How to fight gas and electricity price hikes

Other suppliers are expected to follow Scottish Power’s lead and raise gas and electricity prices. But you can fight back against price hikes. We tell you how.

No one wants to spend more on gas and electricity than they have to. But with other energy firms expected to follow Scottish Power’s lead and raise prices, you may think there’s nothing you can do to beat the cost hikes.

However, if you’re one of the four in five householders who have never switched supplier then you’re spending around £170 more a year on gas and electricity that you have to, according to joint research by energy regulator Ofgem and charity Citizens Advice. 

Scottish Power, one of the ‘big six’ energy firms which dominate the UK energy market, recently announced it will increase gas bills by 19 per cent and electricity by 10 per cent from 1 August.

The Bank of England has since warned it expects household energy bills to rise by 15 per cent this year, heaping more misery on cash-strapped consumers.

Indeed, even Energy Secretary Chris Huhne has said consumers should fight price hikes by taking their business elsewhere.

Speaking to the Observer newspaper, Huhne said: "Consumers don't have to take price increases lying down. If an energy company hits you with a price increase, you can hit them back where it hurts - by shopping around and voting with your feet."

How to fight back

Consumers who want to avoid price rises can opt for a fixed or capped energy tariff.

Fixed tariffs fix the unit price (also known as the kilowatt hour or kWh price) of your gas and electricity for a set period of time.

Capped tariffs allow the unit price to fluctuate but it won’t rise above a certain level – the cap – for a set period of time.

However, due to the price guarantee that comes with fixed and capped tariffs, it does mean that they cost more per unit of gas and electricity than standard tariffs.

Also, if prices go down when you’re on a fixed tariff you will not benefit. If prices fall when you’re on a capped tariff you will benefit but remember you’re paying more per unit of gas and electricity than if you were on a standard tariff.  

But fixed and capped tariffs provide peace of mind to those worried about future price rises. And with prices almost certainly on the increase, consumers on a fixed and capped tariff are likely to see a benefit.

Be aware that many suppliers use the terms fixed and capped interchangeably. So regardless of the name of the tariff, ask questions and read the details of the tariff so you know exactly what you’re signing up for.

Best buys

Lisa Greenfield, energy analyst at Confused.com said: “We could be seeing a repeat of the unprecedented price rises of 2008 so we’d advise switching to a fixed or capped tariff quickly before the best deals are withdrawn.”

“The average standard tariff paying on receipt of bill is £1161 a year.

“Although typically you would expect to be charged a premium for fixing your prices, if you’re on a standard tariff there are still savings to be made.

“If you are a Scottish Power customer, you can save a massive £378 per year by switching from their standard tariff paying on receipt of bill which, taking into account their price rise will cost £1,387, to the best fixed rate tariff currently available - EDF’s Fixed S@ver V2.”

Best buy capped/fixed tariffs

Supplier	Tariff	Average UK bill
EDF	Fixed S@ver V2	£1,009
npower	Go Fix 6	£1,014
OVO Energy	New Energy Fixed	£1,050
ScottishPower	Capped Price Energy June 2013 NSC	£1,085
e.on	Fixed Price 5	£1,126
British Gas	N/A	-
Scottish & Southern	N/A	-
First Utility	N/A	-
AVERAGE		£1,057

How to find the cheapest supplier

The easiest way to compare prices is to use an accredited comparison site like Confused.com.

• 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.

Avoid paying exit fees

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.

It may be that your energy supplier may waive the exit fee as Confused.com writer Lois Avery found out when she tried to switch from Scottish Power following the price hikes. Find out how you can do the same here.

If you want to know more about how to switch energy suppliers, read our step-by-step guide to switching. And be bamboozled by energy no more with our round-up of the top ten energy myths.