From the first of February, the 6 million domestic energy customers who pay their bills via Quarterly Cash or Cheque are going to see fuel costs rise by an average of £50 – yet unlike the universal price hikes that unleashed chaos upon markets at the close of 2012, this time there’s actually something consumers can do about it.
With the average dual fuel bill having risen by £93 in the last year alone, yet another expensive increase should come as little surprise. After all, the average UK household uses 39.4 per cent of its annual energy consumption during the winter months – pair this with Big Six price hikes in excess of 8.8 per cent, and many homes in the UK are set to face a substantial struggle paying for fuel throughout the aftermath of the festive season.
That being said, customers are only shooting themselves in the foot by opting to pay their bills via Quarterly Cash or Cheque, as suppliers are intentionally charging them more based solely upon their preferred method of payment.
Indeed, it doesn’t take a gas engineer to figure out that energy suppliers don’t want customers to use Quarterly Cash or Cheque, not least of all because it minimises profit. When Quarterly CC is applied, the exact dates of payment submissions are less precise, broadly leading to a less accurate mode with which suppliers are then able to buy and sell their energy. Accordingly, any potential losses are passed straight onto the customer.
In fact, those who pay their bills quarterly are subject to average rates of 7.18 per cent more for their annual consumption – with major variations based upon suppliers. Indeed, standard Quarterly CC customers with E.ON Energy face annual bills of up to £109.62 greater than those who pay for the exact same plan via Monthly Direct Debit. Unfortunately, this difference is based upon little more than the opinion that it's volatile to accept Quarterly CC payments.
Domestic energy customers are sluggish to change when it comes to their household energy bills. In fact, industry-regulator OFGEM has estimated that over 60 per cent of bill payers have never pursued switching suppliers, costing them an otherwise avoidable £4bn every year; therefore, UK customers hardly have a right to complain about being forced to pay an extra £50 for their energy whilst simultaneously refusing to explore the market to its full capacity.
There are substantially more deals on the market today that require payment by Monthly Direct Debit rather than Quarterly CC – and by continuing to pay higher rates with the latter, consumers are doing themselves a massive financial disservice. After all, while there's admittedly little homeowners can do to prevent large, market-wide price hikes, it’s absolutely vital that they act pre-emptively to reduce the impact those increases will have upon their monthly energy bills. This means playing the market – and taking advantage of hundreds of pounds in savings.