Energy companies are increasing prices – what does it mean for you?
Published 8 September 2016 by Linzi Nuttall
With the weakened pound following the EU referendum wholesale energy costs are rising and suppliers are starting to increase prices. It’s time to fix your energy tariff now and make your home more efficient too.
August saw two energy firms announce price increases on some of their products from 1 October. First, Ovo Energy said it would increase the price of its one year fixed tariff, Better Energy. Then Co-op Energy was the second supplier to hike prices on its variable Pioneer Tariff, with a 3% average increase.
Other providers look set to follow suit. One reason is that energy – like gas for your home and also for electricity generation – is usually priced in US Dollars on wholesale markets. Since the EU referendum result, the £ has lost value against the $, which means gas is more expensive for firms to buy.
As a result, the cheapest deals for energy are slowly disappearing, and are being replaced with more expensive deals. For example, if you’re a typical user with a bill of £724 for a one year fix, the cheapest you could get an identical one year fixed tariff now would be £770.
Though there is no need to be alarmed immediately, experts suggest that now is the time to lock into a fixed rate energy tariff before the price rises become more widespread.
How to act and save £100s
Although 6 million energy supply accounts were switched in 2015, many energy users have never switched supplier, and have been on the same tariffs for years. Now is a great time to shop around and compare tariffs to see whether you could save £100s on your bills. Whether this recent change in some tariffs is just a blip, it’s still worthwhile having a look.
To calculate whether you can save on your bills, you’ll need to check prices via a comparison site such as uSwitch. Look at your annual statement to see who your supplier is and what you use and spend per year. Use the information to search for a fixed tariff, and remember to check if there are any exit fee penalties on your existing one, or terms and conditions that may end up costing you. A fixed tariff will enable you to lock the cost of your energy for a specified term, so you’ll know it won’t go up.
While searching, also see whether you save more by buying gas and electricity from two separate suppliers instead of one. Even when you’re offered a dual-fuel-deal it may still work out cheaper to fix your tariff with separate companies. Remember, with most firms the cheapest tariffs are usually available to those that pay monthly by Direct Debit.
Other ways to reduce your utility bills
Saving money isn’t just about cutting bills, you can go one step further by making your home energy efficient too. This can have a huge impact on the cost of your bills overall. There are simple ways of doing this that won’t cost much. We take you through a few of the easiest.
• You could save between £85 and £90 a year, by turning down the thermostat by just 1 degree.
• Thick curtains can help keep the heat in a room and cut out cold draughts from windows. On bright days draw back the curtains and let the room fill up with the sun’s warmth.
• Change your light bulbs to the latest energy efficient ones. You should save a useful £7 a year for every lightbulb you change.
• Keep your fridge and freezer full, they will use less energy to stay cold. If you can buy in bulk when you shop for groceries you’ll save money and also make fewer journeys to the supermarket and save on buses, taxis or petrol.
Small and simple changes can make all the difference to cutting costs. Start with looking at fixing your energy tariffs now and becoming more energy efficient around the home before winter kicks in.