were on with the defunct firm – but under Ofgem rules any credit you have on your account is protected.

If you’re unhappy with the new supplier’s offer you are free to shop around for a new deal and switch – you won’t have to pay any exit fees to leave.

Ofgem video explains how the energy safeguard tariff or price cap works

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