Household energy costs have risen steeply in recent years, leaving many people struggling to pay their electricity and gas bills. Despite pressure from the Government, the major energy suppliers are not dropping their prices meaning that it’s up to the consumer to shop around for the best available deal. Whilst the utility companies are still racking up large profits, they have at least responded to pressure to publicise their cheapest tariffs. Thanks to this information, plus the proliferation of price comparison websites, it’s becoming easier for the consumer to find ways of reducing their monthly or quarterly bills.
Who are the main energy suppliers?
There are a number of companies in the UK providing gas and electricity to households. The big six are:
* British Gas;
* EDF Energy;
* E.ON; npower;
* Scottish Power and
These companies supply energy to more than 50 million homes and businesses in the UK. However, a number of smaller companies have entered the energy market in recent years hoping to offer the consumer a choice and providing real competition to the major suppliers. Some of these companies bear the name of major retail brands such as Sainsbury’s and M&S whilst others cover a local area or promote renewable energy.
How do I find the cheapest energy supplier?
It’s important to be aware that no one energy supplier is cheaper overall than all the others. As well as the various suppliers changing their prices at different times, a number of other factors come into play meaning that the supplier offering the best deal for one household may not be the cheapest for a different household.
The best way of finding the cheapest deal is to use a price comparison website such as moneysupermarket.com, uSwitch.com or UKPower.co.uk. These websites will have up to date information on pricing, tariffs and deals from all the big six suppliers plus many of the smaller companies. All you need to do is submit information about your current energy supplier and usage, your current tariff and your post code. The websites will show you what deals are available and whether you can find a cheaper deal. In many cases you can make the switch using the website instead of having to approach the new supplier yourself. Be aware that if you are on a fixed, capped or discounted tariff with a specified term you may have to pay a penalty if you switch before the energy company gives you notice of the term coming to an end.
Why are different suppliers cheaper for different customers?
A number of different factors are taken into account in calculating your potential energy bills. Your cheapest supplier will depend on where you live, the size of your house, how many people live there, your current energy usage and the type of tariff you want.
What tariffs are available?
Energy companies offer different tariffs or rates to their customers and are obliged to publicise these rates and advise customers of their cheapest options. The main tariffs available are:
Standard or variable tariff: The price of your gas and electricity will vary as your supplier changes its prices depending on the wholesale costs. This is the default tariff without any tie-ins but is often the most expensive. Some suppliers offer occasional deals of a discounted variable tariff for a fixed period.
Capped tariff: The price of your gas and electricity is capped for a specified term so if the price per unit goes above the cap, you don’t have to pay the extra amount. However, you will get the full benefit if the price drops.
Fixed tariff: You pay a fixed price per gas and electricity unit for a specified term, often two years. This allows you to budget and you know you won’t be affected if prices increase. However, you don’t benefit from any fall in the unit price.
Economy 7: Under this tariff, you would pay a lower cost for energy use during the night. This tariff is popular with customers who have storage heaters which use a lot of energy during the night to heat the property throughout the day.
How can I reduce my energy bills?
Apart from shopping around regularly to find the cheapest supplier (you should compare prices at least every two years) you can reduce your bills in a number of different ways:
Dual fuel: Consumers are often eligible for discounts if they take their gas and electricity from the same company.
Go online: Many energy suppliers offer customers a small discount for setting up an online account and receiving paperless bills.
Direct debit: Energy companies prefer customers to pay their bills monthly by direct debit as it reduces the admin costs so will often offer a small discount as an incentive.
Smart meters: The Government is aimed to have smart meters fitted to 30 million homes and businesses by 2020. Many utility companies are already offering them to customers. A smart meter connects wirelessly to your energy supplier and gives a continuous accurate reading of your energy consumption. Not only is your supplier kept up to date with your energy usage putting an end to estimated bills, it means you as the consumer can see how much energy you are using, encouraging you to try to cut back your consumption.
Don’t waste energy: Except comparing rates and switching to a new energy provider, there are few more things you can do to reduce your electric and gas bill. Watch your energy consumption around the house. Make sure lights are switched off when you’re not in a room; don’t leave electrical appliances on standby; turn down your thermostat slightly; take a shower instead of a bath; buy energy efficient appliances and use eco-cycles where possible on washing machines and dishwashers.
You may also want to read about: gas boilers