Recent changes proposed by the Government, to simplify energy tariffs (the price of electricity or gas) and encourage switching, have led the energy companies to offer a smaller range of electricity tariffs with one fixed tariff for each type. Discounts for internet tariffs and the payment of bills by direct debit must now be based on actual costs and savings rather than being loss leaders for the energy companies, which was sometimes the case in the past.
At the moment, when a deal comes to an end, such as a fixed price tariff, the energy companies are putting customers onto their standard tariff rather the nearest equivalent. Customers must then contact their company to return to the previous type of tariff. This is an opportunity to check the value of different suppliers.
Smart Meters
Over the next few years existing electricity meters will be replaced by Smart Meters, which automatically reports meter readings to the billing centre and provides a display of both electricity and gas use. This should ensure more accurate billing but remove some of the cost advantages of online accounts. They are already being installed in England and can be requested in Wales from the Autumn 2014.
Until Smart Meters are fitted a remote electricity monitor, like the Energy Monitor, can be fitted easily to give a guide to how electricity is used.
Providers
There are six main providers of gas and electricity, along with several smaller companies entering the market. Not all tariffs, especially for smaller companies, will appear on price-checker websites and offers are often removed in times of price changes. It is worth checking that you are getting the best deal for your gas and electricity supply, as staying with the same company year on year, and how you pay them, could lead to you paying more than necessary.
When changing suppliers it is not just a case of getting the cheapest tariff (the price of electricity or gas) available, but also one that suits your household situation.
In general, fuel for heating should be paid for over the whole year by some sort of regular payment to avoid heavy bills during the winter months when the weather is colder.
To find out the best value tariffs you need to know how much gas or electricity you have used (generally in a year). This will be on a statement from your supplier, along with the tariff charged. You can request copies of statements from you supplier.
Most online price checkers allow the amount currently being paid to be entered, but it is often difficult to find the current tariff in order to calculate usage.
How charges are made
There are two parts to the charges made by energy companies, a standing fixed charge for the connection and charges for how many units of gas and electricity have been used. There are two several main ways that the energy companies charge:
1. Until recently most bills showed a much higher charge for the initial units used then a lower charge for the remaining units.
2. Most common now is a A fixed standing charge per day and a single price per unit for the electricity or gas used.
3. A single charge rate where the standing charge is included in all the units used. Although the charge will be higher than other tariffs, it can
work out cheaper for households that are low users.
Electricity meters read kWh directly, so the readings from the meter can tell you what the cost will be. Gas meters read either m3 or (older meters) 10’s of ft3. This is then converted by a formula into kWh which is laid out on the bill.
If there is a price change during the period of the bill the energy company will estimate how much gas or electricity has been used up to this point so that the new tariff levels can be applied.
Fixed price tariffs
Suppliers can offer tariffs that are guaranteed not to increase for a fixed period. