13 September 2017

Can you save on your energy bills this winter?

Autumn is on its way and it's soon going to get chilly. But before you switch on the central heating dial, have a think about your energy use. Can technology help you use less? Could you cut your bill by switching energy deals?

Most gas and electricity suppliers offer a range of tariffs, and it's usually the standard variable rate (SVR) that is the most expensive.

Fixed-rate deals tend to be cheaper and work like mortgages. The rate won't change for the duration of the contract, but when that ends you'll need a new deal or it'll go back to the more expensive SVR rate.

How gas and electricity tariffs are calculated

Electricity and gas charges are calculated using a standing charge per day and a charge for the amount of power used.

The charge for power used is calculated using a rate of pence per Kilowatt hour, a unit of energy known as kWh. Accurate bills only come after a meter reading, when your actual usage is measured.

Often discounts are applied if you manage your account online, have both fuels with the same provider and choose to pay by direct debit.

How to switch suppliers

If you're on an SVR tariff you can switch suppliers anytime without penalties because you're not tied into a contract. If you have a fixed rate deal, your supplier should tell you your deal is ending 42-49 days before the contract end date.

From that point you won't be charged an exit fee for switching and can find a new deal by using your postcode and bill details to answer questions about energy usage and compare tariffs online or by phone.

When you find a new deal, your new supplier will confirm the switch and ask for your latest meter readings, which they will send to your old supplier to prepare a final bill and agree a switching date. This takes around 17 days, including a two-week cooling off period.

Is it actually worth switching?

If you are on the Standard Variable Rate and have never switched, it's likely you will save between £100 and £300 a year.

A recent investigation by the government's Competition & Markets Authority found that two-thirds of 'big six' customers are still on expensive standard tariffs, paying an estimated £1.4 billion a year more than they would on more competitive rates.

The big six suppliers are British Gas, SSE, Scottish Power, EDF, E.ON and Npower. According to MoneySavingExpert.com, the average annual duel-fuel bill from a 'big six' supplier on 21 July 2017 was £1,138. But the cheapest deal available would have cost just £844.

A Spokesperson for Ofgem said: “You can save up to £300 per year from switching supplier. You can also switch to another supplier if they have a better customer service rating."

Almost a third of UK households have never switched, but people are becoming more aware. Energy UK reported that 2016 was a record year, with 4.8 million people switching. Switching should be straightforward: There's no change to the actual gas or electricity you get, just to the company. Your energy supply won't be interrupted.

Are challenger operators a better option?

The regulator Ofgem and the government have opened the energy market to competition from new challenger suppliers. They can charge lower prices than the 'big six' because they have smaller overheads.

However, some challenger suppliers have poor customer service, partly due to keeping overheads low. But some of the 'big six' also have poor reputations for customer service, despite more resources.

Smart meters – Are they worth it?

Smart meters communicate directly with energy suppliers, sending them your meter readings digitally for accurate bills.

A Spokesperson for Ofgem said: “The advantages of smart meters are that you only get billed for the energy you use, so no more estimated bill readings, and they help customers monitor their energy use."

However, some people think the cost of introducing smart meters, paid for by customers through an annual £6 levy on bills, is higher than the actual savings.

What other technology is available and does it save money?

Energy efficiency measures like cavity wall and loft insulation and new boilers can cut bills. You can get some of these free from some energy suppliers, who have to offer them as part of their efficiency obligations.

Heating accounts for over half of all household energy costs. A more efficient boiler gives you more heat per gas unit, reducing costs.

Cavity wall insulation plugs the gap between a property's internal and external walls with insulating wool and foam to keep cold air out and retain warm air, so less power is needed to keep a property at the same temperature. Loft insulation works in a similar way, stopping heat escaping from the roof.

Other ways to save money include avoiding leaving appliances on 'standby'; choosing energy efficient appliances and lightbulbs and smart heating controls that allow you to control heating remotely via a mobile app.

A Spokesperson for the Energy Savings Trust said: “In the future there may be more internet-connected technologies that work along with time-of-use tariffs that could be offered by smart meters, such as appliances that automatically switch off at peak times to save energy costs."

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