Switch energy supplier, draughtproof your home and insulate yourself against rising fuel bills

With the average British Gas customer facing a hike of more than £250 a year, Julian Knight looks at ways to keep costs down

The British Gas announcement last week that gas bills would go up by 35 per cent and electricity by 9 per cent was a blow for millions of British families. Almost overnight, according to the price comparison service uSwitch, the energy costs of an average UK home shot up by £267 to a whopping £1,322 a year.

Those on low incomes will feel the price pain most keenly. Georgina Walsh from the consumer group Energywatch says: "If you are elderly, disabled, a single parent or have a chronic illness, this means that you will have a very hard time indeed."

On past performance, the other major energy suppliers are likely to follow suit soon. In fact, EDF pre-empted British Gas's move by raising its gas bills by 22 per cent and electricity by 17 per cent on 25 July.

Ron Campbell, head of policy at the charity National Energy Action, says: "Once all the big six energy firms have raised their prices we estimate that around six million households will be in fuel poverty. That's the sort of level last seen in the early 1990s."

A household is deemed to be fuel poor if it spends more than 10 per cent of its income on energy.

So how can you best reduce your energy bills?

Ms Walsh says the biggest immediate saving can be made by switching energy supplier: "If you have never switched supplier then that's the most obvious first step. Substantial savings are on offer."

In fact, the industry watchdog, Ofgem, estimates around £100 a year can be saved by moving supplier for the first time, while subsequent moves can also bring savings.

Many suppliers offer their best deals to customers who sign up and receive bills over the internet rather than traditional quarterly paper billing. In addition, Energywatch recommends paying by direct debit, which can bring annual discounts of about £100.

Three energy suppliers – E.ON, npower and British Gas – are offering fixed-tariff deals. In brief, these contracts fix the cost of energy bills for a set period, providing protection against dramatic price increases. However, there are strings.

"Companies charge a premium for fixed deals, which means that at the beginning the customer is paying more than they would have done if they had stayed as normal," Ms Walsh says. "Essentially, it's a gamble: if prices rise sharply the customer will make a saving. On the other hand, if prices don't rise sharply, or in fact fall, then they may pay way over the odds."

The other route to cutting bills is to make your home more energy efficient.

"The main wastage in a British home is through the roof and walls. Therefore, the biggest single step is to insulate these parts," Mr Campbell says.

According to the free advice service Energy Saving Trust, basic loft and cavity wall insulation costs around £1,000 on average, but this cash should be recouped in the form of lower bills within just four years.

Discounts of up to 100 per cent are available on insulation, Mr Campbell explains: "Get in touch with your local Energy Saving Trust advice centre (0800 512012) and they will tell you which energy suppliers are offering insulation in your area. People in vulnerable groups – such as the elderly or those with health problems – can claim discounts on the work. Some will even get it free."

The government-funded Warm Front scheme offers grants of up to £4,000 for major efficiency work, such as installing new boilers and central heating, but these are for people who are in receipt of benefits (check out warmfront.co.uk).

Other measures include fitting a hot water cylinder jacket of at least 75mm depth, draughtproofing, including fitting brushes to letterboxes and excluders to doors, and fitting energy-efficient light bulbs. Double glazing is another option, but the expense makes it slower to pay for itself than loft and wall insulation.

Another key area, according to the Energy Saving Trust, is using energy-efficient appliances, switching appliances off at the wall when they are not in use, rather than leaving them on standby mode, and fitting a condensing boiler.