Forget Paul Daniels, forget David Blaine – even Derren Brown would’ve struggled to play the big six energy companies’ latest sleight-of-hand.
While they all announced cuts, and it would be churlish not to welcome it, in truth, at 2.5%, it’s less a cut than a tweak.
After all, a typical house still pays £1,320 a year on a standard tariff, but would pay just £1,030 on the cheapest tariff – the savings dwarf these piddling cuts.
Each company announced 5% cuts on gas or electricity but none on both – the most effective way to get maximum PR gain for minimum price cut.
Given the huge chunk of household budgets that goes on energy bills, it’s vital to ensure you’ve the best deal. Here are the ten things everyone needs to know.
1. Bills are still massively up.
These latest cuts don’t come close to reversing autumn 2011’s near 19% hikes. To prove it, I got on my calculator and worked out the net RISE since summer 2011. It may surprise you.The overall price rise since summer 2011 (after price cuts have hit)
British Gas: 18% 10.2%
EDF: 9.6% 4.5
Eon: 18.1% 4.7%
Npower: 9.9% 7.2%
SSE: 13.5% 11%
S.Power: 13.1% 10%
(Calculated on average announced rises and cuts)
2. Don't think 'one company, one price'
One energy company offers many tariffs, so, bizarrely, you may be with the company offering the country’s cheapest deal, but not on that tariff, so being charged the country’s highest rate.
3. Save £100s in minutes
Energy switchers keep the same gas, electricity, pipes, meters and safety. The only change is customer service and billing.
A typical household on a standard tariff can save about £300 a year by switching, yet there’s no one cheapest – it depends on a few factors. The easiest way’s to find a consumerfocus.org.uk approved comparison site. Tell it where you live and how much you use and it tells you the cheapest company.
To boost the gain, go via moneysavingexpert.com/gaselec to the same comparison sites, and you can get added freebies on top if the comparison sites can switch you, such as £30 cashback or even a crate of 12 bottles of wine.
Most of the price cuts are now factored into the comparison sites. A few aren’t, but the difference is small and it’s still winter, so the earlier most people on standard tariffs switch, the better – I’d still go for it.
4. Was I wrong to fix?
Recent cheap fixes were often a few £100s less than standard tariffs, even after these tiny cuts. So Uswitch and others’ recent research showed most people who compared and got cheap fixes were still much better off – as the chart above shows.
Yet even if they hadn’t been, remember fixing’s about surety – an insurance policy against price hikes. Even if prices were to fall dramatically, if you got a fix to prevent hikes, it's done its job.
You wouldn’t complain about your travel insurance if you didn’t have a problem on holiday.
5. Even if you save £100s, it may not mean a dramatic drop in your bills
Overall, recent energy prices are up massively. So while a comparison site may say “you save £250” do remember that is compared to what you would’ve paid, not what you did pay last year. For many, in cash terms switching prevents the huge hikes, but don’t budget to shell out less.
6. If you only have electricity you can still save.
If you don't have gas, don't think the rules are different – you can still save using the comparisons above.
7. Paying via monthly direct debit saves a further 5%
If possible, arrange to pay by fixed monthly direct debit to ensure the lowest possible rates. Remember, it means bills are estimated, so do regular meter readings to ensure they don't stray.
8. Dual fuel isn’t always cheapest
Despite what many people think, getting gas and electricity from one supplier isn't always the cheapest option. When comparing, check the cheapest separate suppliers too.
9. Prepay customers can save too
Ask if you can convert to a 'credit meter' (where you get bills), as some allow it free. If that’s too expensive, compare and switch prepay provider. Both Energyhelpline and uSwitch have prepay comparisons. Finally, when switching, favour companies that may convert you to bills for free, there’s a full list at moneysavingexpert.com/prepay
10. If you can't afford any hikes, consider fixing
Fixing's all about your attitude to risk. No-one knows if the next move will be up or down. If you can't afford hikes, a fix is insurance against them. For those on standard tariffs, compare to find the cheapest fix, which'll usually undercut your current rate.