Found a better energy tariff? You CAN discard your fixed tariff and avoid hefty exit fees

Fixed energy tariffs are frequently cheaper than suppliers’ standard variable tariffs, which makes it a good idea to keep moving from fix to fix. But what do you do when a super-cheap tariff is launched and you’re facing early termination fees on your current tariff? You could actually still grab a slice of the action and avoid the fees.

Fixed-rate energy tariffs usually last one to three years. During this period the unit price you pay for the energy used and the standing charge, which covers the costs involved in supplying energy, such as distribution and metering, won’t change.

Some energy suppliers allow you to leave fixed tariffs whenever you like; if this is the case there’s nothing to stop you snapping up the best fixes.

But it’s more likely there will be an early termination fee to contend with. Bear in mind you’ll only be charged if you switch away from your fixed tariff before the last 49 days of the contract. If you’re within this period and you’ve found something cheaper, get switching!

Anything from £5-£60 per fuel can be levied for terminating a contract early. While £5 may not be a big deal, the idea of forking out £120 could be difficult to stomach even if you’ll be making a bigger saving in the long term. If you’re smart about it, however, you can do a runner and avoid paying any charges altogether.

Beat pesky termination fees

So you’ve used our Cheap Energy Club or another site to compare prices and you’ve got your eye on a scandalously cheap energy tariff (humour me here) with a different supplier, but you’ve a year left on your current fixed tariff. Give your current supplier a call and tell it you want to move onto its standard variable tariff. Yes, this will usually be more expensive than the fix you’re on, but hear me out.

Energy suppliers don’t charge if you’re moving from their variable tariffs to a different tariff with another company. So if you’re able to perform an internal switch to the variable tariff for free, you can then switch away to the tariff of your choice with a different supplier – again, for free. As if by magic you would’ve sneakily got yourself out of paying those pesky termination charges.

Do the maths

You’ll have to dust your abacus off and do your sums first, though, as this tactic won’t necessarily save you cash. Find out exactly how much more expensive the variable tariff you’re switching to is. Switching away from a supplier can take up to four weeks, so look at your average monthly usage and calculate how much extra it will cost you on the standard tariff over a month.

You can find your monthly usage in kilowatt hours on a copy of a recent bill or online. Multiply this by the unit rate in pence for the standard tariff you’re switching to and add this figure to the tariff’s standing charge, which you need to multiply by 30. Double-check your calculations – or you could just join Energy Club and it can do this for you.

The extra you pay during that month (or less) may work out more than just forking out the exit fee. It could also be more than the saving you’d make from switching to the new fix. If either of these is the case, step away from the abacus and wait until you’re within the last 49 days of your contract before switching.

However, if the amount you’ll pay on the variable tariff for a month turns out to be negligible, go for it. The internal switch should take around a week, so within five weeks you could be on a cheaper tariff and the threat of early termination fees will be a distant memory.

This trick was first drawn to our attention by a savvy MSE-er and we’ve had confirmation from E.on, Scottish Power and British Gas that their customers won’t be charged for switching under these circumstances. But Npower, SSE and EDF have said that you “may” be charged for switching from your fix to the standard tariff, so have a word with them before doing anything.

While I appreciate this is all a bit of a faff, and it’s not for the impatient among us, it could save you a decent amount of cash if done right.