How to reduce energy bills: Londoners can save £200 a year by switching to cheaper suppliers

Nearly half of Londoners are paying about £200 a year more than they need to for their gas and electricity by not switching to cheaper suppliers, according to new government figures.
An estimated 1.4 million households are missing out on £280 million of potential savings by sticking with their existing energy provider, says the Department of Energy & Climate Change, which is running a campaign called Power to Switch encouraging consumers to transfer to cheaper energy tariffs.
 
While a typical household currently pays about £1,100 a year for energy, online comparison services say that switching suppliers could slash bills to £850 or lower.
 
Shop around
Londoners are the least likely to switch energy providers in the UK, according to data from comparison service Uswitch, partly because of the high number of rental properties in the capital.
 
Landlords often bar their tenants from changing suppliers, says Uswitch, despite rules from energy regulator Ofgem saying that if the tenant pays the gas and electricity bills directly, rather than through the landlord, they have the right to switch.
 
Lack of awareness of the available savings may also deter many people from switching. The research found that fewer than one in 10 Londoners knew they could save £200 or more by changing suppliers.

How to cut energy costs
Cheapest supplier Annual cost
E.on Uswitch Fixed 1 Collective Oct 15 £831
GB Energy Premium Energy Saver £837
Extra Energy Fresh Fixed Price Dec 2016 v4 £849
Green Star Energy Rate Saver 12-month Fixed 1510 £850
Extra Energy Bright Fixed Price Dec 2016 v2 £850
*Based on dual fuel, medium energy user (e.g small family in three-bedroom house or large flat.
Source: Uswitch, October 2015

 
More ways to cut heating costs Potential saving
Use a programmable room thermostat and thermostatic radiator valves £70 to £150
Insulate pipes between hot water cylinder and boiler £10
Draught-proof windows and doors £35
Install radiator reflector panels £15
Cavity/solid wall insulation (for a three-bedroom semi) £160 to £260
Source: Energy Saving Trust

The Competition and Markets Authority watchdog, which has been investigating the energy market for competition failings, says that because many households do not shop around, energy suppliers can get away with keeping prices higher for these customers.
 
Most households are on standard variable-rate tariffs with British Gas and other big energy companies. But despite substantial falls in wholesale market prices — particularly gas — over the past year, these firms have generally passed on only limited reductions to such customers.
 
And while there has been a 17 per cent drop in the price of the cheapest energy deal on the market in the past year, the so-called “big six” suppliers have reduced their dual-fuel standard tariffs by an average of just two per cent, says Uswitch.
 
“Prices are being reduced, but only for customers who engage with the market,” says Stephen Murray, energy expert at comparison service MoneySuperMarket.com.
 
This means that, while a typical household on a standard tariff is now paying about £1,100 a year for dual fuel, the cheapest tariffs charge £850 or less — a potential saving of more than 20 per cent.
 
Find the best fit
Low energy users, commonly single people or couples living in smaller flats who are out at work during the day, could pay less than £600 a year with the cheapest deals, says Uswitch.
 
Most of the lowest-cost tariffs are fixed for a year. Fixed tariffs protect customers from price increases for the plan’s term, although the size of your bills will still vary with usage. And, at the end of the fixed-price period, you need to switch again to avoid paying the supplier’s standard tariff.
 
Paying your energy bill via a fixed monthly direct debit can also save up to £90 a year, say experts.
 

Although your existing supplier may have a cheaper deal that you could switch to from your current tariff, online comparison services can identify the best deal from a wide range of suppliers in just a few minutes.
 
Sites will detail potential savings compared with your current plan and usage, and some will even give cashback if you complete your switch through them.
 
MoneySavingExpert.com’s Cheap Energy Club, for example, pays £30 for dual-fuel and £15 for single fuel switches.

Follow us on Twitter @HomesProperty and Facebook

Comments