Loyalty is something that most of us prize in other human beings. However, when it comes to the products and services that we regularly rely on it seems that it really doesn’t pay to be loyal. In particular, the cost of energy is leaving those who stay loyal to their energy providers seriously out of pocket. So, how do you know if you’re paying too much for your home energy and – if you are – what should you do about it?
Why are we paying too much?
A study published earlier this year identified that 40% of customers don’t change energy suppliers because they believe that it is “too much hassle.” Many people simply don’t have time to keep track of the tariff they are on because they are too busy and, as a result, 20% don’t actually know which tariff they are paying for. As it turns out, this is a costly way to approach energy bills – customers who are trapped in poor value deals are paying a total of £4 billion too much for their annual energy supply. There are some substantial savings to be made by switching energy suppliers and yet 32% of people haven’t changed energy supplier for at least five years. Most of these people are likely to be on Standard Value Tariffs – the energy supplier’s standard rate, which kicks in after any discounts or sign up deals expire. SVTs are usually much more expensive than the new deals that are offered to switching customers so staying on them can push the cost of energy right up.
What can you do about your home energy bills?
Switch providers to reduce the “per unit” cost
If you’re one of those customers who hasn’t changed energy supplier for some time then you could be paying far too much. The first step to start making savings is to switch to another provider. Savings of approximately £275 a year are available to those who choose to switch so the benefits of doing so are very tangible. Plus, there are many more options for managing the process today so that switching energy supplier doesn’t have to be time consuming or a hassle. Most switching services make it very simple – and there are also options like weflip, which will do all the work researching the market and automatically switch you to the cheapest deal.
Make sure you’re not paying too up front
Recent research established that more than half of UK households have overpaid energy bills by an average of £84.80. Because energy use can shift seasonally, or when personal circumstances change, providers often end up taking larger payments than are necessary. Although they are legally obliged to refund a surplus this often only happens when the contract comes up for renewal or when a meter reading is provided. Keep an eye on any surplus on your account – if you want to ask for a refund you can do so at any time.
Reduce the number of units of energy consumed
Here’s a plan to reduce the volume of energy you consume:
Take control of your thermostat. If you’re willing to drop room temperature by just 1ºC you can reduce the cost of your annual heating bills by over £70.
Use energy saving light bulbs. Make the switch from traditional light bulbs to LEDs and you could save significantly – the average LED could cut £200 from your energy bills over its lifetime. You can also reduce energy consumption from bulbs by ensuring that you are using the best bulb for the room and also switching lights off when rooms aren’t being used.
Replace old appliances. Today, appliances are designed to be much more energy efficient than they used to be. Energy efficient washing machines, TVs, dishwashers etc can save you up to £241.
Upgrade your boiler. An old fashioned boiler will use more energy, not just as a result of its design but also the wear and tear to the system. Switch from an old G-rated gas boiler to a new A-rated condensing model and you could reduce annual energy bills by around £200.
Insulate your home. Ensuring that you have the right insulation for your property will help to stop heat escaping so that you require less energy to heat your home. Loft insulation, cavity wall insulation and solid wall insulation could help to reduce annual energy bills by £275.
If your energy bills have started to feel onerous there are solutions available – from switching your energy provider to avoid an expensive tariff, to taking steps to reduce your energy consumption, there is a lot you can do to make a difference. Given that most of your energy use is in the winter, and as it takes time to implement this plan, you should start right now!
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read more about Alex Hartley