Fix your power bills now to minimise the pain of rises

Published on Saturday 2 August 2008 15:37

Charges will almost double this year due to the latest hikes, writes Teresa Hunter

TIME is running out to lock into fixed bills and avoid combined annual gas and electricity charges nearly doubling to 1,600 in the coming months.

Scottish Gas followed EDF last week by announcing a 35% increase in gas prices, after a 15% hike in January. But this is not the end.

A recent report from energy analysts Eclipse warned that UK gas prices would climb 66%, leading to average bills of 1,000, because of falling domestic gas production and a greater reliance on imports, with their sensitivity to soaring oil prices.

As electricity prices are also gas and oil-driven, these too are set to climb. Scottish Gas has increased electricity by a further 9% following January's 15% hike. In all, an average annual gas and electricity charge with the company will have risen from 912 at the beginning of the year to 1,322, before topping 1,600 in the months to come.

But energy suppliers hunt in a pack, and the remaining companies are expected to follow their competitors' prices upwards. Energywatch is predicting that this will lead to a sharp rise in disconnections.

Gas and electricity regulator Ofgem is due to publish its latest disconnection figures tomorrow. These are not expected to show any undue increase in people being cut off, but the data will only go up to March 2008, before the full effects of the recent punishing prices began to bite.

So it is vital that households act now to minimise the impact of the storm yet to come.

USwitch's Jo Ganly warns: "We are talking about levels of bills that will be unaffordable for potentially millions of households. It is vital consumers make sure they are on the cheapest tariff suitable for their circumstances."

In fact, it has never been easier to find your cheapest supplier. We show you how.

How to cut your bills

Using your old bills or by asking your current supplier, establish either your annual consumption based on the number of kilowatt units you use per hour, or how much you spend on a monthly basis.

With this information you can use comparison websites such as uSwitch.com. moneysupermarket, gocompare, peopleschampion or moneyexpert. Some, such as uSwitch and moneysupermarket, will carry out the switch to a new supplier for you. Alternatively you can contact uSwitch by phone on 0800 093 0607.

Right now, customers can choose the cheapest tariff they can find in the almost certain knowledge that this will go up, or opt to fix their bills.

You should be able to cut your costs immediately by switching to direct debt, knocking around 118 annually off your bills. Further discounts are usually available for buying both gas and electricity from one supplier.

Finally, you can cut charges by buying online. Despite the recent price hike, Scottish Gas's Click Energy 5 online service is the lowest tariff for most customers.

Alternatively you can fix your bills, although these deals are disappearing fast. Seven firms pulled fixed deals on Friday, and only Scottish Gas will allow you to fix until 2011 with its dual duel offer, and EDF until 2009 with its price protection deal. However, you may end up paying more in the short term.

For example, we found that a moderate user in Edinburgh's EH12 area could fix his annual energy bills at 1,234 until 2011 with Scottish Gas's fixed price offer. However, the cheapest tariff is Click Energy 5, which currently costs 852.

Nevertheless, Ganly strongly advises customers to fix. She says: "If you want to make sure you can pay your bills over the next few years, then it makes sense to opt for certainty."

What if you can't afford to pay

There is additional help for the over-60s via the winter fuel payment. This gives a household with someone over 60 an extra 250 and someone over 80 an extra 400.

The cut-off date is September 21, so to qualify for the 250 they must have been born by September 21, 1948, or for the higher amount before September 21, 1928.

It should be paid automatically before Christmas to anyone who is in receipt of a state pension, but may have to be claimed separately by anyone aged 60 to 64.

There is additional help from the Government to anyone receiving Pension Credit via the cold weather payment, which essentially gives them an extra 8.50 for every seven-day period that the temperature falls below freezing.

Apart from that, most companies offer discounts via what they describe as their social tariff, but these differ. Scottish and Southern, for example, slices 20% off for those on benefits, while EDF reduces bills for those in desperate need by 15%. Scottish Gas too has its Essential tariff for anyone on benefits, including Pension Credit.

If you cannot pay your bill, seek immediate help from a money adviser, and also contact your company and explain you are having difficulties.

Although companies all pledge to help those facing serious struggles, Energywatch says their approach differs, with some much less sympathetic than others.

Energywatch's Graham Kerr says: "We still hear of cases where consumers have received threatening letters that have upset them. Given the price rises, we would expect to see more of these letters and for disconnections to rise.

"However, a company cannot cut you off without a warrant. So it is important to speak to them, as there will often be options to help.

"For example, there is a weekly scheme that allows you to pay a little each week."

High costs forced us to switch

PENSIONER Nancy Martin didn't realise she was paying far too much for her gas and electricity because she had failed to sign up for direct debit, writes Teresa Hunter.

She and her husband, retired postman Tommy, live on their state pensions and a small private pension in Knightswood, Glasgow. They always managed to pay their bills without too much trouble, until the last price hike, when Nancy decided she would have to find a cheaper option.

Nancy says: "We were with Scottish Gas for gas and ScottishPower for electricity, and the bills were around 800 to 900 a year. But I started to get concerned at the last wave of price increases, so I contacted uSwitch to see if I could find a cheaper option. They suggested we switch to Npower, and to move onto direct debit."

Nancy and Tommy describe themselves as moderate users, with gas central heating and water and an electric cooker and shower. Moving onto direct debit alone is estimated to cut bills on average by 117 annually, and moving to one company for both will have trimmed costs further.

How to power down and save

• Unplug your mobile charger – could save 3.50 a year

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&#149 Boil only the water you need for one cup – 29 a year

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&#149 Put kitchen appliances on standby – 11 a year

&#149 Turn your thermostat down by 1C – 45 a year

&#149 Putting silver foil behind radiators – 14 a year

&#149 Draught-proofing – 20 a year

&#149 Draw the curtains