With autumn looming it’s time to take a look at your energy bills. The central heating may have been switched off for the past few months, but it’s soon going to be warming your home and burning a hole in your wallet again.
Despite falls in the wholesale price of gas, energy suppliers have barely cut their prices after huge hikes last year. The average wholesale price of gas between 1 April and 24 August was 25.5p per therm, compared to 58.47p at the same point last year. But the biggest cut consumers have seen was a mere 10% reduction by British Gas. The big six gas companies have defended their pricing policy, saying that consumer prices always lag behind wholesale price changes. “Much of the energy we are all using now was bought last year when prices were at their highest,” says Gary Felgate of the Energy Retail Association in The Guardian. So will prices drop in the future then? Sadly, probably not.
Energy companies’ costs are set to rise as they invest in modernising the grid and building new coal plants. As a result energy prices may even rise rather than fall, says Neil Faulkner on Lovemoney.com. That means that it could be a very good time to get a fixed-rate deal. Fixed tarrifs lock you in to paying a certain price for a set period of time. They tend to be slightly more costly than the cheapest tariffs available, but they protect you from any future price rises. But do be aware that if you want to switch providers before your price fix ends, you could get charged an exit fee. So if you think falling wholesale prices will feed through to consumer bills, you may want to hold off from fixing for the moment – just make sure you are on the cheapest standard deal.
Switching providers is simple. Go to Moneysupermarket.com or Uswitch.com to compare deals and see how much you could save – if you’ve never switched before you could cut your bill by as much as 20% by switching. Once you’ve found the best deal, give your new provider your details and they’ll perform the switch for you. You’ll just need to give them meter readings on a specified day so that your former provider can work out your final bill.
There are several other ways you can cut your electricity and gas bills. Pay with a fixed monthly direct debit and you can get as much as a 10% discount. That’s because paying this way gives companies some protection from you defaulting on your bill. Also make sure that you submit regular meter readings to ensure you aren’t over- or underpaying (which will only result in a big bill at a later date).
Switching to online billing could save you a further 10% compared to standard tariffs, says Martin Lewis on MoneySavingExpert.com. Just make sure you still check your bills regularly to ensure they’re correct. And for help deciphering all the jargon on the average energy bill, visit Uswitch.com. It has created a complete guide to the bills after a survey showed that only 14% of us can correctly work out how much we owe our energy provider.
How inflation shrank student loans
At the start of this month, some people’s student loans started shrinking – even if they hadn’t been paying them. That’s because the interest rate on pre-1998 loans has gone negative. The rate is set at the start of September for the next year, based on what the retail price index measure of inflation was in March. In this case, it was -0.4% – hence the negative rate.
Unsurprisingly, this news sent the government into a panic. It hasn’t been able to do anything about loans taken out before 1998. But post-1998 the loans contained a clause, allowing the government to stop the interest rate from going negative. But it will still be 0% all next year – hardly usurious.