After the glorious weather at the weekend, your central heating is probably the last thing on your mind. But a round of price reductions from the major energy companies in the past couple of months means now’s the perfect time to make sure that you are getting the cheapest gas and electricity deal you can.
How much could you save?
Despite years of publicity about the benefits of switching supplier, almost half of us have never swapped energy provider, according to the sector regulator Ofgem. If you’re one of those people, you could be paying 20% more than your neighbours who have switched. In short, you are one of your energy firm’s cash cows, happily sitting there paying their highest rates. Don’t keep making life easy for them – make the effort to at least check if there’s a lower tariff for you – I’ll show you how in a moment.
Even if you have switched in the past, you could well save money by switching again. Moneysavingexpert.com and Lovemoney.com both recommend that you compare prices once a year, as either your energy prices might have crept up, or other companies may have cut their prices.
A word of warning before you start hitting the comparison websites though. If you have switched recently – within the last year or 18 months – check with your provider, as you may be liable for exit fees if you leave, particularly if you are on a capped or fixed rate policy. However, do bear in mind that it may still be worth switching if the amount you’ll save is more than the penalty fee.
So why is now a good time to look at switching? Last year, due to rising wholesale gas prices, energy bills rose by an average of 42%, according to uSwitch.com. But this year, wholesale prices are almost 50% lower than they were last summer. Unfortunately, energy firms haven’t passed on all of this discount, but price cuts of around 10% have been announced by the big six firms: British Gas, Scottish & Southern Energy, E.ON, EDF Energy, Scottish Power and nPower.
These cuts may only apply to the firm’s most expensive rates, but they have persuaded customers to start switching suppliers; as a result the companies are putting out some competitive deals.
The surprisingly simple task of switching
Switching gas and electricity supplier requires very little effort from you. Simply dig out your last bill and head to uSwitch.com or Moneysupermarket.com. With the latter website, I suggest you stick to the detailed search option. The ‘quick search’ is so vague the results are pretty useless – it told me I could save £250 a year, but a couple of minutes spent on its detailed search revealed my biggest annual saving would actually be £83.
Once you’ve picked the company for you, simply follow the onscreen instructions to give your personal details. Then your new provider will perform the switch for you. All you’ll need to do is provide them with meter readings on the switch day so that your final bills from your old provider can be worked out correctly.
How else can you cut your bill?
Switching isn’t the only way to reduce your energy bills. Opt to pay by direct debit rather than on receipt of quarterly bills and most firms will offer you around a 10% discount. Similarly, if you switch to your provider’s internet-only package – meaning you won’t get any paper bills – you can expect to save around a further 10%.
Every time you get a bill, do a meter reading. Otherwise you are working on your provider’s estimated readings unless they have sent a meter reader round. Estimated readings are rarely accurate and can either leave you building up a big bill in the future (if the estimate falls short) or over-paying. If you have over-paid then you will get the money back eventually – it’s usually credited to your account when a correct meter reading is provided – but wouldn’t you rather it sat in your own account accruing interest rather than in the energy firm’s?
This is an easy way to cut your monthly outgoings, so – particularly if you’re one of those who haven’t ever switched energy providers – set aside ten minutes and just get on with it
• This article is taken from our weekly MoneyWeek Saver email.
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