Getting the best deal for your household energy
With energy and gas prices expected to soar over the coming years and the chancellor, George Osborne, conceding that we are on the brink of a double-dip recession, it’s no wonder that so many of us are worried about paying our gas and electricity bills.
Research by insurer swiftcover.com has found gas and electricity bills to be people's biggest financial worry.
So what are the energy companies doing to help?
Well, the answer is not much to date really. Ofgem, the energy regulator claim that the Big Six have been making profit margins of £125 a year from every household in the UK by increasing the costs of gas and electricity.
Suppliers have attributed these price increases to rises in the cost of wholesale gas and electricity. However, figures from Ofgem suggest bills have risen by far more than wholesale prices.
What can consumers do to try and pay the least possible?
Many people stick with the same company for many years, giving their supplier their loyalty. Unfortunately, this loyalty often means profits for the energy companies as low cost tariffs are often “phased out.” If the customer does not move from an out-of-date tariff, they usually default on to an expensive rate, meaning that the supplier gets bigger profits from you.
Switching can be complex though. There are hundreds of tariffs on the market and most of them are ‘bamboozling’- even to those who work in the energy industry. When Which? did a survey they found that even accountants could not work out the best tariff for themselves. Hence the only practical way to compare all available tariffs is to let a computer work things out for you.
Ofgem have announced this week that they are resetting the rules for energy companies to put a stop to these ‘bamboozling’ tariffs and to help make comparing and switching easier for consumers. However, implementation of these changes won’t happen overnight.
In response to these issues, Glasgow-based utility consultants, Business Cost Consultants, was asked by their housing association clients how their tenants could reduce energy costs. This led to the creation of an impartial energy price comparison site.
www.switchmyenergy.co.uk allows users to input some basic details, for instance current suppliers, preferred payment method and electricity and gas consumption and/or spend. For users who don’t have a bill to hand there are options to estimate consumption and/or spend. The form takes about 5 minutes to complete and upon completion you will be presented with a detailed list of available tariffs and the savings you could make. Since launching average savings have been about £200 on gas and electricity dual fuel deals.
Users can also register for price update notifications and for those without access to the internet, there is also a freephone number – 0800 410 1262
It is important to remember when using price comparison websites that they aren’t all what they seem. Some of them only contain tariffs for selected “partners” or will favour particular suppliers as they will be paid a larger commission from them.
The switchmyenergy website is 100% impartial and so shows prices from every single supplier in the UK and will sort the best tariffs by price and not by levels of customer service. However, there are customer reviews for each supplier beside each tariff displayed.
A further explanation of the different tariff options is given below.
Online, Fixed and Capped Tariffs
Consumers can pay more to ‘cap’ the unit price of electricity and gas for a fixed period of time. This ensures that if electricity and gas costs rise, you won’t need to fork out for an unexpectedly high bill. The unit price for capped energy is generally higher than the supplier’s standard tariff, but can be reduced if supplier energy costs go down during the fixed period. It is important to also note that capped energy tariffs may carry an exit fee if you wish to switch before the capped period expires.
Another option is fixed energy tariffs. These tariffs guarantee that the unit price for gas or electricity is fixed for a period of time giving consumers worried about rising energy costs peace of mind. However, consumers do pay more for fixed energy tariffs and if your supplier reduces the standard rates, you won’t benefit from these reductions during the fixed periods. Similarly to capped energy tariffs, the T&Cs should be checked for any exit fees.
Consumers can also opt for online plans. These aren’t fixed and are the most competitively priced, so will save consumers the most money. We would recommend consumers to take this option. However, since tariffs change regularly it is very important to check out prices at least once every six months.
Green energy tariffs are those which benefit the environment by using renewable energy sources. Some companies specialise in providing up to 100% of energy directly from renewable sources.
www.switchmyenergy.co.uk is now available for all consumers to use. Alternatively, if consumers would rather speak to someone they can call 0800 410 1262.
Find out how to work out how much energy use by following out step-by-step guide
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