Cheap Gas & Electricity

Updated: 3 July 2009 Further price cuts from British Gas Time to Switch? The story so far... every major provider has cut prices this year, but on 3 July E.On followed British Gas' surprise price cuts and cut gas 3.3% for most customers (full breakdown below). While this latest cut is welcomed, none of the energy suppliers cuts have been overly generous. To put it into perspective, wholesale rates are nearly fifty percent lower than they were last summer, so deeper cuts certainly wouldn't have gone amiss. After last year's mammoth hikes many will still be paying over 30% more than in Jan 2008, even factoring in these reductions. Is it time to switch? While there's still a chance, it now looks likely the market isn't going to react to the latest British Gas price cut as it was playing catch up anyway, as the only one of the big six suppliers that didn't drop electricity prices earlier in the year. In which case it's likely to still be a good time do a comparison and switch to your cheapest supplier (those on capped tariffs read the special notes below). The consensus among industry insiders is the BG price cut was a clever move by British Gas to get two bites at the price cut headlines. The main prediction for the moment, is rather than full cuts across the board, there'll just be changes to online tariffs which head the best buy tables. By specifically clicking via the special MoneySavingExpert.com links below to get to the comparison sites and not going direct, if they can switch you, you also get paid cashback or freebies on top (for why & full info read the top comparison sites section). Overall top comparison service. Our top pick, based on historical reliability, feedback & research, is Energyhelpline*, which pays £15 cashback per switch whether gas, elec, or dual fuel. Alternative comparison services for freebies. If you’re doing a dual fuel switch, which means getting gas & electricity from one provider, you can get bigger freebies (one per household). There’s £30 cashback from Moneysupermarket* 12 bottles of wine (worth c. £40) from Uswitch* And a £35 Amazon voucher from SimplySwitch* More options, including possibly boosting the cashback, for individual suppliers in the cashback switching section. Company by company changes 2009 Price changes vary not just by company, but by region and there can be huge variance. The following are the average changes for each major supplier (or see the full price rise charts). 7 May 09. British Gas & Scottish Gas. 10% elec cut follows 10% gas cut in Jan. For electricity, its standard and pre-pay prices fall by 10% with immediate effect, but the online tariffs fall less, ClickEnergy5 by 6% and ClickEnergy6 by 5%. Similarly earlier in the year its ‘dual-fuel’ & pre-pay gas prices fell 10%, while Click Energy5 fell by only 6.6% and Click Energy6 by 3.6% . Scottish & Southern Energy. 4% gas cut, 9% electricity cut Scottish & Southern Energy (SSE) cut prices for all standard customers on 30 March. 3 July 09. E.ON. 3.3% gas cut follows 9% electricity cut in March For gas prices fall with immediate effect for everyone but Staywarm and fixed tariff customers. It a;so excludes E.On's Energy OnlineExtra Saver 14, it's cheapest online offering. However only recent switchers will be on this, and it'll still be a competitive price. Earlier this year E.ON cut electricity prices for all standard, online and pre-payment meter customers, effective from 31 March. Again the cut excluded its social Staywarm tariff. (See the Staywarm article). EDF Energy. 8.8% electricity cut in certain regions, 0% gas cuts EDF Energy cuts prices an average 8.8% on electricity for some standard and Energy Assist customers, again effective from 31 March. These reductions are not for everyone, it depends on where you live, those areas that'll feel the cuts are London, South East, South West, Wales and Scotland. The cuts are averaged out too, so those in South Wales are getting a 12.5% cut, but in London it's just 5.5%, the rest of the country get nothing. Scottish Power. 3% electricity, 7.5% gas Scottish Power cut prices an average 3% on electricity and 7.5% on gas across standard, pre-pay and some online tariffs on 31 March. npower. 8% electricity, 0% gas cuts npower also cut prices on 31 March; by an average 8% on electricity but nothing on gas. While it does include pre-pay and some online tariffs it doesn't include its cheapest tariff, Sign Online 14. More ways to save As well as switching to a cheaper provider there are a host of other ways to cut the costs. Here's a quick checklist: Switch to monthly direct debit If you currently pay your bills quarterly when you receive them, you can cut the cost by around 10% with almost every provider by simply switching to monthly direct debit. Do a meter reading every time Every time you receive a bill, do a meter reading: don't rely on your energy provider's estimate; these are often way out. If they're under-billing, you'll have a big whack to pay at the end of the year: if they're over-billing, then they've got your cash unfairly. If your Direct Debit is way off kilter, call up and request it's changed. Sadly you can't demand this (see my Ofgem blog), but hopefully they'll listen. See