The rising energy costs are becoming a major part of everyone’s spend, particularly for pensioners, yet few understand the various tariffs and the bills themselves. We are all urged to shop around and save a fortune, but does this actually occur in practice or is it a case of the devil you know.
Many offer short term savings but then revert to a higher tariff, where you are worse off, you are better off trying to understand what you are paying for and argue with your present supplier for a better deal.
Energy is sold by the kilowatt hour, that is a normally single bar electric fire running for one hour or a 100 watt electric light bulb switched on for ten hours. Your electric meter measures this direct, whilst your gas meter measures the volume, which is converted to the energy output, the bill shows the current reading and subtracts this from the previous one to give the total used since the last bill.
Annual Energy cost is therefore made up of the unit cost per Kwh, the total unit used per year and a service charge for supply, as either a standard charge or its equivalent number of units at a higher rate. Most suppliers now give an annual statement of total units and cost with comparison to the previous year and payment review.
The cheapest method of buying energy is by direct debit on the best dual fuel tariff available, Tariffs are being simplified but are still a jungle. The best time to consider a change of supplier is at the annual statement, when all the facts are available to give a like to like comparison.
Like all things it is “buyers beware”, with claims of large savings which are seldom realised and change breaks the continuity of records; having received a quote, it is well worth asking your existing supplier to match it, which they often will do. One should insist that the quote is based on your latest consumption of your annual statement with standing charge separated from running costs and all discounts available; this should be in writing together with the price guarantee period, to allow later redress.
After transfer there are many things that can occur to lose the advantage of changing supplier; exaggerated savings claims; increases due to late tariff rise catch up; transfer to a higher standard tariff after the initial period and changes to the discount structure. It is no different to the honeymoon period of changing insurance, when premiums rise substantially causing one to change again.
One of the biggest areas to save money is in energy use; does your annual statement show a drop in consumption if not why? Little things add up to large savings; lights left on can build up, that porch light left on all night could cost £30 or more per year; things on standby; ovens and heaters doing nothing etc.
Heating is the biggest user and good insulation plus turning the heating thermostat down can give large savings. Energy saving bulbs are all much publicised and advances plus reduced costs make LED bulbs increasingly attractive at 20 times better than normal bulbs and never need changing. Many suppliers are giving away free power monitors which allow one to see power use and savings.
Direct Debit payment is the most economic method and attracts a discount of 5 to 6 %, this is the most effective way of managing budgets, but one needs to ensure it does not get out of hand. This can occur with six monthly billing and estimated bills, if these differ wildly from the actual meter readings, then they need to be submitted.
The annual statement and energy review sets the amount for the year ahead based on existing use and current tariff, which is worth spending time checking; if this is a major increase and the account is in credit, then it is worth querying. It is an advantage to the supplier to keep your account in credit.
Another way to reduce energy costs is to generate your own, until the advent of the FIT scheme in which suppliers pay you a good price, this was not worthwhile. Many home renewables do not work well and need expert advice, however if you have a southerly facing roof,.a simple and reliable system is Solar PV panels.
This is a good investment if you have spare savings or a pension lump sum and although varying with location can give a tax free income, inflation proofed and guaranteed for 25 years of between 7 to 8% return. Yield varies with location, but a known system in the North West facing south east of 3.7Kw is producing 2000Kwh per year and yielding an income of some £900, meeting a good part of energy bills.
Energy costs can be better controlled but require diligence and homework, however the real control needs concerted action by the Government and the regulator as many of the cost increases are artificial and arise from ineffective green policies.
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