Cuts in energy prices must go a long way to redress balance

THERE has been a lot written in the press recently about the "energy price war" that has seen all of the main suppliers announce cheaper rates for customers.

However, while the recent skirmishes have resulted in better deals, we should not forget that over the past three years energy bills have rocketed. In fact, prices on average increased by 94 per cent for gas and 60 per cent for electricity between 2003 and early 2007.

While the recent price cuts are a step in the right direction, they only go a small way towards redressing the balance. Since this time last year, wholesale energy costs have come down by more than 60 per cent. Energy companies, on the other hand, have announced price reductions of about 10 to 15 per cent. None of the energy suppliers have reduced their bills by anywhere near the amount that they raised them in the preceding 12 months, so consumers are still paying way over the odds for their energy.

While it is very likely that prices will fall further later this year, by switching providers you can take the matter into your own hands and realise significant annual savings.

Research carried out for SimplySwitch found that people are more likely to switch suppliers when bills are rising (62 per cent) than when they are falling (35 per cent). However, because existing customers invariably miss out on their supplier's best deals, switching as prices fall can actually be a very shrewd move. Not only will switching significantly reduce bills, it also helps to boost competition and ultimately drives down prices.

Households in Scotland tend to be loyal to the Scottish brands. However, with Scottish-Power now owned by a Spanish company, this could be seen by many as misplaced loyalty. For the vast majority of customers, there are no penalties for leaving an energy company and, now that all the suppliers have announced a cut to their standard tariffs, there's never been a better time to switch.

Many of the most vulnerable households, however, tend to have prepayment meters. These customers not only pay a premium for their energy, but are left unable to switch to a better deal. Providing they are not in debt, there is no reason why consumers cannot take the lead and ask their energy supplier to change them from a prepayment meter to a standard credit meter.

Usually it is done within two weeks and it's free - although some suppliers do ask for a refundable deposit. This will not only mean lower bills and being able to pay by direct debit, but will also leave consumers free to switch to the best deal available.

Competition is the best regulator and gives consumers the ultimate power.

There are many confusing messages out there, with each supplier making its own claims about why its deal is the best. Headline price reductions might look tempting, but these will vary by region. The only way to be 100 per cent certain of finding the best deal is to contact an independent, Energywatch accredited source.

Energywatch introduced guidelines earlier this year to ensure that price comparison services such as SimplySwitch offer completely impartial information. As long as you use an approved company, you are guaranteed to receive information on every energy provider available in your area. You won't get the same guarantee from the doorstep salesman.

Luckily, finding the best deal and switching suppliers is actually very simple. You'll need a bit of information on how much energy you use and how much you currently pay, but a quick visit online or a short phone call could save you about 200 per year.

• Karen Darby is the founder of SimplySwitch.com