Cut down your energy bills

IT HAS been a sad few weeks for anyone with a gas or electricity bill to pay. Last week, Npower announced plans to increase electricity and gas prices by 5.1 per cent, bringing to four the number of big energy companies hiking rates this Christmas, bringing the average household’s bill to £1,210.

And just yesterday, Chris Huhne, the energy and climate secretary, announced the government’s plans to fund £110bn of new investment to replace much of Britain’s aging power infrastructure with shiny, new, low carbon energy infrastructure. Over a quarter of Britain’s generation capacity will shut down over the next decade. By 2023, half of Britain’s coal power stations and all but one of its nuclear facilities will be out of action.

According uSwitch, a price comparison website, the high feed-in tariffs and guaranteed prices for low carbon producers required to fund the new investment could see the average energy bill increase by up to £400.

Aside from the government’s investment plans, it is not clear why energy prices are going up. Providers point to increasing wholesale gas prices, which have gone up by 25 per cent over the last three months. But consumer groups point out that wholesale prices are still far below their peak in 2008, and yet consumer prices are almost as high. To solve the quandary, energy regulator Ofgem has launched a probe, which might result in tougher regulation of energy prices if they conclude that prices are unreasonably high.

But in the meantime, what should savvy consumers do? Well, according to Scott Byrom, utilities manager and energy expert at Moneysupermarket.com, the most important thing is to switch your provider, and soon. “50 per cent of people are still on their incumbent provider’s standard tariff, which could be up to £400 a year too expensive”, he says.

According to Byrom, most consumers use anywhere up to half of their gas for the year in January and February alone. It can take anything up to six weeks for a switch to be confirmed, so consumers are advised to do it as soon as possible so as not to get caught out too badly this winter.

Choosing the right tariff is also important. According to Consumer Focus, a watchdog, the six biggest energy providers offer 93 tariffs between them. To get the best, consumers need to be aware of their individual circumstances. Byrom recommends that customers research their options widely. He also warns about the lure of cold callers offering a switch; often they do not offer the best rate.

With another cold snap anticipated for Christmas, most people are likely to keep burning the gas. There is not much they can do to avoid paying for the government’s low carbon subsidies, but there is no point in giving too much to the energy companies. As Byrom points out, when you spend £400 more on a TV, it tends to be a bit better, but energy is the same at any price.