This piece first appeared in Reader's Digest in July 2001
The text here may not be identical to the published text
Five years ago there was a revolution in Britain, and although many people have heard about it, most have still not joined even though it could save them up to £100 a year. The revolution was the end of the monopoly enjoyed by British Gas to supply fuel to domestic customers. And a couple of years later, the electricity industry followed as local electricity companies began to lose their monopoly. The result was competition on price that has led to dramatic falls in the cost of gas and electricity at home. But those who change their supplier make the biggest savings. An average customer can save around £2 a week – more for some, less for others. But fewer than one in three people has moved from British Gas and fewer than one in five has changed from their local electricity company. If you are in this inert majority, Money’s Worth could save you money every year.
One reason so many people have not changed is the bewildering array of tariffs and charges which makes comparisons so difficult that for any individual to find the cheapest supplier almost impossible without help. On my count there are 88 different gas tariffs and even more for electricity. It is called confusion marketing – making things so complex that it is difficult or impossible to make a rational choice. Fortunately, help is at hand. More on that later, but first the answers to a few questions that still worry people.
Pipes and wires: Changing your gas or electricity supplier does NOT mean new gas pipes or electricity cables. You get the same gas and electricity through the same pipes and wires and measured by the same meters. All that changes is who you pay and how much it costs. It is a purely administrative deal, nothing physical is done to your house.
Safety: Because the changeover is really just one of who bills you, the physical supply of gas and electricity is just as safe as it is now. Your gas supply is arranged and guaranteed by a separate company called Transco. It is completely independent from British Gas and remains responsible for safety and leaks. Your electricity will continue to come from the same source down the same wires and your local electricity company will remain responsible for the supply and the safety of it.
Continuity: Because you are buying the same gas and electricity down the same pipes and wires, there will not be any disruption of supply when the changeover happens. And if the company that you change to goes out of business for any reason, your supply is still guaranteed – the customer database will simply be taken over by another company.
Now we have got that out of the way, let’s get down to savings. If you get gas from British Gas or electricity from your local electricity company, moving to another supplier will almost certainly save you money. How much you save will depend on four things
·How much gas or electricity you use – normally the more you use the bigger the savings, though the percentage savings may not be always be bigger for larger users.
·How you pay for it – the biggest savings are for people who pay by cheque each quarter. If you pay by direct debit the savings are less and for those with prepayment meters the savings can be quite modest or non-existent.
·Where you live – some companies do not supply all areas and some vary their tariff by area.
·Which supplier – the choice of your new supplier is very important.
There are 22 domestic gas suppliers in Britain. Only one, Countrywide Gas, is consistently more expensive than British Gas, and the savings with Gas West are small at best and it is more expensive for many customers who use more than a little gas. The other companies all offer significant savings for most customers. For example, if you use an average amount of gas, a medium user, then you can save up to up to around £80 a year. The percentage savings on your bill are between 4% (North Wales Energy) and 24% (amerada.co.uk) if you pay your bill by cheque each quarter; between 3% (Cambridge Gas) and 19% (amerada.co.uk) if you pay by direct debit; and between nothing (several suppliers) and 16% (Southern Electric Gas) if you have a prepayment meter. Pre-payment customers should take care – many companies are more expensive for them than British Gas. Those savings are for average customers, savings will be different if you use more or less than average and the best supplier at one level of use may not be the best at another.
It is one of the extraordinary features of the new system, that paying another company for your electricity is nearly always cheaper than paying the company that operates the cables and relay stations in your area. The actual savings will depend where you live and are nearly always more modest than those with gas. Ranging from 11%, around £26 a year, to just a couple of pounds for an average user. There are almost no savings to be made by prepayment meter users.
There are more than 20 electricity suppliers – many are the same companies that supply gas. Some will offer you a special ‘dual fuel’ deal to take gas and electricity from them. That may not be the cheapest way to buy as the extra discount on top of the normal tariffs is normally only a few pounds a year, though it can have advantages such as one bill for both fuels.
There are two ways to cut through the pricing complexities and find the cheapest company. First, the Office of Gas and Electricity Regulation, Ofgem, produces information regularly which compares the tariffs of all the suppliers. The information is available over the internet or in printed form if you prefer. But if you do have access to the internet, it is even easier to go to one of two websites approved by Ofgem, fill in your details, and let the computer find the cheapest supplier for you. Sometimes the two websites give slightly different answers and with both you can start the process of changing supplier on-line.
Your new supplier should guide you through the details and the whole process will take several weeks. If you owe money to your current supplier your application to move may be refused. Remember to read your meter on the day you change so you can get an accurate final bill and start afresh with your new supplier.
If you do not want to be bothered with the calculations and changing – and many people do not – then there are other ways to save money on your fuel. First, paying by direct debit is always cheaper than waiting for a bill and sending a cheque. Second, if you are on a prepayment meter try to change off it onto a normal bill. Third, consider if you can cut your fuel use by insulation or other means – you can get advice from the Home Energy Efficiency Scheme, and maybe a grant too in some circumstances.
Office of Gas and Electricity Regulation (Ofgem) 0800 887777
Energywatch, for consumer complaints, 0845 601 3131 for electricity and 0845 906 0708 for gas.
Home Energy Efficiency Scheme for grants and advice on keeping warmer 0800 952 0600
Find the best deal for your circumstances at www.unravelit.com or www.uswitch.com