Energy price rises are not exactly news. However, for many consumers, the rate at which the big energy companies continue to put up their prices means increasing, uncomfortable, pressure on personal finances. In May SSE became the last of the ‘Big Six’ energy companies to announce ongoing price rises. So, is it time to move away from the big companies and switch to a smaller energy provider instead to start saving cash?
Recent price rises by the “Big 6” energy suppliers
All the major energy suppliers in the UK have now announced an increase in the prices that they charge for gas and electricity. That includes British Gas, EDF Energy, E.ON, Npower, Scottish Power, and SSE. The increases are different, depending on the energy company that you’re currently with. For example, SSE customers will see a 5.7% increase in the cost of gas and a 7.7% rise in electricity prices as of 11th July. For 2.36 million customers that’s going to result in an average increase of £76 a year. Around 4.1 million British Gas customers will see an increase of 5.5%, which will add an average of £60 to annual bills. Around a million people who buy their energy from Scottish Power will be paying £63 more on average (an increase of 5.5%). The same number of customers at NPower will be paying 5.3% more, which translates into a £64 increase, which will be payable from mid June. And finally, E.On has changed its billing processes with the result that the average standard variable rate will increase.
What can you do to save money on your energy bills?
Many of these price rises have been criticised by the government as “unjustified” but, given the fact that these are not nationally owned power companies but private entities, there is little that can be done to stop power companies increasing bills. So, the only solution for individual customers may be to shop around and find a cheaper energy supplier – which is increasingly where smaller energy companies are more appealing.
What does the process of switching suppliers involve?
It’s pretty simple, especially if you use one of the big and well established switching websites.
Create a comparison of the prices available to you – you’ll need to enter information, such as your post code and how you use energy, to get this.
You’ll be shown the options for comparison and the price of each one so you can see the available services and costs.
Make the switch – if you use one of the big comparison sites the switch can often be made on the site. Your new supplier will contact the old supplier for a meter reading and the switch automatically takes place.
Make sure you use a website that is Ofgem accredited and look for one that states you will have a 14 day cooling off period to change your mind if you decide the new supplier is not for you. Remember that price comparison websites take commissions from energy companies in return for a successful switch so there should be no cost to you.
What to bear in mind when you’re switching energy suppliers
Start by looking at your existing bills. This will be a useful way of working out how you already use your energy and could also help you to save cash. For example, if you’re using most of your energy during the day then you could opt for an off peak tariff that should be cheaper. Read your meter so that you know exactly how much energy you’re consuming per month and year and then look at the deal you were previously on to see if something similar would work with a new energy supplier.
Fixed and variable tariffs. When you’re choosing a new energy supplier your tariff options will be fixed or variable. A fixed tariff will remain the same for the length of your contract whereas a variable tariff may go up or down. So, if prices go down then you benefit more from a variable tariff but a fixed option may make it easier to budget.
What about a dual fuel deal? It’s always worth looking at whether it is cheaper to buy both gas and electricity from the same supplier – you may get a discount for doing this.
Look at the opportunities to save. For example, the supplier may offer a discount if you pay by direct debit and you could get a further discount if you opt to manage bills online, as opposed to receiving paper bills.
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