Ecotricity pledges to beat ‘big six’ on standard electricity prices

You can now get green electricity for less than the standard price of brown, but it won't be the cheapest deal you can get on your energy.

Green power provider Ecotricity has pledged to undercut the ‘big six’ energy companies on their standard electricity tariffs.

From 1st October the company will supply 100% green electricity for less than the price of brown electricity on standard tariffs from British Gas, npower, SSE, E.ON, Scottish Power and EDF.

‘Brown’ is a term used to describe energy produced from polluting sources like coal and oil, while ‘green’ describes energy produced from renewable sources like the wind, sun and water.

Paying less for green

Before now Ecotricity was only able to price match the standard electricity tariffs of the big six.

That’s because in the past 65% of its power was bought from the market and therefore linked to market prices.

But now because the company is self-generating more energy via its expanding fleet of wind and sun ‘parks’, it can start to set electricity prices independently.

Ecotricity’s electricity is 100% green. The company also produces green gas, but only 2% of it is derived from renewable sources (food waste). However, even at 2% it is still the greenest gas in the country!

The good news is Ecotricity reinvests its profits into building new sources of renewable energy, so before long it could offer both green gas and electricity for less than the price of brown.

The company claims to spend more on investing in renewable power compared to every other energy company in the UK. Between 2004 and 2012 Ecotricity spent an average of £281.02 per customer; the next best investment was £55.54 per customer from SSE.

Tariffs and costs

Ecotricity offers one simple tariff for electricity called Green Electricity and one for gas called Green Gas, which you can combine to get a £15 dual fuel discount.

With Ecotricity you are guaranteed to be getting the lowest price it charges no matter when you joined, regardless of how you choose to pay and customers are free to leave at any time without any penalties.

Now Ecotricity can also promise to be a few pounds less than the standard ‘big six’ electricity tariff in your region. You can see how much cheaper Ecotricity electricity would be for your household using its price checker tool.

At home in Reading I can get the Green Electricity tariff for £541 a year, which is £2 cheaper than the standard tariff of SSE. With a Green Gas tariff I would pay £844 a year, which is the same as what British Gas charges.

Combined the cost of going green would be £1,370 a year after the £15 dual fuel discount. While this might be a few pounds cheaper than the standard deals on offer from the big six, it’s certainly not the cheapest deal you can get on energy right now.

The problem with standard tariffs

Normally an energy supplier’s standard tariff is the most expensive it offers. Customers usually revert to a standard tariff after a deal ends.

According to recent figures obtained by the Sunday Times around 12.6 million homes in the UK were on standard or expensive tariff payment methods - that’s 70% of the country. It is estimated this is costing an UK households an extra £2 billion.

The jargon and complicated tariffs can deter people from switching onto better deals. Ofgem's reforms (which we explain in Ofgem enforces new Standards of Conduct for energy suppliers) are helping to demystify the energy market and help people get a better deal by forcing energy companies to be simpler, fairer and transparent. But the full extent of these won’t be felt until 2015.

Ecotricity doesn’t offer fixed or variable deals mainly because as a small energy provider it doesn’t have the same purchasing power as bigger rivals. So its standard tariff is its best tariff. But if you are going to switch to save money there are much better deals out there, which I have listed in the table below.

* Savings against an average bill of £1,420 as determined by Ofgem                                                            

All calculations are for an average usage dual fuel household paying by monthly direct debit. Average usage as defined by Ofgem is 16,500 kWh pa of gas and 3,300 kWh pa of electricity. Source: energyhelpline.com.           

As you can see the cheapest deal on the market is the M&S Energy Fix & Save, which on average will cost £1,139. This is £231 less than the Ecotricity dual fuel deal.

Being able to challenge the big six on energy prices is a big step for a small company, let alone one that deals in environmentally friendly energy. But until Ecotricity can challenge the better deals, rather than the expensive standard tariffs, many won't be taking part in the green revolution.

Compare energy deals

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