The Utilities Tariff That Tricks You

If you're moving house this year, beware the deemed tariff! Laura Starkey shows you how to avoid the energy providers' sneakiest trick.

It is a truth universally acknowledged that moving house is stressful - not to mention expensive.

Yes, you're probably thrilled to think that sometime soon you'll be settled and happy in your new home. 

But in the meantime, you're devastated about the family heirloom that's been smashed, your other half is refereeing the children's wrestling match over bedrooms and -- worst of all -- nobody knows where the kettle is.

Amongst this chaos, and amid a sea of cardboard boxes, you're unlikely to be thinking about who supplies your gas and electricity.

However, The Fool's fresh information about how you'll be billed for your energy might make you think about switching suppliers before you switch on your appliances.

What's The Problem?

The problem is that gas and electricity companies will apply deemed tariffs to a property as soon as they know the old occupiers have moved out.

While a deemed tariff is simply the company's standard quarterly rate, this is usually about 25% more expensive than the cheapest tariff your supplier could offer you. Even worse, when you call electricity or gas companies to let them know you've moved into a property, you unwittingly sign up to this bum deal.

Around 11% of the population move house each year and, according to Fool.co.uk research, that means 2.4 million households will automatically be placed on deemed tariffs.

For a typical three-bedroom house, utilities should cost around £1,400 a year - yet homeowners collectively spend £70m unnecessarily, because they are paying inflated rates.

Suddenly, moving house looks even more expensive than before!

As the deemed tariff is probably the most profitable rate offered by your utility company, they're unlikely to come to you with a better offer. Therefore, it's a good idea to investigate your options and bag yourself a better deal as soon as possible.

Can I Switch This Soon?

In a word, yes.

While most of us might consider waiting to see how much energy we actually use before switching suppliers, any delay in getting off a deemed tariff could prove expensive. 

The companies responsible for your utilities will have data on how much gas and electricity the previous occupants of your property used. It's definitely worth asking for this, even though companies might be reluctant to pass it on.

If you have the opportunity, you could even ask the people who lived in your home before you how much energy they used each year.

Should neither of these approaches prove fruitful, simply applying averages to your gas and electricity usage for a few months should see you save in comparison to the cost of a deemed tariff.

You can get a decent idea of how much gas and electricity you'll use based on the amount of bedrooms in your property, as you'll see in the tables below.

All in all, there's little to be gained by waiting to switch suppliers.

If you think you've over-estimated your usage after a couple of months, you can always review the tariff you're on then.

So What Should I Do?

As soon as you move into your new home, you will need to notify the current utilities providers that you have done so -- even though it means being put on the dreaded deemed tariff.

It's also a good idea to take readings from any meters you may have and note them down somewhere safe.

Then, check out the Motley Fool's gas and electricity comparison service as soon as you can to find the deals that are best for you.

Remember that, even after you state your intention to switch suppliers, it could take six weeks for your request to be processed. This means that even a fortnight's delay in finding a better deal could see house-movers spend two months on a deemed tariff!

Conversely, finding a quote and setting up the switch should take just a few minutes, and could save you hundreds of pounds a year.

It's also worth noting that even after you've dealt with your deemed tariff, your utilities suppliers will still be keen to charge you as much as possible.

A deal that's great in April might well seem ghastly by the following March, so it's a good idea to put your switch date in your diary and do an annual check on whether you're getting the best rate you can.

Applying deemed tariffs is another sneaky trick utilities companies will use to charge you more -- so don't let them!

Plug in your PC at the same time as the kettle (when you eventually find it), and make sure your own deemed tariff is doomed.

More: Save More Money On Energy! | Compare And Switch Gas And Electricity Suppliers | Listen to the Money Talk Podcast: Fight Back Against Energy Price Hikes