the full Energy Direct Debits guide for template letters to help. Switch to your company's internet tariff. Switch to your company's internet billing. It will usually save you up to 10% over the standard tariff, providing you're prepared to be billed online. Are you on a pre-payment meter? While a push from the government means things are getting better, those on pre-payment meters often pay more than everyone else. If possible you should try to switch to a billed meter. Yet often they won’t let you, due to credit score or income difficulties. The government is pushing providers to end this two tiered system but it's moving slowly. Even if you can’t change, you’re not stuck. Although not all the comparison sites include pre-payment tariffs, use either Energyhelpline* or Uswitch* to compare prices. Ebico has historically been competitive on pre-payment tariffs though most of the other major suppliers have now started to charge pre-pay customers the same as other customers. Are you in financial hardship? Some companies offer special cheaper tariffs, which will help. Unfortunately, the major one of these, British Gas' Essentials Extra, has stopped taking applications until spring 2009. In the meantime, it's launched the lesser Essentials Advance, which offers eligible customers free insulation, and a £50 discount off the first bill after it's been installed, but standard energy prices. However you can't assume these will be the cheapest tariff. As you're online (or you wouldn't be reading this) it's likely the cheapest online tariff will save you cash. Read the full guide below. This is just broad brush headlines. To find out full details, including getting grants, using less energy and how to improve on the cashback you get, read the full guide below. What to do if you're on a cap? In July 2008, it was already certain energy prices were going to rise. At the time there were three cheap caps left, and for those who wanted price surety to insure against any possible rises I was yelling "cap, cap, cap". If you capped then, then there's already been a price hike of around 30%, so you've almost certainly been saving money so far. And even with these latest price drops, most people are still likely to be on a cheaper tariff than you would've been otherwise. Research in Feb ’09 from energy site Uswitch analysing the impact of price cuts on those who capped before August’s price rises said "Energy prices would have to drop by £185 or 16% before consumers on competitive fixed price plans would be losing out. Households that took out a fixed rate plan in July 2008 are currently paying £143 a year less on average than households on standard plans." The latest British Gas electricity price cut will have lessened the gap, to find out exactly, match your cap against the current cheapest tariff, by doing a comparison but do be careful for a number of reasons. Many caps have similar names. Ensure you’ve selected the exact cap you’re on as there are many with similar names. Remember caps gives surety. If there is a saving by switching, do include in your decision the fact your cap gives price surety at a lower level than currently available; and may have an exit charge. Be careful if you're cap ends soon. As we’re entering a period where they’ll start to end many comparison sites are touting for business. Yet there are big traps here. The biggest one is the price comparisons will be based on the prices of the cap, not the rate it'll jump to when it ends, which is what you really need. Plus many of the capped tariffs has penalty exit fees so if you’re only a month or two from the cap ending, and there’s a £30-£75 switching penalty during that time, be careful the switch doesn't happen before then. However if there's no exit penalty on your tariff, you could do a comparison and see if it's worth switching now. We're monitoring the main cap end dates, and will put the info in the weekly e-mail for each cap when the times right to switch. What about those who capped after August 2008? Once those three caps had disappeared, some may have continued to cap for certainty; if you did, the price of caps then could be higher than the new 'price dropped' rates. So again do a comparison. Some of the capped tariffs had exit fees, so if yours does be sure you factor this in. If the savings are bigger than the exit fee, switching now is an option. Though if you got a long term cap, it does have the benefit of insulating you from any future increases (and who knows if that'll happen) so if it's not much more expensive you may want to stick with it. Energy Cap Watch: Tariff by tariff info As last year's capped tariffs are coming to an end, we'll be adding tariff by tariff info here. npower one & npower price fix 2009. Ends 31 July The nPower One/Fixed cap on 31 July, yet as it usually takes 2 months to switch do it now (there’s no exit penalty so doing it sooner isn’t a problem).When asked for your current tariff DON’T put your cap, as then it’ll compare to its rate. Instead put your tariff as nPower Standard as it’s what you’ll be on when the cap ends. See above for switching info. Want to save more and get extra grants? Please read the whole article below for more tips, options and explanation.

