Seeing red? Act now to cut your household bills
The best way to combat greedy power companies is to shop around, says David Prosser
Saturday 13 January 2007
It's not the most obvious of alliances, but David Cameron's Conservatives have at least one thing in common with the European Commission. Both have warned this week that competition in the UK's energy markets does not seem to be doing much to ensure customers get a decent deal.
The Commission's preliminary report, which calls for tighter regulation of Europe's energy markets, comes too late, however, to help British gas and electricity customers, for whom the average home energy bill increased by 38 per cent to £1,013 in 2006. Those increases followed three years of rising prices, albeit with more modest hikes in bills.
Energy prices rose sharply last year because of increases in the price of gas on the international energy markets. This has an immediate impact on the cost of domestic gas, but it is also important for electricity because 40 per cent of power in the UK is generated by gas-fired plants.
However, while the price of wholesale gas rose to just over 80p a therm last May, it has since fallen to below 20p a therm today. This is actually below the price at which energy suppliers were buying gas at the beginning of 2003, at a time when domestic prices were around half today's levels.
Suppliers say consumers will benefit from the fall in wholesale prices - eventually. But since the fuel companies buy their gas months in advance, at the prevailing market price, they claim they are not yet able to pass on the reductions.
Meanwhile, consumer groups point to the large profits generated by energy companies. Scottish and Southern Energy posted annual profits of £858.2m last year, for example. Scottish Power's interim results for the second half of the year showed a 77 per cent increase in profits to £483m. And Centrica, the owner of British Gas, reported profits of £200m in the second half, even though it has lost more than a million customers in recent times.
It is against this backdrop that the Conservatives are calling for an investigation of the energy sector by industry regulators and competition watchdogs, following similar calls from the Liberal Democrats. Regulators already have the power to intervene, but have not yet done so.
Ann Robinson, policy analyst at price comparison service uSwitch, says: "Ofgem has threatened to take action against any provider whom it considers to be lethargic in passing on any reduction in prices - it is hoped by all that Ofgem bares its teeth and makes good on this threat."
Joe Malinowski, founder of The Energy Shop, a similar service, adds: "The consumer wants to know why, if we have a competitive energy market in the UK, he is paying over £1,000 a year for his energy when wholesale gas prices have halved in the last six months."
There's no sign yet of an imminent fall in prices, though British Gas has said it will cut prices in April. In fact, some bills are still increasing. Scottish & Southern Energy raised gas prices by 12.2 per cent on 1 January. At the same time, the cost of its electricity rose by 9.4 per cent. British Gas is also piling on the pressure - it has introduced a £5 charge for customers who don't pay their bills within 28 days.
Thousands of customers will also be affected by the end of fixed-price gas deals - at least six will finish in the first quarter of the year.
In these schemes, customers agree to pay slightly more for their gas in return for a guarantee the price won't rise over a specific period. Contracts taken out a couple of years ago from British Gas, Powergen and Scottish Power were a smart bet, but the average customer will see an immediate jump of more than £300 once their deal stops.
It's no wonder that customers are upset. One option for those whose fixed-price deals are expiring is to take out a new guaranteed contract.
However, Karen Darby, chief executive officer of Simply Switch, warns that could prove an expensive mistake. If suppliers do start cutting prices this year, customers on fixed-price deals would lose out.
Companies such as uSwitch and Simply Switch have been urging home energy customers to hunt out cheap energy deals for years, as have consumer groups. "Wholesale gas prices may have been falling but householders will have to seek a better deal by switching suppliers," says Darby.
Around half of all households have never switched supplier and those who have done so may be able to save money by moving again. For a task that is relatively hassle-free, the potential savings are dramatic, as the table above shows. In all of the examples, the difference between the most expensive supplier and its cheapest rival is at least 16 per cent, or £104 a year. The biggest saving available is more than 30 per cent.
There are other ways to save money. All energy companies offer preferential rates to people who pay by direct debit. Those who pre-pay, particularly using meters, on the other hand, lose out. In addition, your energy company has a duty to provide you with information on energy-efficiency, to help cut bills.
Switching supplier, however, is the real money saver and should take no more than a month to complete. The easiest way to find the best deal is to use the price comparison services, which will even arrange the switch on your behalf, free of charge. Your existing supplier will require a final meter reading, but the switch requires no change of equipment - it's purely administrative.
A water meter could save you money
* Water bills are an increasing burden for households. Just two of Britain's 22 water companies last year chose not to impose the maximum increase on customers allowed by Ofwat, the industry regulator. Average bills in England and Wales rose by 5.5 per cent last year to £294, following an 11 per cent increase in 2005. Further bill rises are certain for this year.
