All of the UK's 'big six' energy providers - British Gas, npower, E.ON, Scottish Power, Scottish & Southern Electric and EDF Energy - have raised their prices for a second time this year over the last month, meaning that the average energy bill has now shot up by £380 in the last eight months alone.
What action should consumers take?
Energy prices now average £1,300 across the UK but are much lower with online direct debit deals.
The cheapest deal on average across the UK is the British Gas Click Energy 5 tariff, which has an average price of £845.10. However, consumers must be aware that this product is yet to increase in price and so the price you see now is unlikely to be the same for much longer. To get a true view of the market, the best move is to use a comparison website and find the best possible deal to suit your needs.
Variable or Fix?
The biggest question for consumers is whether they should opt for a cheap online deal or protect their bills by going fixed.
Apart from British Gas 'Click Energy 5', all online products have increased in price and now average at around £1,123 a year. In comparison, fixed deals are averaging £1,266 meaning consumers opting for an online deal will need to see prices rise by 12.7% before a fixed deal would be more feasible. In the current market, this type of increase is highly likely and so security in fixed is certainly something to consider.
Ultimately, it comes down to consumer preference i.e. whether you want the cheapest deal or whether you want security. However, if you are on your energy supplier's 'standard' tariff, which most of us are, then it's a no-brainer. The average cost of a standard tariff is now £1,294 meaning there is a saving to be made whichever option you choose. You should therefore compare gas and electricity deals now.
You can learn more about online versus standard deals in our latest video blog 'cut energy costs'.
What about the hardest hit customers?
There are around five million customers currently using prepayment meters to pay for their gas and electricity in the UK - but these customers can also act to cut their energy costs.
The best course of action is to contact your energy provider and see what products are available. Prepayment deals are among the most expensive and customers are therefore well advised to move to a standard meter if that option is available.
It is also worth taking advantage of the Government's new Warm Front scheme.
What has the Government done?
Gordon Brown's long-awaited measures to help those struggling to cope with ever-rising gas and electricity bills have been widely derided as little more than a damp squib.
However, features such as free cavity wall and loft insulation already exist. These deals are available from all major UK energy suppliers and enable those aged over 70 or in receipt of certain benefits to qualify for FREE insulation. Other households can also already qualify for grants to receive 50% off their insulation.
Other measures involve cold weather payments rising from £8 a week to £25 a week for pensioners, disabled people and unemployed families with a child under five and a freeze on this year's fuel bills for around 600,000 of the UK's poorest customers.
It all sounds good in theory - and certainly any incentives are to be welcomed - but in reality, most customers will be lucky to have the insulation installed by the middle of next year, meaning very few of us will be benefiting this winter. It is therefore essential consumers take action into their own hands and seek the best possible deal to ensure the new year fuel bills don't come as a nasty shock.
So what should you do in the meantime?
Unfortunately, energy prices are only going to continue to rise - with many experts even suggesting that there could be 60% increases over the next few years. That is why it is vital to drive down your energy usage wherever possible. Here are some tips:
- Install energy saving light bulbs - At a cost of around £1.50 they are more expensive than regular light bulbs but last 12 times longer. Paying for 12 light bulbs would cost around £3 - roughly twice as much.
- Adjust your washing cycle - Set your washing machine to a 40°C cycle rather than a 60°C cycle and you will use one third less electricity every time. Also wait to wash clothes until you have a full load.
- Don't leave appliances on stand-by - Turn off the little red light on the TV and DVD player and shut down computers completely. Collectively, TVs in the UK waste around £116million by being left on stand-by every year.
- Buy a lagging jacket - At a cost of around £15, a lagging jacket for your hot water cylinder could save you around £30 a year.
- Make small adjustments - Only boil as much water as you need when using the kettle and take a shower instead of a bath to save cash.
For more ideas, including an in-depth look at loft insulation and cavity wall insulation, check out our article 'energy saving tips'.
Have your say: What are your energy savings tips? Are you still struggling to find the money for your fuel bills? Click here to visit our forum and talk to other members.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing.
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