This piece first appeared in Saga Magazine in November 2011
The text here may not be identical to the published text  

Invest energy to save money

We face a winter with fuel prices more than a fifth higher than they were this time last year. Five of the six major suppliers have raised their prices and the sixth, EDF, will put up charges on 10 November. The average bill for heating and lighting a home has gone up by around £220 a year to £1290. That is nearly £25 a week just to keep warm.

Low users may find their bills rise by a bigger percentage as four of the big six energy suppliers have concentrated the electricity price hike on the fixed costs paid by all users through a standing charge or a higher tariff for the first few hundred units they use. Other electricity units above that basic amount are going up far less so large users will see a smaller percentage rise in their bills. The two exceptions are E.ON and British Gas which have put prices up fairly uniformly.

Cutting costs
The first and easiest step to cut your bill is to call your existing supplier and ask if you are on the cheapest tariff it offers. It sometimes helps to say you are thinking of changing to another supplier and want to check out the best they have first.

But to make sure you are getting the best deal of all you do have to look at what is available from every supplier. Around half the population has never changed electricity or gas supplier. If you are one of them, then change as soon as you can. You could save £200 or £300 a year. Even if you have changed in the past it could be time to do it again. Beware though if you have a fixed price deal. If you leave before it comes to an end you may be charged a penalty.

If you have access to a computer and a broadband connection to the internet then go to one of the 13 comparison websites accredited by Consumer Focus which all use complete and accurate data. Never use a comparison site that does not have the Consumer Focus Confidence Code symbol on its front page. The most popular is probably uSwitch.com, but theenergyshop.co.uk has been rated the easiest to use and which.co.uk/switch is run by the consumer charity Which? If you have no access to a computer all three can help you on the phone (see information panel).

They will tell you which tariff and supplier will cut your bill the most and how much you will save. They can also make the changeover and all you will know is that your bill will come from another firm. To get accurate results you will need your bills from the last year or the annual statement which all energy companies should now send out. You can enter the kilowatt hours (kWh) or the amount you paid. You will also need to know your current supplier and exactly which tariff you are on. Take care as there are 10,000 tariffs and many have very similar names.

You will also have to make some choices. The most important is whether you will pay monthly by direct debit. That will almost always give you the best deals. But it is not worth doing if there is a danger of having too little money in your account to meet the payment every month. The charges your bank will make for going overdrawn or bouncing a payment even once or twice a year can outweigh the savings of using direct debit.

The next choice is whether you want a tariff where the price is fixed for one or two years.  The advantage is that you know what rate you will pay. The disadvantage is that you will pay a bit more now and if energy prices fall you will be paying more than you should. But most experts think energy prices are bound to rise. The companies have already absorbed some of the increase in the wholesale price of gas (electricity prices depend on the price of oil and gas too). There is also an estimated £200 billion to be spent on new electricity infrastructure – from upgrading pylons and meters to connecting wind farms – which has to be found and that will be paid by us through our bills.

The final choice to make is whether you want to move away from the big six energy suppliers (British Gas, E.ON, EDF, nPower, Scottish Power, SSE) to one of the smaller firms. Generally they have simpler tariffs and can offer better deals to some low users. Ovo Energy actually cut its gas price over the summer by 3%. Good Energy has not raised its electricity price since 2009 and its gas price went up this summer by half the rise of most of the big players. It offers green tariffs from renewable resources. Ebico is a not-for-profit company which has a commitment to charge all its customers the same price on every tariff regardless how much or how little energy they use.

Although changing energy supplier can save you money you should never do it in response to a doorstep call. If someone knocks on your door or calls you out of the blue offering to cut your energy bills just say no. Otherwise you could end up paying more.

Other help
All the big suppliers – and some of the smaller ones such as Ebico – are in a new scheme called ‘warm home discount’. That will give £120 off a winter energy bill to pensioners who only get the guarantee part of pension credit. Some other low income users may also get it but each supplier will have its own rules about who will.

Many homes leak heat worth hundreds of pounds every year. Most energy supplies have an obligation to the Government to spend money helping us to use less. So the first step is to call your supplier and ask what it can do. There is also a charity called Energy Saving Trust which gives free advice about energy saving initiatives all over the UK. Call them on 0800 512 012 or go online www.energysavingtrust.org.uk and put in your postcode to find what is available locally.

HEATING OIL

If you live in an area which is not connected to the national gas grid then it is harder to cut the cost of fuel. Your electricity supplier may not offer you the top deals that it gives to those who buy gas as well. And the cost of heating oil has been rising very fast. The problems were made worse last winter by two oil comparison websites which were in fact run by companies which supplied oil so their impartiality was questioned. The Office of Fair Trading has forced the websites to show who owns them but it is not clear if they really will find the lowest price. Oil users should check local suppliers who may well be less expensive than a national distributor. A village or community can save costs buying oil in bulk through an oil club. Citizens Advice has information about how to do that www.citizensadvice.org.uk/index/campaigns/oilclubs.htm  

More information

·         List of accredited websites www.consumerfocus.org.uk/get-advice/energy/confidence-code

·         If you do not have computer access you can change over the phone with theenergyshop 0845 330 7247, uSwitch 0800 051 5493, or Switch with Which? 01992 822 867.

·         Companies in the Warm Home Discount Scheme www.decc.gov.uk/en/content/cms/funding/whds/whds.aspx

 


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