Roughly, 16% of households in the United Kingdom, which is more than 4 million, spend at least 10% of their income on energy and are therefore living in "fuel poverty", according to the Government definition. Household income and the efficiency of domestic heating, insulation, etc., are obviously significant contributory factors, but increases in domestic energy prices – 45% for gas, and nearly 30% for electricity – during 2008, have left many householders struggling to pay their heating bills this winter.
Swapping Energy Providers
The vast majority, in fact 99% of British households, obtain their gas and electricity from one of six companies, namely British Gas, EDF, E.ON, npower, Scottish Power and Scottish and Southern Energy, collectively known as the "Big Six". All six companies have faced increased scrutiny from the energy regulator, Ofgem, recently for their reluctance to cut gas and electricity prices, despite the collapse of oil and natural gas prices. Increases in wholesale energy prices were passed on to consumers in January, and during the summer, but corresponding decreases have been less forthcoming. There are, however, no less than a further eight independent energy providers in the United Kingdom, plus some others owned by the "Big Six". As household budgets are squeezed ever tighter in the aftermath of the credit crunch, many consumers are taking the opportunity to shop around for a more competitive energy deal.
The good news for consumers considering a change of energy provider, whether for gas, electricity, or both, is that no structural changes are required and the process can be completed quickly without any interruption to supply. Logistics and administration change, yes, but all gas and electricity effectively comes from the same sources. Energy tariffs are typically based on where you live, the size of your home, and, of course, the quantities of gas, electricity, or both, that you consume. Your first step, therefore, should be to check, with your existing supplier, that you are on the most competitive tariff applicable. If you are on a standard tariff, or tariffs, and pay your bill(s) quarterly by cash or cheque, the chances are that you can save money by changing tariffs with your existing supplier, or changing supplier.
Savings can often be made by opting to pay your energy bills monthly and by direct debit. There are a number of websites that allow you to compare different offerings from different suppliers. You can then establish which is most appropriate to your own circumstances. Paying by direct debit reduces administration costs, on the part of the supplier, and you may be offered a discount as a result. Similar comments may also apply to obtaining gas and electricity namely "dual fuel", from the same supplier. Dual fuel packages allow providers to operate on tighter margins than if you take one fuel or the other, reducing the cost to the consumer. Do be aware, however, that in time of fluctuating wholesale energy prices, as have been a feature of this year, so far, energy providers may be keen to tie you into fixed rate, fixed term, energy agreements. These agreements may be for 12, or 24, months or longer, which is fine if you are prepared to fix your energy costs for such a lengthy period, but do make sure that you examine closely the terms and conditions of any such agreement. It may be, for example, that 6 weeks' notice is required at the end of the fixed term is required, to prevent the agreement "rolling over" for another 12-month period. Suppliers are not obliged legally to inform you that notice is due, and if energy prices have fallen significantly since you signed the original agreement, you may find yourself with no choice but to pay inflated prices for a whole year before you can change to a more competitive tariff or supplier. So, in answer to our original question, it may, indeed, be possible to save significant amounts of money by swapping energy provider this winter, but in doing so, you do need to keep your wits about you. It is true that there is "no such thing as a free lunch"; if you find an apparently competitive deal, do make sure that it won't actually cost you more, rather than less, in the long term.