Bamboozled by the recent gas and electricity price rises announced by the Big Six energy firms who dominate the UK market?
Well, no-one wants to pay more to heat and light their home so we’ve put together this easy-to-use guide to explain which companies have put up prices, by how much, why the rises are happening, and what you can do to cut costs.
Which companies have raised prices this summer?
ScottishPower was the first to raise prices: gas by an average of 19 per cent and electricity bills by 10 per cent, from 1 August 2011.
British Gas followed: gas up by 18 per cent and electricity 16 per cent, effective 18 August 2011.
Scottish and Southern Energy was next: gas up 18 per cent and electricity 11 per cent from 14 September 2011.
E.ON followed: gas up 18.1 per cent and electricity 11.4 per cent, effective 13 September 2011.
NPower was next, gas up 15.7 per cent and electricity up 7.2 per cent as of 1 October 2011.
EDF followed: gas up 15.4 per cent and electricity up 4.5 per cent as of 10 November 2011.
How much will these price rises cost me?
Around 27.7 million households are affected by these price hikes which have added, on average, £160 to annual gas and electricity bills.
The chart below shows how the average standard dual fuel (where you take gas and electricity from the same supplier) bill, paying on receipt of the bill, for a medium user* has increased since January 2011.
Average UK bill for standard dual fuel tariff for a medium user paying on receipt of bill*
Why are prices going up?
The energy firms blame an increase in the cost of wholesale gas – the amount they pay for energy – for customer price hikes.
But watchdog Consumer Focus says that despite recent rises, wholesale prices remain around a third lower than at their 2008 peak.
Energy regulator Ofgem is investigating the price rises and has appointed accountancy firm BDO to see if gas and electricity firms have understated their costs to justify price increases.
The findings are expected before the end of the year.
Will I be affected by these price rises?
If you’re with ScottishPower, British Gas, Scottish and Southern Energy (that also owns Southern Electric, Swalec and Scottish Hydro, and Atlantic) E.ON, nPower or EDF and you’re NOT on a fixed or capped tariff, then your bill will go up.
Can’t afford higher energy bills? Here’s what to do
If you’re worried about the price rises, consider opting for a fixed or capped energy tariff.
These tariffs set the unit price (also known as the kilowatt hour or kWh price) of your gas and electricity for a certain period of time, although with capped tariffs, if prices fall, you’ll pay less.
However, due to the price guarantee that comes with fixed and capped tariffs it does mean that they cost more per unit than standard tariffs, but they do provide peace of mind to those worried about future price rises.
Energy best buys
Cheapest overall (fixed and non-fixed) dual fuel tariffs, for a medium energy user, paying by direct debit, as at 21 December 2011*
How can I find the best deal?
Besides the Big Six firms that dominate the UK energy market, there are around 13 smaller firms supplying gas and electricity.
Consumer Focus accredited price comparison sites like Confused.com allow you to search the whole of the UK energy market and find the supplier offering the best deal for you.
How to search for the best deal
- You’ll be asked to enter your postcode and details of your current gas and electricity supplier, including the name of your tariff. You should be able to find the name of your tariff on a bill but if not give your current supplier a call and ask. There are hundreds to tariffs on the market so it pays to enter the correct tariff so you get the most accurate price comparison.
- You’ll be asked to enter your annual spend on your bill, or your annual usage. For the most accurate price comparison, enter your usage. You can find this out by calling your current supplier and asking for your usage for the past 12 months, in kilowatt hours (kWh).
- If you don’t know your usage - if you’ve moved into a new property for example, you’ll be asked if you’re a low, medium or high energy user. Find out what category you fall into.
- The search results will show you the cheapest deals for dual fuel (gas and electricity from the same supplier), as well as the cheapest deals for gas and electricity separately. It’s worth checking out the cost of separate deals as while duel fuel is often cheaper, this is not always the case.
- You’re also able to enter how you’d like to pay your bill. It is almost always cheaper to pay by direct debit. Energy firms claim this is because the payment is cheaper to process but the fact is that if you pay by direct debit then your payment is guaranteed, unlike paying on receipt of bill. So suppliers are happy to offer discounts for customers who pay by direct debit.
Find out the top 10 energy myths and arm yourself with the facts before making the switch to a new gas or electricity supplier. Read what happens after you’ve committed to a new energy supplier. Here we’ve put together the answers to your most frequently answered energy questions. Or if your puzzled by your bill read our simple guide to understanding your bill.
Can I avoid paying exit fees if I switch supplier?
Some tariffs charge exit fees if you leave within a certain period. The fee varies between suppliers but is typically around £20 per fuel. But don’t let this put you off shopping around for a cheaper deal.
If your supplier has put up prices and as a result you want to switch to a cheaper deal, it may be that your supplier has to waive the exit fee, as Confused.com reporter Lois Avery found out when she tried to switch from ScottishPower following its price hike. Find out if this applies to you.
Other ways to reduce energy bills
Reducing your heating thermostat by just one degree can cut up to 10 per cent off your heating costs, according to the Energy Saving Trust (EST). For a gas-heated, three-bed, semi-detached property, this could save you £50 a year.
Insulation is like a giant duvet interwoven between your house’s walls and loft, and serves as a buffer keeping heat in and cold out.
According to the Energy Saving Trust, homes lose 33 per cent of heat through walls and 25 per cent through the roof. And poorly insulated homes cost more to run as they require more heat, more frequently, to keep them at comfortable temperatures. Read our guide to insulating your home.
Find more money-saving energy tips at the Energy Saving Trust website or for free, independent and local energy saving advice you can call them on 0800 512 012.
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*Average annual UK bill, based on a medium energy user, defined by energy regulator Ofgem as using 16,500 units of gas and 3,300 units of electricity a year.