It only takes five minutes to switch energy supplier, and do it when the times right and it can save you 20%, plus there’s a way to get paid to do it. Go to a comparison service direct and they’ll just find you the cheapest; but so many MoneySavers switch, there’s been a price war to win your business, meaning you earn up to £30 cashback or 12 bottles of wine on top.

• How to cut costs & energy use
• Is now the time to switch?
• How comparison services work
• Best Buys: The UK's top comparison site
• Picking the perfect tariff

Here's a bright idea - switch gas & elec and save hundreds

How to cut costs & energy use

There are two ways to cut energy costs; use less and pay less for what you use.

When you switch, only the price really changes

The pipes, circuits and wires, safety coverage and gas and electricity flowing through the house are all the same. Only customer service, billing and, most importantly prices, change; the new supplier performs the switch; all you do is take a meter reading.

Of course, there've been many switching ‘horror stories' and sadly these still happen, but for most it's a smooth process.

The savings are big, often £100s a year

Considering it only takes a few minutes, the impact is vast.

If you’ve never switched before

This means you’re using British/Scottish Gas for gas and your regional electricity company for electricity; in which case you can cut your bill by up to a massive 20% by switching. This is because, if you’ve not switched before, they know you’re willing to pay high prices without considering it and thus profit from your inertia.

If you have switched before

Here, savings are smaller, as you've already had the big ‘first switch' gain, yet you can still get around 10% off. As the cheapest supplier changes regularly, it’s worth comparing annually or after a major bout of price changes to see if it’s worth it.

While it sounds strange, you may save money even if your bills go up! In a period of regular price rises, switching often doesn't mean you actually pay less. If you’re saving 10% when all energy prices are increased by 20%, you’ll still pay more than you were, yet less than if you hadn’t switched.

How you pay is crucial

The savings also depend on how you choose to pay:

Direct Debit is cheaper.

Fixed monthly direct debit payments (where you pay a fixed estimate each month) save you up to 10% as companies are sure you won't default, and they earn interest on any overpayments (which should be refunded at the end of the year). Yet if you pay by variable Direct Debit, always ensure you call in a meter reading after a bill; don’t rely on their estimates.

Dual Fuel isn't always cheaper.

Logically dual fuel (gas and electricity from the same supplier) should be cheaper and it often is, yet not always. During your comparison, also compare the cost of the cheapest dual fuel supplier with separate cheap gas and cheap electricity suppliers.

Even if you’re on a prepayment meter you can switch and save.

While a push from the government means things are getting better, those on pre-payment meters often pay more than everyone else. If possible you should try to switch to a billed meter. Yet often they won’t let you, due to credit score or income difficulties. The government is pushing providers to end this two tiered system but it's moving slowly.

Even if you can’t change, you’re not stuck. Although not all the comparison sites include pre-payment tariffs, use either Energyhelpline* or Uswitch* to compare prices. Ebico has historically been competitive on pre-payment tariffs though most of the other major suppliers have now started to charge pre-pay customers the same as other customers.

Get grants and go green to save too

Cutting down on energy usage will save you cash too:

Grants for being green.

