We compare prices for many things in life, yet many of us don’t think about doing this when it comes to our energy bills. Many people, particularly those who are on their supplier’s standard variable tariffs could be paying too much for their energy.
A 2014 Ofgem survey found that more than half (53%) of people said they have been confused by energy tariffs, and a third said their energy bills have been a concern. With a proliferation of switching services available, there’s no need to stick with an expensive standard variable rate.
There are several widely-advertised comparison sites that can help you find a better deal, but be careful – they may not always show you every available tariff on the market. Citizens Advice has a price comparison tool, which always compares prices from the full range of UK suppliers.
Being a successful energy shopper is all about knowing what’s out there – and deciding what’s important to you. It may be cost, renewable energy or customer service.
All you need to start your research is:
- your postcode
- the name of your current supplier
- the name of your current tariff
What sort of tariffs are there?
Standard variable rate
This is usually the energy supplier’s default tariff. You may sometimes be switched on to the standard variable rate following the end of a fixed rate tariff. If you haven’t switched tariff for a long time, you may well be on a standard variable rate.
These rates offer total flexibility. You’re not tied into a contract with a fixed end date and you won’t be charged any exit fees should you wish to change supplier.
However, there’s no protection against price increases on a standard variable rate and it’s often not the cheapest available.
A fixed rate is exactly that; you pay a defined amount for each unit of energy until a set end date. Fixed rates often last for a year, two year or five year period.
These rates offer peace of mind – you know how much you’re going to pay and rates are often much cheaper than standard variable rate tariffs.
However, you’re often locked into the deal for a set period of time. Also, remember it’s only the unit price that’s fixed – you’re still paying for the quantity you use and your bills can still go up if you use more energy.
A dual fuel tariff is where you receive gas and electricity from the same supplier.
Energy companies will often offer a reduced rate for dual fuel customers and choosing a dual fuel tariff means you’re only dealing with one energy company.
However, the discount offered to dual fuel customers aren’t always as much as choosing individual electricity and gas suppliers. You need to check the savings carefully.
Many energy suppliers offer green tariffs, which can either mean they’ll match your usage with renewable energy generation or they will contribute towards environmental schemes on your behalf.
These tariffs offer a positive way to tell the energy industry that you want to support renewable energy. However, they’re not always the cheapest. And the ‘green’ aspect of the tariffs isn’t entirely straightforward either.
Some green tariffs will directly supply renewable energy. Others involve energy companies purchasing ‘regos’ (Renewable Energy Guarantee of Origin) certificates on the open market. These certificates are issued to renewable energy generators for each megawatt of renewable energy generated. They can sell any excess certificates created at times of surplus to non-renewable energy generators, who then use them to create a ‘green tariff’. You need to read the small print to work out which sort of ‘green tariff’ you are being offered.
Will I get charged for switching?
Some fixed tariffs do have an exit fee – however, many are free to leave at any time. If you’re on a standard variable tariff, there are no exit fees in any event.
Aren’t I protected by the price cap?
In January this year, Ofgem introduced a price cap to regulate the maximum amount energy suppliers could charge for supplying gas and electricity. While the price cap provides some protection against excessive charges, it only stops high charges rather than offering low ones.
Initially the cap was set at £1,137 per year for a typical dual fuel customer paying by direct debit. However, the price cap is reviewed twice a year – in April and October and last month the cap increased to £1,254 due to rising energy costs, with corresponding price increases expected across the industry.
The only way to guarantee to get your energy bill down is to use less energy by making your home more energy efficient and/or reducing the cost of the energy you purchase by switching tariffs.
We’ve got lots of ideas about home energy efficiency on our website – everything from insulating under your floors to installing smart meters.