Market leading tariffs – some disassembly required!

With the announcement from E.ON UK that its dual fuel and paperless billing discounts would be removed effective 1 March, it seems an appropriate time to consider whether the nominal discounts for dual fuel customers have any role to play in a market where small suppliers are offering cut-price deals and customer switching is at an all-time high.

Historically dual fuel discounts have been used by the large suppliers to cross-sell to customers within their incumbent regions. However, the changing competitive landscape with consistent price competition from small suppliers means that a dual fuel discount alone is no longer enough of an incentive for consumers, and Scottish Power is now the last of the large suppliers to offer it.

Of the 10 cheapest nationwide suppliers in the Cornwall Insight domestic tariff report in March, just two of them were offering a discount to attract new customers to their dual fuel offers. While the rest are offering market-leading prices, this could also arguably be the result of restricting their best deals to engaged, online dual fuel customers.

But looking further still, it becomes evident that competition from small suppliers on electricity-only and gas-only tariffs means that, regardless of whether the supplier offers a discount, dual fuel contracts do not always represent the cheapest option for consumers.

A graph showing potential savings from taking gas and electricity from separate suppliers

Comparing the cheapest dual fuel tariff in each region (including dual fuel discounts), to the cheapest single fuel tariffs, we found that in nine of the 14 energy regions it was cheaper for customers using the equivalent of the Ofgem medium TDCVs to take separate suppliers for each fuel in March. While the average annual saving from opting for separate suppliers is only £8, the savings were more substantial in the North East (£27), North West (£20) and Yorkshire (£45) regions. With 79% of the market currently on dual fuel deals, there is scope for substantial savings for consumers.