Electricity prices: is it worth switching to the default supplier?

In every region of Germany, there is a default electricity supplier. Anyone moving into a new property who hasn't yet chosen a different electricity provider automatically receives their electricity from this default supplier. These suppliers are generally considered expensive compared to other providers. But is that really the case, or can it be financially worthwhile to switch to the default supplier?

The default supplier for a region is the company that supplies the most households with electricity (or gas) in the respective network area. All household customers are entitled to a basic supply.

Electricity price comparison

It must be said upfront that there are significant price differences even among basic utility providers. These can amount to as much as 35 percent. For an average household, this can translate to more than 300 euros per year. Furthermore, basic utility providers also offer different tariffs. To avoid remaining on the (often more expensive) basic tariff, customers must switch to a different one.

For a household consuming 4,000 kWh per year, basic electricity supply under the standard tariff costs an average of €1,036, according to expert calculations. The cheapest tariffs, on the other hand, cost an average of €951. However, even here, costs can vary by up to 35 percent from one basic supplier to another.

Difference between basic service providers and alternative providers

The average price from alternative providers is €806 for an annual consumption of 4,000 kWh. However, as energy experts emphasize, the lower price is solely due to bonuses and discounts that only apply in the first year. These usually cease in the second year. After that, the prices between the default supplier and alternative providers hardly differ, or if they do, only slightly. This is unless you switch to a different provider that again offers discounts and bonuses for the first year.

Is the switch worthwhile?

If you don't want to switch electricity providers every year, you should factor in the prices for the second year when calculating your electricity costs, once bonuses and discounts have expired. Often, the price difference compared to a cheaper tariff from the default supplier isn't that significant.

If you break down a price difference of €200 per year into monthly costs, the difference is less than €20 per month. Energy experts therefore emphasize that consciously saving energy by reducing the use of individual energy-guzzling appliances would have a significantly greater impact. In this way, more can often be saved with less effort than by switching electricity providers.

Would you like to know how installing a heat pump or a photovoltaic system affects the value of your property? Contact us. We would be happy to advise you.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

Photo: © zhengzaishuru/Depositphotos.com