Consumers charged £200 to leave fixed rate energy deals early

Energy suppliers charge customers on some fixed rate contracts up to £200 if they want to switch deals before the fixed rate period ends, a consumer group warned today.

What's more, some suppliers have a policy of ‘rolling over’ customers onto new fixed rate contracts which carry early exit fees if they don’t hear from the customer before their existing deal ends, according to Which?

This means consumers can end up either stuck with their supplier for another year or having to pay a hefty penalty charge to get out of the contract.

At £200 pounds, EDF’s Fixed Price 2015 contract carries the highest penalty charge for switching suppliers before the fixed period ends. Charges for cancelling fixed-price tariffs from other suppliers meanwhile are up to £100 for British Gas, up to £75 for Scottish and Southern Energy, and up to £50 for Scottish Power.

Neither nPower nor Eon however will roll you onto a fixed-price tariff with cancellation charges.

Which? said that while energy companies are required to write or email customers to inform them which tariff they will be moved on to, if the customer misses the notification it could end up costing them hundreds of pounds.

Scottish Power however said it writes twice to customers with deals about to end before the new rate starts.

A spokesman for British Gas meanwhile said: ‘We write 30 days before maturity to give customers the chance to opt out of being rolled over. Most customers like to be moved on to another fixed-price contract, because they want the security of no sudden price rises’.

Audrey Gallacher, head of energy at Consumer Focus, said: ‘Consumers who unexpectedly find themselves locked into long term ‘rollover’ deals are right to be angry. Contract lengths, the renewal process and expensive fees for terminating early must be explained to people clearly before they sign up’.

‘If more people are locked into long deals that are hard to cancel, fewer people are likely to switch with less incentive for companies to compete on prices,’ she explained.

‘We have raised a number of concerns with Ofgem about ‘rollover contracts’ and how energy suppliers sell them. We are also concerned about the increasing number of rollover contracts in the telecoms market. Regulators need to look closely at whether the benefits of rollover contracts really outweigh the risks to consumers of big termination fees and being unable to shop around for a better deal,’ Gallacher added.

You can find out more information on what you need to watch out for when switching energy suppliers in our article 'Beware these five pitfalls when switching energy suppliers'.