Focus on: Co-operative unveils cheapest standard energy tariff

Published:
21 November 2012
Topic:
News,Gas & Electricity,Product review

The government may have announced proposals to simplify the energy market, but that doesn't mean you should stop shopping around for the best deal.

Despite five of the 'Big Six' suppliers hiking gas and electricity prices in recent months (and with the sixth, E.ON, expected to announce a rise early in 2013), some smaller providers are bucking the trend of rising bills, with The Co-operative actually lowering its Pioneer tariff prices by 2%.

The reduction makes this the cheapest standard tariff currently available in many cases. Here, we take a closer look at the deal, as well as how it stacks up against some of the alternative tariffs offered by the big players...

What's the deal?

With effect from December 21, the Co-op will reduce the cost of its Pioneer tariff by 2%. The move means the average bill for a typical energy user consuming 3,300kWh of electricity and 16,500kWh of gas per annum will fall to £1,157, making this the cheapest standard tariff currently on offer for those paying quarterly by cheque or cash.

It is also cheaper in many instances than standard tariffs with payment by direct debit. The Co-op has no price differential according to method of payment whereas other suppliers offer discounts to those using the direct debit option.

The cheapest standard tariff from the 'Big Six' suppliers is E.ON's standard tariff, with a typical annual cost of £1,223, which is still £66 more than the Co-op's tariff.  Scottish Power will charge the most for its standard tariff, when its prices rise on December 3, bumping up the average annual cost to £1,368, making it a massive £211 more expensive than Co-op's Pioneer tariff.

The Pioneer tariff is available to those paying by direct debit or quarterly by cash or cheque, and there are no termination fees, so you can move to an alternative tariff whenever you want.

Any catches?

The Co-op Pioneer tariff is a variable rate product so prices can change throughout the year. That means you could end up paying more for your energy than you expected if there is another round of gas and electricity price hikes.

While Co-op leads the pack when it comes to standard tariffs, there are cheaper fixed and online tariffs available.

For example, the current cheapest tariff is from First Utility. Its iSave tariff, has an average bill of £1,087, a saving of £70 compared to the Co-op deal.

Other competitive online tariffs include British Gas's Online Variable deal, with an average annual cost of £1,120, and E.ON's Energy Discount tariff, which would cost a typical user £1,124 a year.

If you want to lock into a fixed tariff, which will provide protection from future price rises, then Ovo Energy's New Energy Fixed tariff will set the average user back just £1,139 a year, £18 less than Co-op's tariff. However, this Ovo tariff is not available in the Scottish Hydro region.

Alternatively, E.ON's Fixed One Year tariff would cost a typical user £1,182 a year, but this is £35 more than the Co-op's standard tariff.

Verdict

After months of price hike announcements from the big players in the energy market, news from Co-op that it is reducing the cost of its standard tariff is extremely welcome.

However, while its price cut propels Co-op to the top of the standard tariff tables, there are cheaper online and fixed deals available.

Fixed tariffs in particular are appealing due to the fact they provide peace of mind that you won't be hit by further hikes during the term of the deal.

Top tip

As well as making sure you are on the best tariff to suit your needs, a smart meter or energy monitor can help you reduce your bills just by increasing awareness of your energy use so that you can cut wastage.

For example, the Energy Saving Trust says that turning appliances off at the plug when not in use and avoiding standby saves on average around £35 per year on energy bills. 
  
Similarly, turning down your thermostat by one degree could save around £10 a year on heating bills, while washing clothes at 30 degrees rather than higher temperatures will save around £12 a year on typical energy bills.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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About This Author

Melanie Wright

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Financial journalist

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Rated 3/5 (average from 36 ratings)

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