There’s a vast range of grants available for improving home heating and insulation, just go to the Energy Saving Trust’s Energy grant search. For more grants available for all types of home improvement, see the full Find A Grant article.

Just use less energy.

Cutting energy is a mix of big and little things. Turn down the thermostat and wear jumpers; turn lights off when you leave a room; use energy saving lightbulbs; defrost the fridge and check it's not on too high; don’t leave electrical goods on standby… for more info read the Energy Saving Hunt and the Energy Saving Trust.

It’s also possible to pick a green energy option, see the picking the perfect tariff section.

Is now the time to switch?

If you’ve never switched before, it’s always worth doing. For everyone else timing is crucial; the worst moment is when a major energy provider, such as British Gas or npower, has just announced a cut or rise in prices.

This is because when one company announces a price change, within a month or so all the others tend to follow suit; thus it isn’t a level playing field if you do a comparison at this time. When prices are rising, you may shift to a company only to see its prices jump up the next day. It’s slightly less important with dropping prices, but even then you may end up leaving a company that drops its prices the next day and becomes cheapest.

The two indicators below will help you decide whether the time's right.

Indicator 1: The Switching Traffic Light

Energy suppliers have a herd mentality, once one changes its prices the others tend to follow within a few weeks or months. If you compare during that period, it's likely you'll switch to a provider whose prices haven't yet increased or decreased, but are due to in the future. The aim of this traffic light is to prevent that happening.

Current traffic light status: Switch with caution

This is my best guess at the state of play, yet energy companies don't pre-announce changes, so nothing’s guaranteed.

Why Amber? After an initital round of price drops in April, British Gas then announced a further drop of 10% on electricity and later E.On dropped gas 3.3%. It's unclear whether other providers will follow. While most people will save by switching, for total finesse you may want to wait a few weeks to see if other providers will announce even cheaper tariffs.

Yet if you're struggling to meet your energy bills, it's not a disaster to switch now. If you do and there are further price cuts, you can always switch again. If and when there are any more price cuts, full details will be in the free weekly e-mail.

Indicator 2: The last price rise/fall chart

The chart below shows each company's last price change for its main tariff (specific specialised tariffs may change independently); if that was much more recent than the rest of the market, it's likely others' changes are due soon as they come in phases. The last major changes were price rises, yet this time around all suppliers are making cuts.

It’s important to understand that when you do a comparison it will be at the ‘post-price-rise/cut price', as comparison services incorporate the new prices at the moment they’re announced; not the moment they happen.

Don't assume the biggest price drop means the cheapest company.
It always depends on what the prices were before.

How comparison services work

The cheapest supplier for you is calculated by a complicated algorithm which depends on where you live, and the quantity and type of energy you use. Web and phone based comparison services do this for you.

Just plug in your address and usage (use the Kilowatt hours on the bill rather than the cost to improve accuracy) and they tell you which supplier is cheapest. Yet even if you don't have a bill or have just moved in, most comparison services can still estimate for you.

How they earn their money

Comparison services are paid between £30 and £60 per switch from the energy companies; in other words they're referral businesses. In itself this isn't actually a problem, as it doesn't add costs to the consumer, plus consumer group Consumer Focus (it used to be Energywatch) has an accreditation system for website, not phone, services, setting minimum standards.

Yet these are commercial beasts, and thus there are differences between them; in functionality; inclusion of niche players and the treatment of 'initial discounts'; and some concerns that one or two tweak results at the edges for their gain. Yet overall, it's better to use them, than to simply listen to the energy companies when they tout ‘we're cheapest'.

Why do they only pay cashback via this site?

In the early days of the site, back in 2004, a comparison service boss asked me, “how can we be your top pick?” Flippantly, I replied “pay customers some of your cut!” and surprisingly it agreed to a trial, but only for users of this site, so as not to cannibalise its existing custom.