* To add insult to injury, companies such as Thames Water announced large increases in profits while failing on many other measures. Thames, which missed its target for cutting leakages for the fifth year running in 2005 and imposed hosepipe bans on customers, was sold for £9bn in October to a group of overseas investors.
* Unlike the gas and electricity markets, water customers can't shop around for a better deal - you're stuck with the supplier that operates in your area. But that doesn't mean you can't save money, particularly if you live in a smaller household.
* Water companies charge people on the basis of the type of property they live in, rather than on how much water they actually use. So if you have an identical house to the family of five next door, but live on your own, you'll pay the same water bill as them.
* The solution is to exercise your right to have a water meter fitted, so that your bills are based on usage. A spokesman for the Consumer Council for Water explains: "Domestic customers can request a water meter which is fitted free of charge unless the location or pipework makes it impractical or uneconomic for the company to do so."
* Water suppliers are required to advise customers on whether installing a meter will save money. The water companies publish "ready reckoners" to help you make the calculations and many have online calculators on their websites. Even better, installing a water meter is not a gamble - if the change doesn't save you money, you have the right to change back to the old system, as long as you ask to do so within 12 months.
No need to ring up expensive phone and internet charges
* It's getting easier and easier to cut the cost of your home phone bill, as BT comes under increasing pressure to give rivals access to its networks and infrastructure.
* Martin Lewis, who runs the Moneysaving expert.com internet site, says the biggest savings are available to those who currently have - or want to get - broadband internet access. TalkTalk's £20 a month deal for both services is the cheapest deal on the market by some way, he says. For that price, all your internet access and all calls to UK landlines are covered.
* If you don't need broadband, or don't want to change your existing supplier, Lewis recommends renting a line from BT at £11 a month and requesting its Together Option 1 package. He then tips Primus (call 0800 036 0094 for details) as the cheapest supplier of calls. Its Saver 2 deal offers free weekend and evening calls to landlines, though other deals may be cheaper if you regularly make more than six calls during the weekdays.
* Lewis also points out that for both combined broadband and phone, and phone-only, customers, it's possible to save even more money by using different call suppliers for calls to mobile phones and overseas numbers. To access these services, you typically dial a number to get into their networks and then the actual number you want. You usually pay via your normal call supplier's bill, but at the "override" provider's charges.
* Lewis's site includes a daily updated list of override providers that shows the cheapest service for each type of call. "In a world where prices constantly rise, the phone is now cheaper than ever before," he says.
The 'no-hang up' scam targets vulnerable people - and your bank may not protect you
Under new state pension rules we will all be much worse off
Budget 2015: George Osborne is set to get tough with further cuts in public spending
Energy giants overcharge us by almost £2bn as 70% of customers are on the wrong tariff, warns CMA
If a bank calls about transferring money because of fraud, you risk losing your life savings
- 1 Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
- 2 Nick Kyrgios calls former Olympian Dawn Fraser a 'blatant racist' after she tells Wimbledon star to 'go back where their parents came from'
- 3 World learns of app that shows you who unfriended you on Facebook, app promptly crashes
- 4 Chris Moyles reportedly set to make radio comeback with new breakfast show on XFM
- 5 The Greece debt crisis explained in less than 100 words
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Sickness and disability benefits could be reduced by £30 a week as part of £12bn welfare cuts
iJobs Money & Business
£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...
competitive: SThree: Are you passionate about sales?Do you have a keen interes...
£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
Day In a Page
In a new collection of flats, this first-floor two-bedroom apartment offers ample entertaining space and a prime view of Furze Green from a private balcony.
This three-bedroom stone-built cottage currently trades as the village store with a restaurant in the annexe and family accommodation on the upper floors.
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.
Spanning three storeys, this late-Victorian five-bedroom farmhouse is a spacious family home with a modern interior and B&B potential.
With an original church arch, this triplex one-bedroom church conversion has a light, spacious, feel and comes with a secure off-street parking space.
This recently-refurbished three-bedroom home has bi-folding doors that lead out to a decked seating area - ideal for alfresco dining this summer.
Well-located for coastal walks and popular restaurants, this detached four-bedroom home offers views over farmland, to the Solent, the Purbecks and Bournemouth.
If you love high ceilings, school conversions like this one are bang on the money. This two-bedroom flat is minutes from Burgess Park and the foodie haven at Borough Market.
Set within a church conversion in Bermondsey, this two-bedroom maisonette combines existing features, such as original arches and brickwork, with a contemporary finish.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.