All the sneaky fees that energy companies hit customers with, and how to avoid them

As temperatures drop and people turn up the heat, everyone is thinking about how to cut their energy bills.

But no matter how hard people try, many suffer from other hefty fees.

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Energy prices are set to rise again in January, adding another £21 to bills and households could end up paying hundreds of pounds extra due to hidden charges.

In this article, Laura Purkess describes the ways energy companies pass these hidden costs on to customers—and how you can try to avoid them. . .

EARLY EXIT FEE

MOST energy suppliers charge an exit fee if you want to change supplier before the deadline.

As of April, about three million households were using fixed electricity tariffs.

A recent Tariff Watch report by Warm This Winter – a campaign run by a coalition of charities – found that most fixed electricity tariffs come with exit charges 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 end of the contract.

Check your energy supplier’s terms and the end date of your tariff before asking to switch, otherwise you could be hit with a nasty surprise bill.

Fiona Waters, from Warm This Winter, said: “Energy suppliers are letting customers down again as many are stuck in fixed rate deals they can’t get out of due to extortionate exit fees.”

You can usually leave the contract within the first 14 days if you change your mind, and there will be no exit fee.

BROKERAGE COMMISSIONS

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SOME energy customers who set their rates through a broker, such as small business owners, may have been duped by dodgy “brokerage fees”.

Here, clients are charged an additional commission, which is paid to the broker.

Energy companies are expected to owe billions of pounds after small businesses won a landmark court case earlier this year over hidden brokerage commissions on their accounts.

It is believed that the owners of so-called “micro-businesses” will suffer the most.

Watchdog Ofgem introduced new rules in April to improve transparency of broker fees, but many were already inflated without even realizing it.

Contact your supplier and file a complaint if you believe you have been affected.

Fixed expenses

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ALTHOUGH everyone has to pay ongoing charges, they are not part of your bill for the energy you actually use.

Instead, they are charged a fee to keep households connected to the grid and to help maintain the energy grid.

Households typically have to pay around £379 a year in recurring payments, up from £182 five years ago.

Consumer advocate Martin Lewis called the charges an “unfair energy tax” that “disincentivizes people from cutting their bills” because cutting your energy use doesn’t reduce your fixed costs.

You may be able to get a cheaper standing fee from another provider, but it won’t make much of a difference.

However, before committing to a deal, it’s always worth checking the fixed costs of your electricity tariff, as well as the unit prices.

PAPER BILL CHARGES

CUSTOMERS who choose to continue receiving their paper communications could face wicked new fees of up to £18 a year.

Sun Money recently reported that Ovo Energy is introducing a new £1.50 monthly charge for customers who choose to continue receiving paper bills from this month.

This will not apply to some vulnerable clients or clients on the Priority Services Register.

Meanwhile, we discovered that E.On charges customers £1 if they request a paper invoice.

It is understood Octopus Energy, British Gas and Scottish Power do not currently charge these charges.

If you have access to an online invoice, ask your supplier to switch to paperless invoices to avoid charges.

Ovo said: “We send digital messages to most customers. We continue to offer paper messages to anyone on the Priority Services Register, those receiving tailored messages and anyone in need of financial support.”

E.On did not respond to requests for comment.

THE COST OF A GREEN DEAL

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ENERGY customers may be charged extra if they use a government scheme called the Green Deal.

It helps people make energy-saving improvements to their homes, such as insulation, draft proofing or installing solar panels.

But you must pay any costs covered by the scheme back through your energy bills, and some customers have complained they are paying more than they save.

The best part is that if you buy a home with a Green Deal attached, you become responsible for the outstanding loan and this is added to your energy bill.

Please note any Green Deal fees on your bill.

You can file a complaint with the Green Deal service provider if you are unhappy.

OAPs bank fuel cash

HUNDREDS of thousands of pensioners have started receiving winter fuel payments of up to £300.

The government confirmed that money began arriving in bank accounts on Monday.

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More than 1.3 million vulnerable households in England and Wales will receive money to pay their energy bills.

Previously, payments were made to persons who had reached retirement age.

But the cash is now means tested, so pensioners are only entitled to it if they receive certain benefits, including Pension Credit, Income Support or Universal Credit.

They also had to receive benefits during the “qualifying week” of September 16 to 22.

People born between 23 September 1944 and 22 September 1958 will receive £200.

Those born before 23 September 1944 will receive £300.

Payments should arrive automatically in bank accounts in the coming months.

Those who are eligible should pay attention to the code on their account statement.

This is their National Insurance number followed by “DWP WFP”.

If you are due a payment and have not received it by 29 January, please call the Winter Fuel Payment Center on 0800 731 0160.

Those who are eligible for Pension Credit but have not yet applied have until 21 December to apply for the winter fuel payment.

This is because applications for pension credit can be made backdated by three months.

They can also receive up to three months of retroactive pension credit worth up to £3,900 a year.

Mortgage window is closed

A MAJOR bank has cut the time borrowers have to lock in a new mortgage before their current offer ends.

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NatWest customers now have four months until their existing mortgage expires to find a new deal.

Previously, homeowners could choose a new mortgage six months before their existing one expired.

A fixed-rate mortgage means you agree to pay an interest rate for a specified period of time, which is usually two or five years.

This means your monthly payments will remain the same during this period.

Mortgage rates rise and fall constantly for a number 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 expires means you can get the lowest interest rate on your mortgage.

If you find a better deal before your current mortgage expires, you can trade in without paying a penalty.

NatWest has become the sixth bank to shorten its product transfer period.

Halifax, Lloyds, Nationwide and Santander customers also have four months to lock in their new rate.

Barclays gives three months.

A NatWest spokesman said: “We are seeing customers deciding to lock in new rates much closer to the end of the current term.

“To comply with this, we, like others in the market, have moved to a four-month window for new product selection.”