Mar 23, 2017 - 2min read
Energy suppliers and their exit fees have been getting a bit of a battering in the press recently. And rightly so. This month, The Guardian reported that Ofgem is investigating claims that certain energy suppliers have been flouting regulations surrounding exit fees.
While this is concerning news, we have a different view on exit fees altogether, whether they’re being applied legally or not.
What is an exit fee?
Several energy companies charge their customers up to £60 if they decide to leave before their fixed tariff has expired. It is worth noting, however, that this does not apply to customers on variable tariffs.
Why do some suppliers charge exit fees?
Particularly on long term fixed tariffs some suppliers charge exit fees because they have hedged forward for the duration of the contract. This means they have made a commitment to buy the energy at the price that they are promising to the customer. Suppliers typically do this to create a disincentive for the customer to switch which, if they did, may leave the supplier with a liability of more expensive energy that they may not be able to sell to another customer.
Why we don’t charge them
At Tonik we want you to stay with us because you want to, not because you have to. It is a reflection of our belief in what we have to offer that we don’t apply exit fees. We don’t think exit fees help to incentivise a customer to stay if it no longer works for them, and we’re confident you won’t feel that way. We price competitively, aim to provide service brilliantly, and think that should be enough of an incentive for a customer to stay.
Outside of the energy sector we are not alone. Many of the subscription services that have caused a stir in recent years, such as Netflix, Spotify and Graze, don’t charge exit fees either. Like us, they have faith in their offering.
What you might not be aware of
Energy companies are not allowed to charge exit fees in the last 49 days of your contract. So, if that’s you and you’re keen to take a look for a more forward-thinking supplier, click here for a quote.