Expending a little energy on cutting power bills is well worth it

Energy firms are preparing for price increases over the summer that could send household gas and electricity bills soaring to new record highs.

Energy bills rose by an average of 5.9 per cent after each of the big six suppliers raised their tariffs over the winter. Those hikes were accompanied by a sharp rise in fuel costs, a Vat increase to 20 per cent and government spending cuts that have combined to pile the pressure on household finances.

The expectation after the winter price rises was that further energy bill increases were unlikely until late 2011. That was before unrest in North Africa and the Middle East helped drive a new surge in the cost of wholesale gas.

Hide Ad
Hide Ad

Scottish & Southern Energy last week dropped the heaviest hint yet that households can expect significant price hikes over the coming months.

It reported a 29 per cent rise in profits for the last financial year, but said its household gas business had been hit by a 25 per cent jump in wholesale costs. It warned that wholesale gas and electricity prices for the coming year had since risen by as much as another 33 per cent. Higher wholesale prices tend to translate into higher household bills around six months later and there is little doubt that the big six are preparing to pass their extra costs on to consumers sooner rather than later.

Exactly how steep those increases will be is unclear, but perhaps the best indication came from the Bank of England in early May. It forecast 15 and 10 per cent rises in domestic gas and electricity prices respectively between July and early next year, three months after predicting just a 5 per cent increase later this year.

Mark Todd, director of Energyhelpline.com, said: "We expect prices to rise by 10-15 per cent in the late summer to early autumn if market conditions remain as they are now."

So households have to take action if they want to soften the blow. Here are five steps you can take to keep your energy bills down:

1 Switch

Around a million Scottish households could save 100 a year on average by opting for a cheaper tariff, Consumer Focus Scotland estimated last year. This doesn't necessarily mean moving to a different supplier, however. If you're on a standard tariff you can make substantial savings simply by moving to an online tariff with the same firm.

Online deals paid by monthly direct debit are by far the cheapest available and households continuing to pay standard tariffs by quarterly bill are almost certainly paying far more than they need to.

The chances are that your supplier hasn't told you about its best tariffs, so give it a call and negotiate an improved deal.Threatening to move to a different supplier won't harm your chances.

Hide Ad
Hide Ad

If this fails you can then carry out your threat to take your business elsewhere. The average household can slash their annual bill by more than 250 by changing supplier, claims Moneysupermarket.com, with those on the most expensive deals able to save more than 300.

Comparison websites including moneysupermarket.com, uSwitch.com and energyhelpline.com (which also has a helpline on 0800 074 0745) can point you in the right direction. All you need is a copy of your latest bill (which should include details of the tariff you're currently on), your postcode and your usage levels.

"You can get a fixed price for over a year at the moment for just over 1,000 a year," said Todd. "You can also get a fixed price for close to three years for 1,084. Given 15 per cent price rises a typical energy tariff would cost 1,322.50."

2 Get help

Benefits related to household energy costs include the winter fuel payment. Households with someone over 60 in are entitled to 200 and over 80s households receive 300, cut from 250 and 400 by the government earlier this year.

If you're struggling to pay your bills, don't be afraid to speak to your supplier. It may put together a payment plan or shift you on to a tariff that makes it easier to manage your account. Arranging a payment plan and keeping to it also means your the supplier cannot switch off your gas or electricity.

It may have a social tariff available to those in fuel poverty (where more than 10 per cent of household income goes on energy bills). You could also ask if it has an energy trust through which it can help those struggling to pay their bills.

3 Read your bills.

Always check your bills and take regular meter readings to ensure you're paying the right amount, as suppliers continue to rely on estimates. Almost three in ten households have been billed incorrectly by their supplier over the past two years, according to recent research by uSwitch.com.

Complain to the firm if it fails to update its records or if it sends what you believe are incorrect bills. If it fails to respond or doesn't resolve the complaint within eight weeks, contact the Energy Ombudsman on 0330 440 1624 or 01925 530263, or see www.ombudsman-services.org/energy.html for more information.

4 Make your home more energy efficient

Hide Ad
Hide Ad

From turning down your thermostat and installing double glazing to insulating your home and using energy efficient light bulbs, relatively simple changes around the home can generate significant savings.

Your supplier may help out with the cost of certain measures by providing an energy efficiency grant, depending on eligibility.The Scottish Government offers the energy assistance package, which includes grants for boiler replacement and home insulation, again provided that you qualify.

The Energy Saving Trust Scotland offers free advice for households on cutting energy consumption - call 0800 512 012 or visit www.energysavingtrust.org.uk for more information.

5 Try a smart meter

These are not directly cheaper but by recording exact energy consumption they can help households work out where they can reduce their usage and modify their habits to benefit more from off-peak tariffs.

The reading from the smart meter is transmitted straight to the supplier, which uses the information to provide households with details of exactly how they use their energy, so households are not at the mercy of wrongly estimated bills.

Unlike on direct debit deals, however, winter bills can be particularly hefty because the payments are not smoothed out over the year.