Why has the message changed?
In the latest round of price cuts, British Gas reduced gas prices by 10% from February 19; and at the end of March SSE will cut electricity prices by 9% and its gas prices by 4%; EDF Energy will reduce its electricity tariff by an average of 8.8%; and E.ON is cutting its electricity prices by 9%.
This leaves npower and Scottish Power as the only two energy giants yet to make their moves official – but what’s clear from the price cuts that have been made, is that the level of reductions Brits were hoping for will not be taking place.
This is because even though the prices of wholesale prices have fallen recently, gas is still around 46% more expensive than this time two years’ ago while the cost of electricity is about 51% higher.
As such, while there is still a slim hope that there will be a second wave of price cuts later in the year, suppliers are already hinting that prices could go up again within 12 months.
So with energy suppliers effectively delaying their price cuts for another six weeks, those languishing on a standard deal should look for a cheaper tariff now.
By shopping around and applying for the best deal in your area you can complete the switching process, which typically takes around 28 days, and be paying a lot less even before these price reductions are implemented.
Why customers should act now
According to a moneysupermarket.com survey, only 27% of customers have changed their gas and electricity supplier in the last six months. This means that the vast majority of people could save a considerable amount of cash by switching now. If you’ve never switched energy providers before, our latest video blog ‘How to switch your energy provider’ talks you through the process – you’ll see just how straightforward it is.
The price reductions from EDF Energy and E.ON are only going to save standard rate customers around £41 a year, while the cuts announced by British Gas and SSE will save standard tariff customers £88 a year and £66 a year respectively.
By contrast if standard rate customers move to the cheapest deal now, such a saving could be achieved in just two months. If you are on your provider’s standard deal, you could cut your energy bill by around £60 a quarter – saving you around £228 over the course of a year. That’s the equivalent to a 17.7% reduction.
There is a huge gulf between the cost of standard tariffs and the cheapest deals on the market. By using our gas and electricity comparison tool you can find the cheapest deal in your area.
Further savings are possible by adjusting your payment method from quarterly cash or cheque to paying monthly by direct debit.
At the moment the cheapest tariff on average in the UK is the British Gas WebSaver 2, but it’s still worth comparing deals as prices vary depending on your consumption levels and where you live.
For example, for a customer with average consumption levels, the next quarterly bill is likely to be in excess of £300 if they stick with a standard tariff – and that’s only three months after being hit with a winter consumption bill in the region of £500. However, by moving to a monthly direct debit deal customers could reduce this to a balanced payment of £88 a month. It’s a much more manageable bill at a time when most of us are being forced to tighten our purse strings.
What if you’re already on a monthly direct debit deal?
If you’re already on your provider’s cheapest tariff – which will invariably be its online monthly direct debit deal – then you can afford to wait a little longer and see what moves are made by Scottish Power and npower. When they make their price cuts official you can shop around with confidence that the cheapest deal you find is likely to be the best deal on the market.
And even when you have switched to the cheapest tariff you shouldn’t rest on your laurels. You’ll probably be able to cut your bills further by becoming more energy efficient and reducing your consumption.
Here are our top five energy saving tips for the forthcoming quarter:
- When the weather heats up, open a window to cool off before turning on air conditioning units or running electric fans.
- Make sure all lights are turned off when you leave a room and unplug all non-essential electrical devices at night rather than leaving them on standby.
- Invest in thick curtains – they will keep energy in your home.
- Change to energy saving light bulbs and you could save up to £40 over the lifetime of the bulb.
- Take showers instead of baths – you’ll use around a third less water every time.
For more energy saving tips check out our article ‘How to save energy and slash fuel bills’.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing.