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Your Money > Cut Your Bills Articles > Stay warm and...
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By Richard Evans
If you love your central heating, this winter could be an expensive one. The price of crude oil has been shooting up - and where oil goes, gas and electricity tend to follow. But a few minutes spent looking for a cheaper provider could mean that you save money even if the cost of energy does rise. While some observers think gas prices could increase by about 10 per cent in the new year, anyone who has never switched supplier could save 20 per cent or even more by seeking a more competitive deal. Isn't the market hideously complicated, though? Couldn't it take forever to weigh up all the different deals, such as online tariffs, fixed and capped rates and dual fuel offers? Actually, despite all this complexity, finding the right deal can be done in minutes - all you need is your postcode and a few recent bills or an idea of your spending on energy. "We recommend that consumers use an online price comparison service," says Georgina Walsh of Energywatch, the consumer watchdog. "But make sure you use one that has our seal of approval." You can see a list of Energywatch-certified comparison sites by clicking here. "You could ring round all the gas and electricity suppliers if you wanted," says Mark Todd of energyhelpline.com, a comparison service that carries the Energywatch accreditation. "But price comparison sites are much simpler. All you need is your postcode, some recent bills and your bank details if you want to switch there and then."
He adds: "The site will ask you to enter your postcode and your existing supplier and tariff, then your energy usage in kilowatt hours, which you can get from your bill. Failing that, your average spend on gas and electricity will do." You'll also need to tell the site how you currently pay - whether by quarterly bill, monthly direct debit, etc. All you have to do then is say how you want to pay in future - direct debit is usually best, says Mr Todd - and look at the results. The savings can be significant. "If you have never switched supplier, you will typically save between £150 and £350 by changing to the best deal," he says. "Those who have switched in the past can expect more modest savings - perhaps £100-£150." This is because, before the energy market was liberalised, customers had to buy from their regional suppliers. When market reforms allowed these companies to seek customers all over the country, they cut prices to entice new customers outside their original territories, but kept prices higher for those in their original areas who were too apathetic to switch, explains Ms Walsh. "We can't stress often enough that if you've never switched, you are paying for your loyalty," she says. "If you have been loyal to your local supplier they are taking advantage of you - by charging less to those outside their original region." Once you have chosen your new supplier, switching should be painless, say the experts. "One common worry is that you will be cut off during the switching process - this is not true," says Ms Walsh. Ofgem, the industry regulator, reckons that 90 per cent of people who switch find the process easy. Your new supplier will handle everything for you, Ofgem says, and the switchover should take about six weeks - good reason to think about choosing a new supplier now, so that the switch is complete when the really cold weather arrives. "But neither your old nor new supplier will take a meter reading when the change happens - it's down to you," says Mr Todd. "Read the meter on the day of the switch and let your new supplier know the figures. You can usually do this by phone, post or internet. The reading gets passed to your old supplier, which can then send you an accurate final bill." If you don't take a reading, the suppliers are allowed to estimate it, he adds. Energy companies sometimes try hard to keep customers who have decided to defect. "They may have 'winback' teams that attempt to persuade people to stay - sometimes by offering better deals," says Mr Todd. "We think it's usually best to ignore them, as you will normally have chosen the best deal for your circumstances on the price comparison site." In case you can't face the legwork of using a comparison service, Yahoo! asked the experts to pick out some of the best tariffs. "Price Fix 2008 from Scottish & Southern Energy offers a good price and good service," says Scott Byrom of moneysupermarket.com, another Energywatch-approved comparison site. "This tariff offers fixed prices until November next year for dual fuel only and is available throughout the country via three of Scottish & Southern's brands - Southern, Scottish Hydro and Swalec." But customers with prepayment meters cannot switch to Price Fix 2008, he adds. "This tariff is a matter of pence more expensive than British Gas's Click Energy 4, although it may not be best for light users," says Mr Byrom. People who use a lot of fuel may be better off with the British Gas tariff, he says, although that company attracts more complaints about service to Energywatch than any other large utility. Npower's Sign Online 8 is also competitive for heavy users, he reckons, but becomes a market leader when you take into account its annual discount, which is paid at the end of the year. "Online tariffs are always best," says Mr Byrom. "In my opinion you can't really beat Scottish & Southern's at the moment. British Gas won't let anyone undercut them, but the difference is tiny. You would normally pay a premium for the peace of mind of a fixed rate but Price Fix 2008 is a good price anyway." Mr Todd also mentions Npower's Sign Online 8. "A typical user in London on quarterly billing could cut a combined bill of £1,269 from the incumbent suppliers, British Gas and EDF Energy, to £990 by switching to SOL8," he says. This is a saving of £279 or 22 per cent. "Many online tariffs are marketed only through comparison sites - and this type of tariff often beats the others by around 10 per cent," he adds. "I would say one of three deals is usually best - Scottish & Southern's Price Fix 2008, Click Energy 4 from British Gas or the Npower tariff. But the calculations are complex; an accredited comparison site will give you an accurate result." If prices do go up, a fixed tariff such as Scottish & Southern's may be your best bet, he reckons. "We have been tipped off by industry sources that prices could rise in the new year - possibly by 10 per cent. So get a good deal now and you'll still be ahead." Consumers who use Economy 7 electricity to heat their home could make particularly good savings if they switch supplier. "A typical family home in Manchester using 55 per cent of its electricity at night and cooking with gas would pay a total of £1,126 if they had never switched; they could cut their bill to a combined £802, saving £324 or 29 per cent, by switching to ScottishPower's Online Energy Saver 4 dual-fuel tariff," says Mr Todd. It's important to tell the comparison site that you use Economy 7 and how much of your electricity is consumed at night - "it can mean a completely different result", he adds. If you have a prepayment meter, you will probably be paying among the highest prices for your energy. But prepayment customers can also switch, as long as they don't owe more than £100. "The best advice is to switch to a non-prepayment tariff," says Ms Walsh from Energywatch. "This is especially important if you have one of the older electricity meters that require manual recalibration when prices change. If suppliers are slow to do this, you could be hit by a bill for hundreds of pounds when they finally get round to it, as you will have been paying the old rate." When you have found your new supplier, don't make the mistake of thinking you'll never have to worry about your fuel bills again. "Be proactive and shop around once a year, and switch again if you would save more than 10 per cent," advises Mr Todd. "After all, it only takes a few minutes." Useful links:
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