The energy company that’s leading the way in guaranteeing a fair tariff

 

Personal Finance Editor

How much is a price promise worth? That obviously depends on what the promise says. In the home energy market, there have been plenty of false promises from suppliers seemingly focused only on squeezing extra profits out of hard-up people.

So when I heard of an energy company making a new price promise last week, my ears pricked up. I have long believed that – rather than be fussed about having the cheapest deal – millions of us just want a guarantee that we’re not paying over the odds for our heating and lighting.

Last year, I came across stories of next-door-neighbours being charged £300 more than each other because one of them was on the wrong tariff.

They were on the wrong one because their energy company had let a once market-leading deal drift so much that anyone still on it ended up paying much more than they needed to for their home fuel.

And that’s the problem with most best buys – they’re designed purely to pull in new customers. Once you’ve signed up, energy firms rely on your natural lethargy to remain on the same tariff even when it becomes much less competitive – and the energy supplier is making much bigger profits from you.

So a guarantee that your tariff will remain competitive – while not being a best buy – is what I think we need. It’s impossible to guarantee a best buy as they change so rapidly but, I believe, it should be possible to guarantee to be among the best available variable deals.

And that’s what the new Price Promise from First Utility appears to offer. The company is not one of the big six firms, but says it is the UK’s largest independent energy supplier.

The full promise states: “First Utility will track the Big Six on a weekly basis and will ensure that the iSave Everyday variable tariff average price (calculated on a national basis) is cheaper than each of the Big Six standard dual fuel tariffs.”

In short, it means that you’ll always pay less with the firm than on a standard tariff with one of the energy giants – British Gas, EDF, E.On, npower, Scottish Power and SSE.

It’s  great to know that you won’t be paying over the odds. So I’d like to applaud First Utility for leading the way in this. We need more guarantees and less gimmicks from energy firms.

But as the applause dies down, there are a couple of criticisms. First, the company couldn’t guarantee how long the price promise will last.  Darren Braham, chief financial officer, would only say that it is “enduring”. Without a guarantee for life, it gives the firm the option to withdraw its promise at some stage.

Second, First Utility’s price promise only covers the Big Six’s standard plans. As uSwitch points out, the standard plans are among the least competitive on the market.

“Even the Big Six themselves offer cheaper tariffs, so consumers need to compare the whole of the market before making a decision, especially as there is more than £200 between the cheapest and the most expensive tariffs at the moment,” Tom Lyon, energy expert at uSwitch, advises.

He goes on to point out that most people would be better off on a fixed rate at the moment with First Utility’s own deal coming in at less than the Big Six’s standard tariffs.

But it’s that kind of short-termism that I think we’ve had enough of. Anyone fixing now will have to look for another deal in 12 months or so. I’m fed up with doing that. I just want to know that the rate I’m paying is competitive.

A price promise should guarantee that. Sure, you may pay over the odds from time to time if variable rates rise  but there’s the same risk with a fixed rate if prices fall.

But I believe many of us want a reliable long-term price promise. Until First Utility can guarantee  that its price promise will last for, say, 10 years, its offering falls just a little bit short. That means there’s a challenge to rival energy suppliers – match or better First Utility’s deal.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

    Is this the future of flying?

    Battery-powered planes made of plastic, and without flight decks
    Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

    Isis are barbarians

    but the Caliphate is an ancient Muslim ideal
    The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

    Curse of Brink's Mat strikes again

    Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
    Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

    'The ministers talk to us about miracles'

    Why Greeks are cynical ahead of the bailout referendum
    Call of the wild: How science is learning to decode the way animals communicate

    Call of the wild

    How science is learning to decode the way animals communicate
    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Africa on the menu: Three foodie friends want to popularise dishes from the continent

    Africa on the menu

    Three foodie friends want to popularise dishes from the hot new continent
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
    10 best statement lightbulbs

    10 best statement lightbulbs

    Dare to bare with some out-of-the-ordinary illumination
    Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

    Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

    Briton pumped up for dream meeting with world No 1
    Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

    Nick Bollettieri's Wimbledon Files

    It's time for big John Isner to produce the goods to go with his thumping serve
    Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

    Dustin Brown

    Who is the German player that knocked Nadal out of Wimbeldon 2015?
    Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

    Damien Martyn: 'England are fired up again, just like in 2005...'

    Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test