From The Sunday Times

August 3, 2008

Five steps to save on energy bills

As energy prices soar, we offer a simple guide to slashing hundreds of pounds off your bills

Ali Hussain

UP to 13m households, or about half of all energy customers, have never switched suppliers and could save an average £200 — and in some cases as much as £500 — according to comparison firm Energyhelpline.  The energy giants penalise loyal customers who pay by cheque or cash, have separate suppliers for gas and energy and don’t manage their accounts online, so this is where you can make the biggest savings.  However, if you prefer to pay by cheque — as many of us do — you could still cut your bill by hundreds of pounds.

1 CHOOSE DUAL FUEL

If you have never switched, you are likely to be with British Gas for gas and a local supplier for electricity. In London, the standard annual gas bill with British Gas is £894 while EDF, the supplier for Londoners who have never switched, charges £469 for electricity — a total of £1,363.  If the customer switched to EDF for gas and electricity, however, the annual bill would fall to £1,230 — a saving of £133.

Savings depend on your region and range from £297 in southern England to £121 in the southwest. They also depend on usage, so use a comparison site such as Uswitch.com before you transfer.

2 GO TO DIRECT DEBIT

Rather than wait for energy firms or the government to reduce the costs of paying by cheque or cash, you could make an additional saving of over £42 a year by switching to direct debit payments, bringing your average bill to £1,188 a year with EDF in the above example.

The cheapest direct debit standard plan, on average, is offered by Scottish and Southern (SSE) with a rate of £952 a year — £54 less than it charges standard credit customers.  However, if you don’t want to go to direct debit, the cheapest plan for cash or cheques is from SSE too at £1,006.

Tim Wolfenden at Uswitch said: “Not everyone wants to pay by direct debit. Many prefer to keep their cash as long as possible rather than let the energy giants earn interest on it. It’s still worth checking you’re on the best tariff, though.”

3 GET ONLINE — FAST

Only about 19% of customers have online deals. In the case of British Gas, just above 10% of customers have its internet tariffs, according to figures from Uswitch.  British Gas has not increased its online tariffs in the latest round of hikes, so it is still offering the best deal. However, the firm’s promise that it will not raise bills for the rest of the year does not apply to the internet deal, so it could go up in future.

Its Click Energy 5 costs £845 a year — a saving of £518 from having separate suppliers and paying quarterly by cheque.  Most experts predict Click Energy 5 will be withdrawn to new customers soon so it is important to act fast.

4 SEND A REGULAR METER READING

Over 11m customers unexpectedly owe money to energy suppliers due to a discrepancy between estimated readings and actual readings, says Uswitch. The average amount owed is £137, and you won’t be able to switch until you have paid it off.  If you find you have ovepaid, you will eventually be refunded the additional payments as utilities factor them into your bill.

Make sure you respond to meter-reading requests. If you are not around then complete the slip that is put through your door and return it or enter the details online.  Some suppliers also offer rewards to those who submit their own readings. EDF Energy gives customers Nectar points for submitting their own meter readings. SSE encourages customers to text in their readings. British Gas says it has plans for a similar scheme.

5 IF YOU WANT TO FIX, MOVE QUICKLY

Despite last week’s energy price hikes, industry experts have warned of a further 40% rise by early next year, which would take the average household energy bill to an eye watering £1,467 a year. British Gas’s Click Energy tariff would go up to £1,183.  Scott Byrom at price comparison site Moneysupermarket.com said: “For those less willing to take a gamble, a fixed tariff is by far the best option.”  However, you will have to act fast. Scottish Power and Eon closed their fixed-price plans to new customers last week. It follows the withdrawal of Npower’s One fix the week before.

The cheapest deal still available is offered by EDF, which is fixed until November 2009. The rate is £1,229 on average for dual-fuel customers and there is a £50 cancellation fee.  A longer-term fix is offered by British Gas with its Fixed Price 2011 Dual Fuel deal which costs £1,240 on average a year — similar to the supplier’s standard dual-fuel tariff. Prices are fixed until September 2011.  However, there is a whopping £100 cancellation fee if you leave the tariff before the end of the fixed date.

While analysts expect further rises in the near term, the price of oil has fallen 16% in the past month to $123. If the fall is sustained, it could mean that energy bills come down again in the next year or two.

http://www.timesonline.co.uk/tol/money/consumer_affairs/article4448473.ece