In the past week SSE and British Gas have increased their energy prices by 8% and 9.2% each. So, aside from our top energy saving measures, what else can be done to stem the steady rise in fuel bills?
The best way is to switch energy company to a new one before they all increase their prices, just like 50,000 people have done since the SSE hike. It's tried and tested advice but it still holds true even with energy prices taking a nearly double digit percentage increase annually at the moment. Surprisingly, four fifths of us haven't ever changed our energy company, which just shows that many of us are spending more money than we need to on our fuel bills.
The reason so many people haven't changed is that the energy sector has nicely developed what is known as a Confusopoly - essentially there are so many tariffs and plans that the task of choosing a new one is so daunting that many give up before they even get started.
Energy Secretary Ed Davey recently announced something that we all know deep down, that the government can't do anything to stop fuel bills rising. So, it really is up to us to make sure we are on the best tariff that protects us from price rises for as long as possible.
Think of energy tariffs like mortgages. Just like mortgages, you get fixed and variable rate energy tariffs. The difference though is that on a tracker mortgage the base interest rate might actually go down, on a variable energy tariff you're pretty much guaranteed that the price will only ever go up. With a fixed term energy tariff you can lock in at a price now and protect yourself for up to 2 years of energy price rises. Just like a fixed mortgage, when you get out of a fixed term energy plan you may have a nasty price hike waiting for you but, on the plus side, you haven't paid over the odds for two years.
So, technicalities aside, what is the best way to switch energy provider?
Price comparison sites are all the rage at the moment and you have a choice of 4 main services to help you switch:
uSwitch is the most well known switching website. It has been around for a long time and so the process of selecting your existing tariff and filling in your current consumption (or estimating it if you don't know it) is simple and straight forward. MoneySupermarket and Confused.com are equally straight forward, however the process for GoCompare could be easier on the eyes.
If you don't have your existing energy usage to hand, or don't know it, then all of them have estimators to help you work out what your usage is. These do vary quite a lot though. To give you an idea of the variation, here is what each service said for a 3 bed semi-detached on a typical British Gas tariff:
|Site||Estimated annual bill|
Given this variation between all the estimated consumptions it is definitely worth accurately putting in your annual usage, or at least working out exactly how much you spend on energy as the last thing you want to do is unwittingly switch to a more expensive tariff.
Given energy prices are only going up at the moment the smart money is to find a fixed tariff that is cheaper than your existing one and locking in to it for as long as possible - the risk is that energy prices will drop, but historically that seems unlikely.
Switching provider does take a bit of effort so if you have minimum threshold in mind that you would switch at, say for a £100 a year saving, then you're a prime candidate for the Martin Lewis Cheap Energy Club. Sign up, tell them your current plan and the minimum saving you would switch for and they will get in touch when there is a tariff that is worth you switching too! It's how we decide which energy company to go with!
A couple of the new cheaper providers (outside the Big 6) make you pay up front before you've used any energy which means you will land up paying your previous energy company's final bill and you new ones first bill in the same month! This could leave a painful hole in your wallet if you're not prepared for it so double check the fine print if you are heading off the beaten track.