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Spend & Save

Energy bills for dummies: A budget guide to staying warm

As prices continue to rise, Julian Knight offers tips on how to keeping costs under control

British Gas has followed Scottish and Southern Energy by putting up its energy prices, and the four remaining members of the Big Six will probably follow suit. Here is The IoS's guide to what you need to know.

Ditch your provider

Switching is important, particularly if you haven't done it before. Many experts reckon that people who simply stay with their current provider and allow their bills to go up are subsidising those who shop around and are willing to switch. Industry regulator Ofgem estimates you can save around £100 a year by switching to the cheapest tariff. However, it can be counterproductive.

Fixed tariffs

There's a danger of switching to a new provider who promptly raises their prices, so the smart option may well be to opt for a long-term fixed-rate tariff. One website, moneysavingexpert.com now has a "top fixed-price comparison page" for those who want to stop the Big Six exploiting public inertia. Another site, cheaperenergytogether.org, seeks to encourage groups of people to switch.

Wear jumpers

Ludicrously, a No 10 spokesman and Energy Secretary Ed Davey were derided for telling us all to wear jumpers at home to cut down energy bills. It's what used to be called common sense. The only sadness is that anyone should need reminding.

Green energy costs money

Experts disagree on how much of our energy bills goes towards the greening of our energy supply chain and schemes such as StayWarm (some say as much as 17 per cent). If this is to continue, politicians will need to overcome their reticence to explain why we need renewables and more energy-saving measures.

Price controls

Labour's answer is an imposed freeze on bills from 2015, for 20 months. The energy firms have squealed that this could cause blackouts but a more relevant concern is that any saving consumers will make during the freeze will be recouped by them in higher bills later.

Break up the Big Six

The industry says the UK has the fourth cheapest energy in the EU, but politicians agree that the market isn't working properly. Some say the Big Six should become a medium 20 or small 50 group of suppliers in order to introduce more competitiveness. However, what is to stop a break-up leading to more consolidation further down the line?

Smart metering

Every home in the country will have a smart meter by 2020. This will allow households to see clearly how much energy they are using and be able to calculate the cost. Where meters have been trialled, energy use has dropped by as much as 15 per cent, as families have wised up to the cost of leaving the TV on standby or their laptop charging away. Ultimately, limiting usage may be the only true way to bring down your bills.