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Your Money > Household Bills Articles > Why you should...
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By Szu Ping Chan
It was a case of last but not least in the energy market last week. And, almost eight weeks after British Gas became the first provider to slash prices, rival npower finally announced it was cutting electricity prices by 7.2%. Top tips for switching energy supplier Here's how the suppliers finally shaped up:
npower's announcement means that the 'big six' energy suppliers have now all cut prices. However, when you consider costs went up by an average of 42% last year, you could say these latest reductions aren't that big a deal. In addition, only Scottish and Southern and Scottish Power cut both electricity and gas prices, with the biggest single cut standing at a rather paltry 10%. Although standard (the most expensive) tariff customers will reap the benefits of the cuts, the recent price changes have had little effect on the cheapest tariffs. For example, while npower's cuts include pre-pay and some online tariffs, it doesn't include its cheapest offering, Sign Online 14. Still, if you've never switched providers, or are on a standard tariff, you're likely to be paying the most expensive rates going. So, with tariffs much easier to compare now everyone has shown their hands, if you're looking to switch, it couldn't be a better time. Vital statistics I looked at some of the cheapest duel fuel deals for someone living in Greater Manchester. Here are the cheapest tariffs for a low user with an average annual electricity consumption of 1650 kWh and gas consumption of 10,000 Kwh:
Here are the cheapest tariffs on offer for a medium user with an average annual electricity consumption of 3300 kWh and gas consumption of 20,500 Kwh:
...and for high users with an average annual electricity consumption of 4,950 kWh and gas consumption of 28,000 Kwh, these are the best tariffs:
Although your cheapest tariff will depend on where you live and how much you use, there are also some universal rules of the switching game. 1) online tariffs dominate the best buy tables - regardless of where you live, and even though these bargain tariffs did not benefit from the announced reductions, they are still the cheapest on offer. 2) All the best deals will require payment by monthly direct debit. That can be a problem as energy companies sometimes don't adjust the direct debits frequently enough and users can end up overpaying for several months. Or even worse, users can find out they haven’t paid enough, and suddenly receive a big bill. On the other hand, paying by monthly direct debit is much cheaper than settling bills by quarterly cash or cheque. 3) One other factor starting to creep in is tie-ins. Until late 2007, energy companies weren't allowed to lock you in to lengthy contract deals, but increasing competition led to a change of heart from regulator Ofgem. Although most of the best deals won't tie you in, there are some exceptions. For example, if you're interested in the Websaver 2 tariff from British Gas, you'll now have to commit until 31st December 2009, or face a £30 cancellation fee. So make sure you read the terms and conditions before signing up. That said, now everyone is on a level playing field, it truly couldn't be a better time to compare the best deals. Switching is easier than you think, and could shave hundreds off your energy bills. Useful links: |
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