That was the start, and as this site's grown, with now over 3 million users a month, they all want a piece of the pie; hence each year there’s a price war to be the site’s top pick cashback provider. Yet still in the main it's only links from the site, or for those who use the phone service and quote the deals here.

BEST BUYS: The Top Energy Comparison Services

The following comparison services are my top picks, assessed on a mix of feedback from MoneySavers, cashback (or wine), inclusivity of tariffs, and functionality.

Cashback's usually paid 45 to 90 days after you sign up, but remember it's only paid when the comparison service actually administers the switch for you, otherwise it doesn't earn anything, so it can't cut you in. Note: Do remember these deals are specific to the links below; go direct and they're not offered.

If you’re confused as to what type of tariff to pick, see the picking the perfect tariff section below.

The Overall Top Pick.

Over the years Energyhelpline* has consistently received good feedback, and has some of the most inclusive functionality. It pays cashback of £15 per switch; which means switch to dual fuel (gas and electricity together) and it's £15 or switch to a separate gas and electricity supplier and it's £30 (joint highest).

Top for Cashback.

The winner depends on which deal works out cheapest for you.

Electricity only: Moneysupermarket* pays £17.50

Separate gas & electricity providers: You can get £30 (£15 per fuel) if you're switching to separate gas and electricity suppliers via Energyhelpline*, Energylinx*, and UK Power*. Yet, they only pay £15 (UK Power £20) if you switch to dual fuel. Alternatively you can get £15 in Amazon vouchers from SimplySwitch*

Dual fuel: This means you get gas and electricity from the same supplier, Moneysupermarket* pays £30, or SimplySwitch* will pay you £35 in Amazon vouchers.

(The Amazon vouchers will be sent to you 90 days after switching and are limited to one per household).

Get a voucher for 12 bottles of wine worth £40.

Rather than cash, Uswitch* will give a voucher for 12 bottles from Virgin Wines when you switch to a dual fuel tariff. You get six red and six white; maximum of one per household. And don’t worry, you don’t need to buy anything else from Virgin to redeem it. You have to go via the above link to get the deal, if you go direct to Uswitch you will only get a voucher for £40 off.

Officially the wine’s worth over £50, yet roughly equivalent plonk can be had from supermarkets for about £40. Not being a big wine drinker, I asked some of the MSE Towers team to test it (hard life innit?) and the view was the wine was mixed quality, some mmmm and some yuck.

You may’ve noticed, there’s no inclusion of some of the charity-donating comparison switch sites, such as Switchandgive which pays £20 to charity for dual fuel switching. That’s because if you switched via the sites above, got the cashback and donated it to charity, the tax advantages of you donating mean the charity gets more (see the increase your charity giving article).

Don't use these comparison services for other things

These sites can also include commercial comparison services for credit cards and home phones. Yet the articles here usually substantially undercut them (see UK Home Phones and the Credit Cards articles).

A way to up the cashback?

While comparison sites offer cashback, occasionally some energy companies will pay even bigger amounts if you switch directly via their websites or via cashback websites. Therefore for the ultimate finesse, first use the comparison services to find the cheapest, then check the winner's website direct to see if it offers cashback.

If this doesn’t work you may be able to get it via a cashback website and see if it will pay out too. It’s also possible to get paid for going to comparison sites via cashback sites too, to check their latest use the Cashback Sites Maximiser.

Are you supplied by an independent gas transporter?

Independent gas transporters (IGTs) are often used by constructors instead of Transco (National Grid) in new build properties as they charge less to fit pipes. One in 20 people are supplied by them instead of Transco.

If that’s the case you may have to pay £30-£40 more on top of any comparison quote as the gas provider uses both pipes so must pay Transco and the IGT to supply gas to your house; and this charge is passed directly on to you.

How to tell if you have a independent gas transporter

If the MPRN (the meter point reference number, unique to your house) on you bill is 10 digits long and starts with 74 or 75 this means you are supplied by an independent gas transporter. If you're not sure, Energylinx has a useful tool you can use to check.

Is it still worth switching?

