How to beat the cost of rising energy prices, wherever you live
Saturday 11 February 2006
It has been another anxious week for families worried about the rise of their gas and electricity bills. Although British Gas has denied suggestions that it is about to raise prices by up to 25 per cent, the company has recently said that bills will increase sooner rather than later.
Nor is British Gas the only provider to be warning of impending price rises. Despite announcing a large increase in profits this week, Scottish Power said it thought further hikes in prices were inevitable for its customers in the near future.
In fact, every energy provider has raised prices significantly over the past two years, following a 168 per cent rise in the cost of wholesale gas - most of them have put their prices up twice or even three times.
The wholesale gas market has a serious effect on both domestic gas and electricity because electricity producers have to buy gas in order to produce the power they supply.
According to a report published this week by TheEnergyShop.com, the average annual gas bill has risen by 38 per cent since January 2004, to £454. Over the same period, the typical household's annual electricity bill has increased 26 per cent to £323.
However, some companies have passed on more of the pain than others. In the gas market, Telecom Plus has introduced the highest price rises over the past two years, while Powergen has been the most restrained. On electricity prices, EDF Energy's increases have been higher, while Scottish Power, Powergen and Scottish and Southern Energy have been the least aggressive.
Jo Malinowski of TheEnergyShop.com adds: "British Gas, despite a lower than average gas price increase, remains the most expensive of the major gas suppliers."
He calculates that the average British Gas customer could save £132 a year by switching provider. They could save a further £50 or so by moving to a company offering a cheap dual fuel deal, and by paying by direct debit. You can also cut bills by signing up to a new provider online.
But, says Karen Darby, of price comparison service SimplySwitch:"The most recent report from Ofgem, the watchdog, showed that only 50 per cent of households have ever switched energy provider."
One problem that may have put people off switching is that there is no simple answer to the question of which energy prices offer the cheapest deal.
Which company will supply you with the cheapest deals depends on where in the country you live, how big your home is, how much fuel you use and at what time of day.
However, to demonstrate how much people can save, we asked SimplySwitch to put us in touch with four different households around the country that have already switched to a new provider.
The idea was to identify who the cheapest providers might be for very varied households, with different families living all over the country. All the people in this study have been able to save substantial sums by moving energy provider. Most expect to move again in the future.
Green electricity can still be cheaper
* Customers who have never switched electricity company could move to an environmentally-friendly tariff and still save money - there are about 10 different green pricing options available.
* The green deals tend to be slightly more expensive than the cheapest electricity tariffs on the market, though some customers are happy to pay more.
* Providers such as Good Energy generate 100 per cent of your power from renewable energy sources, such as the wind. Other providers may only guarantee that a proportion of your power - say 10 per cent - comes from renewables.
* "Prices from the large companies can be competitive," says Tim Wolfenden of price comparison service uSwitch. "The majority of suppliers offer some sort of green deal and some have more than one."
* Specialist green energy suppliers include Ecotricity, Good Energy and Green Energy.
* Mainstream suppliers that offer a green tariff of at least one type include Npower, Scottish Power, Southern Electricity and EDF.
* Price comparison services such as uSwitch will allow users to specifically request green tariffs when they are searching for a new electricity deal.
THE SINGLE PERSON:
"I'm only at home during the evenings and some weekends, so I don't use a huge amount of energy," says Camilla Ives from Croydon. SimplySwitch's verdict was a surprise: it said Camilla could reduce her annual bills by £200,.
* Previous suppliers: British Gas, Seeboard.
New supplier: Scottish Power.
THE FAMILY, SCOTLAND:
Valerie and Stephen Brewster (above) live in a four-bedroom detached home in Glasgow with their two daughters, Ellen and Lois.
The family try to be as energy-efficient as possible, but Valerie is at home all day and, with two small children, they accept that they are likely to use more gas and electricity than many other households, especially when the dishwasher and washing machine are on.
"I've always thought there was an element of swings and roundabouts with energy providers, so that the hassle of switching wouldn't be rewarded with any real benefit," says Valerie.
"But then a friend said she thought we could save quite a bit, so we thought we should at least check to see."
In fact, by dumping Scottish Power and Scottish Gas in favour of a dual fuel bill from London Energy, the Brewsters reckon they are saving about £350 a year.
"It's an internet-based deal so we get bills by e-mail, but it's been very simple," says Valerie.
The Brewsters say they intend to make at least one price comparison every year. "I think it's important to check out the competition regularly," Valerie says.
Previous suppliers: Scottish Power, Scottish Gas. Cheapest current supplier: London Energy Online.
THE FAMILY, LONDON:
Mohamad Klibi and his wife Kathryn live in a two-bedroom house in Kingsbury, north-west London. Although they are both out of the house all day, the couple and their two children - daughter Lilia and son Leyth - are above-average consumers of energy.
"Two years ago, we decided to see if we could get a cheaper deal than we were getting from British Gas because there was lots of publicity about price rises," says Kathryn. The couple discovered the best way for them to save money was to switch both gas and electricity providers, and they moved to a dual fuel deal.
"We've probably saved about £10 each on gas and electricity every month, which adds up to almost £500 since we switched," says Kathryn.
Kathryn is aware that different providers top the best buy tables at any given moment. "We've very recently checked again and Atlantic is still the cheapest provider for us," she says. "But changing energy providers last time was very convenient so if we had to do it again, I wouldn't mind - we'll review this every year."
Previous supplier: British Gas. Cheapest current supplier: Atlantic Electric and Gas.
Jean and John Michelle live in a three-bedroom bungalow near Leicester. Two years ago, they switched to Powergen's Staywarm tariff, but their bills didn't seem to fall. "We were talking to friends with similar homes and they were paying less," says Jean.
A British Gas dual fuel deal has now delivered an annual saving of £300.
Previous supplier: Powergen.
New supplier: British Gas.
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