Energy bills: Could you cut your fuel costs by switching to the best deals?
The average household now hands over an eye-watering £1,163 of their hard-earned cash to their energy provider each year.
Inertia is costing families hundreds of pounds though as those on the cheapest tariffs pay closer to £800 per year.
Moving suppliers is much easier than you think. Below we explain how to search for the right deal for you, which providers offer the cheapest rates and what switching involves.
Bills: If you've never switched supplier then you could save a substantial amount by moving to a different firm
THE WINTER COLLECTIVE : COULD YOU SAVE MONEY ON YOUR BILLS?
This is Money has joined forces once more with energyhelpline to launch a new collective switch to help readers save money on energy bills.
The Winter Collective allows our readers to team up with thousands of other people and use their collective power to negotiate a unique offer on their energy bills.
Switchers taking advantage in the past have typically shaved £265 from their annual dual fuel bills.
This special deal turns the table on energy firms - rather than households having to hunt out a better price, they will be competing to offer you one.
You can register with just a few details here and once we have picked the winning deal we will deliver a unique tariff straight to your inbox on February 14.
If you decide to switch and save money you can. If you decide it is not for you then you do not have to take it.
- Not interested in taking part but want to search for a better deal? For full details of how to switch your provider and where to find the best deals check out This is Money's switching guide.
Rule number one - ditch the standard variable rate tariff
Standard variable rate tariffs (SVR) are the out of contract deals your energy provider will move you to once your fixed deal ends.
They are much more expensive adding an average £262 to annual fuel bills, according to figures from First Utility last year.
Plus these are the tariffs which energy suppliers can hike costs on.
The Big Six's grip on the energy market is slowly beginning to loosen as more and more households ditch them for smaller suppliers.
These energy minnows now dominate the best-buy tables as well as often offering better service.
And you might be surprised by how simple the switching process can actually be.
Those on the hunt for a better deal have heaps of choice whether it is a long-term fix, variable rate or tariff from a smaller or green supplier you are looking for, with tariffs cut to well under £1,000.
Although the savings from switching are not quite as big as they were a few years ago switching should remain a key part of your personal finance maintenance.
If you are one of the millions of people who have NEVER switched (i.e. stuck with your original supplier), then you could also save a big chunk of cash.
If you want to cut straight to comparison, you can compare energy tariffs, with the choice of entering your own energy use, using our energy price comparison tool - click here
Things to remember
Your bill will show two costs - a fixed standing rate charge and the price per unit (or Kwh of energy used).
Online plans paid by direct debit are still the most competitively priced and if you have never switched, choosing one of these will save you the most money.
You can either opt for a variable rate tariff, where the price can go up or down or a fixed rate tariff which gives you a secure price on each unit of electricity you use for a set period.
SAVINGS: TRICKS AND TRAPS
1) Regular meter readings. Make sure you check every time you receive a bill, rather than relying on an estimate by your energy provider's estimate.
2) Change to online bills. You could save up to 10%.
3) Avoid prepayment meters if you can, and swap to a billed meter. Even if you have to pay to get one, it's probably worth it for the savings you'll gain.
4) If you're in financial trouble some companies offer special deals, which help ease any difficulties you might be facing. But don't just assume this will be the cheapest option - make sure you still do your homework.
5) Dual fuel (gas and electricity from the same supplier) is not always the cheapest option.
6) Monthly direct debit payments could save you 5-10% as companies are more confident that customers won't default and earn interest on any overpayments. Check any extra payments are refunded at the end of the year.
5) Swot up on how to lower your energy use
Here's a few top tips to help you save more money by cutting your gas and electricity use
Historically variable rate tariffs have tended to be cheaper. But at the moment the cheapest rates are currently offered on one-year fixes and all of the Big Six have pledged to freeze even their variable rates until 2015.
However you will still pay a premium if you want long-term price security.
But, some may still find that they save money switching to a fixed tariff, particularly if you've never switched and are not signed up to a duel fuel and paying by direct debit.
Should you fix?
Energy prices have been relatively low over the past two years, however prices are creeping up thanks to a jump in wholesale costs meaning if you are thinking of switching it could be worth considering a fixed tariff to help shield you from a mid-winter price hike.
Tariffs of this type will fix the rate you pay for each unit of electricity used for a period, typically 12-18 months.
Stephen Murray, energy expert at MoneySuperMarket, explains: 'Wholesale prices have been rising since early summer and with it the prices of the cheapest fixed deals in the market.
'Brexit, oil prices and exchange rates can all be reasons for this and whilst wholesale costs seem to be dropping again slightly the pressure is still on standard priced tariffs going up in the first half of 2017.
'Two year or two winter fixed deals are becoming more popular at the moment but whether customers fix for 1 year, 2 years or longer the message is to move away from the expensive and variable standard tariffs now.'
You will usually pay slightly more than the cheapest deals to buy long-term security, and be careful as some do come with exit fees if you do want to leave early.
There is no guarantee fixing will be best for the long-term but it gives certainty over bills as household finances are squeezed.
Remember: This doesn't mean you will simply pay a fixed amount. Your bill will still depend on the amount of energy used - you just pay a certain amount per unit.
Price comparison services, like the one here at This is Money, allow you to specify which type of tariff you want.
Who is cheapest?
The table below lays out the top plans for customers paying by direct debit in arrears.
Bill sizes are based on the average medium user - remember the cheapest tariffs can be variable rates, leaving you open to price increases.
But fixed deals currently dominate the best buys, and you could get an average bill below £1,000.
|Rank||Supplier||Plan name||Average bill size||Tariff type|
|1||Outfox the Market||Zapp! December Tariff (medium consumption)||£807||Variable|
|2||Avro Energy||Simple and Control||£840||Fixed|
|3||Breeze Energy||Breeze Fixed 1 Year January 2018||£842||Fixed|
|4||Tonik Energy||Positively Green v7||£842||Fixed|
|6||Pure Planet||100% Green||£860||Variable|
|7||IRESA||Iresa Flex5 12 month Fixed Direct Debit||£860||Fixed|
|8||People's Energy||The People's Tariff||£868||Variable|
|9||One Select||Secure 1 Year Fixed September 17||£870||Fixed|
|10||Together Energy||Together Fixed January19||£876||Fixed (£30 cancellation fee per fuel)|
|Source: uSwitch.com, correct as of 16 January, 2018|
Energy switching: The background
Suppliers tend to charge more for electricity to those customers who live in their 'home' region - the areas where they enjoyed a monopoly before energy deregulation. So switching away will almost always save you money.
Prices are different all over the country and the cheapest supplier for you will depend where you live. You only need to be interested in the tariff that is going to be cheapest where you live, so do your own comparison to find the best price.
- See how much money you waste each month by NOT switching supplier - just click here and enter your postcode
However, although some tariffs incur cancellation penalties if you leave before the term expires, it may still make sense to switch now and accept the penalty if it is small and your potential savings are big.
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