Switching at the right time can save you around £150/year, so you should still save. All providers, except British Gas, charge if you have an independent gas transporter; so simply do a comparison and if it's less than £40 compared to the cheapest provider opt for it instead. Occasionally it may mean you can’t switch to certain suppliers.

Picking the perfect tariff

When you’re using a comparison service, there are still decisions to be made such as do you want a green tariff, capped tariff, and the length of the service contract. The following tips should help you choose:

Is there someone aged over 60 living in your home?

Any home with at least one resident aged over 60 can access E.ON's special Staywarm dual fuel tariff, which sadly isn’t included by the comparison site. Uniquely, the bill doesn't depend directly on the energy specifically used, you pay a fixed tariff over a year, this gives peace of mind that turn the heat up and you won't pay more. For more read the Staywarm additional briefing.

Do you want a Green Energy Tariff?

Luckily green tariffs are now almost commonplace; most suppliers offer them. Green tariffs are defined by the fact that they're either ecologically produced or a proportion of the money is put towards ecological sources.

Yet this is one area where going green and saving money diverge, so it really is a question of your personal politics. The cheapest green tariffs cost more than the cheapest standard tariffs. All the main comparison services allow you to do a comparison only of green tariffs if you choose.

Are you considering a price capped tariff?

A number of energy suppliers offer what are called capped tariffs but are usually technically fixed tariffs, which guarantee your price won't rise for a fixed period, usually two to four years. When doing a comparison, all the services will either allow you to look at capped tariffs separately or have a section for capped tariffs within their results tables.

There are a number of things you should look at when considering a capped tariff:

• Can you afford a price rise?

  While capped tariffs are generally around 10-15% more than the cheapest tariff, yet if prices rise, you'll be quids in. It's an especially important tactic if you couldn't afford a price rise, as capping gives you price surety? Whether they’ll be good value over their life is impossible to say, as it depends on competitive pressures and movements in the wholesale gas and electricity price markets and exactly how much more you need to pay to cap.

• Watch out for exit fees.

  Some providers have started charging exit fees if you leave it before the fix ends. This usually isn't a problem if you don't leave the provider before 6 months. By that time any charges you pay will have been dwarfed by the savings you've made by capping. Nearly all providers will allow you to take your existing tariff with you when you move though do double check with it.

• How long should you cap for?

  Again this depends on how much security you want, you can get, fixes vary between 1 and 3 years usally. Longer caps will be slightly pricier but offer longer term affordability. If you're on a tight budget with little room, longer caps are better. Then again its more difficult to predict the long term trends. In 2007, there was a period when all energy companies reduced their prices, if this happened, and you were on a capped tariff with a penalty to leave, you'd miss out.

Thus the decision is often more about your own finances than anything else; the key question is 'how much surety do I want?' If peace of mind is important, as you're on a very tight budget, then a price cap would enable you to at least have surety of knowing the payments won’t rise. Better to end up having paid a wee bit more than be pushed over the brink.

Check you won’t be locked in.

Until late 2007 energy companies weren’t allowed to lock you in. The regulator Ofgem then decided that the market was competitive enough and thus companies can now require you to sign up for a year's contract. Most don’t but do check before you sign up; it’s always better to have the freedom to ditch and switch.

Energy provider problems

If you're having problems with your energy provider over billing, transfers, service and sale issues and are getting no where with your provider, take it to the Energy Ombudsman who's an impartial and independent official disputes resolution service. Set up in July 06 it will deal with most complaints if you're energy provider is a member (all the major ones are).

Provided you've taken your complaint as far as you can with the energy company it'll look into your complaint. It's within its power to offer financial compensation up to £5,000, though this is extreme and if likely to be a much lower amount.

For a London family who've never switched, are billed quarterly, annually spending £1,200 on gas and £900 on electricity, the cheapest equivalent service would save them £265 a year including cashback. If the family also started paying by Direct Debit, then the saving would be £450 plus of course there's cashback.