Compare Electricity Prices
Are you paying over the odds for your electricity?
All of the big six energy suppliers announced a hike in electricity prices at the end of last year. British Gas, for example, put up electricity prices by 10.4%.
This came after several years when prices moved steadily upwards, with only occasional (and temporary) respite for hard-pressed households.
If you've never switched electricity provider, or haven't done so for a long time, you could be paying more than you need for your energy.
It's easy to run a comparison of prices on the MoneySuperMarket energy channel.
And a simple switch could result in some serious savings. Our figures show that 85% of consumers find a cheaper deal - and 51% save up to £180 a year on their energy bills.
Why are prices rising?
The price of wholesale gas has the biggest impact on our household bills.
Suppliers also blame the price increases on government levies, taxes and operating costs.
They are less keen to explain the link between profits and prices. But the average retail profits for the big six jumped from £233m in 2009 to £1.1bn in 2012, suggesting that big bills for consumers result in big profits for suppliers.
Ed Miliband, the Labour leader, accuses the energy firms of overcharging customers and has pledged a price freeze for 20 months if his party wins the general election in 2015.
There has been speculation that the threat of a freeze has deterred energy companies from cutting their prices (in the wake of falls in wholesale costs) because they fear not being able to increase them under any circumstances in the latter half of 2015 and 2016, should Labour win.
Spotlight on profits
Ofgem, the energy market regulator, is also unhappy about the bumper profits. It has referred the energy market to the Competition and Markets Authority (CMA), which will shine the spotlight on profits and investigate whether competition is effective.
Start saving in a matter of weeks
The CMA is not expected to complete its investigation until well into 2015. But you can take action to start saving today by tracking down a competitive deal that trumps the one you're on at the moment.
It would be great if you could have a recent bill to hand when you start to compare electricity prices, but don't worry if you can't find the paperwork. Our estimation tool can make a pretty good guess at your household consumption.
Search the market
It's a good idea first to get to grips with the various types of tariff.
Suppliers can offer up to eight core tariffs - four for each type of fuel. They must also inform customers of their cheapest available tariff and how much it would cost.
You can switch to a cheaper tariff with the same supplier, but it's always worth checking how your own firm compares with the rest of the market.
If you opt for a variable or standard tariff, the rate you pay for each unit of electricity will go up and down when the supplier lifts or drops its prices.
Standard tariffs are rarely the cheapest and offer no price certainty, which can make it hard to budget for your household bills.
Then there's the capped tariff, which guarantees that the price per kilowatt hour will not rise above a certain level during the term of the deal. The size of your bill can still vary according to how much you use, but you get at least some protection from future price hikes.
A fixed tariff charges a fixed price for each unit of electricity you use. So the pence per kilowatt hour (p/kWh) stays the same throughout the fixed term.
Remember, though, that your energy bill is not fixed and will depend on your consumption. Bills in the winter are therefore likely to be higher than bills in the summer.
Customers with Economy 7 pay a cheaper rate for electricity for seven hours during the night, somewhere between 10pm and 8.30am, depending on the supplier and your location.
Economy 7 tariffs do not suit everyone because the price of electricity during the day tends to be high. But you might be a winner if you can limit your electricity consumption during the day, perhaps if your home has night storage heaters.
You will need a new meter that records night and daytime electricity consumption separately. The meters are relatively easy to install, though you should ask the supplier if there is a charge.
Economy 10 is similar to Economy 7 but also charges a cheaper rate for electricity for three hours during the afternoon. The rates and times vary from supplier to supplier.
Most utility firms offer dual-fuel tariffs, which means you get both your electricity and gas from the same supplier. It can simplify your household accounts because you only have to worry about one bill.
Energy companies also give a discount to customers who choose a dual-fuel deal. However, it could still be cheaper to buy energy and gas from separate suppliers, although this would mean having two sets of bills and two points of contact.
Your best bet is to compare dual fuel tariffs AND the cost of single supplies from separate companies to identify the cheaper option.
Log on for a discount
Online tariffs are becoming more popular as we become more accustomed to carrying out our financial transactions online.
If you opt for an online tariff, you will not be sent a paper bill and will manage your account over the internet, including paying by direct debit. There is usually a discount for online tariffs.
Cash or cheque?
The cost of any electricity deal is the priority for many customers, but it's worth taking a few other factors into consideration before you sign on the dotted line.
Your payment method can have a big impact on your electricity bills. Utility firms charge more if you pay by quarterly cheque or cash because the payments are more costly to administer.
You can save on average more than £50 a year if you set up a direct debit to meet the monthly cost of energy.
Make sure you understand the terms and conditions of the contract. For example, if you are on a fixed tariff, how long does the fix last and will you have to pay a fee if you want to switch again before the end of the fixed term?
Many companies charge cancellation fees - and you might have to pay twice if you want to quit a dual-fuel deal (once for each fuel).
It might therefore be better to wait until the fix expires before you switch. Utility firms must give you between 42 and 49 days' notice of the end of a contract and there should be no charge if you switch during this period.
Poor customer service is a common complaint, so it's a good idea to find out about the experience of other consumers by visiting online forums.
MoneySuperMarket's comparison service also publishes customer reviews of suppliers.
If you decide to switch, the process could soon be much faster than it used to be. Traditionally, it would take between four to six weeks to switch, but energy firms are now moving towards a 17-day switching period (3-day switch + a 14-day cooling-off period).
Your new supplier will contact your old firm to arrange the transfer and there should be no interruption in your electricity supply. And there'll be no work carried out at your house or in the street outside.
You will, though, need to give meter readings to the new firm on the day of the switch in order to ensure accurate billing.
The government wants smart meters to be fitted in every household by the end of 2020. Many utility firms have already begun the installation of smart meters, which also come with a monitor to track your energy consumption.
The clever little unit can result in a reduction in energy use. Why? Because if you can see how much electricity a particular appliance consumes, you might be prompted to use it less frequently.
Money saving tips
There are other ways to save money on electricity bills.
- Don't leave your electrical appliances on standby when they aren't in use. The average house could save about £85 a year by switching off at the plug.
- Don't charge your laptop or mobile for any longer than necessary as it wastes electricity.
- If you wash your clothes at 30 degrees instead of 40, you could knock £9 a year of your energy bills.
- Remember also to make sure that washing machines and dishwashers contain a full load and try to use eco programmes where possible.
- Most home appliances come with an energy-efficiency rating, usually between A and G - and you could save up to £90 a year by choosing the most efficient.
- Switch off lights when you leave the room and replace any old light bulbs with an energy saving version. You could save about £3 a year, or £55 over the life of the bulb.
*51% consumers, MoneySuperMarket data, December 2014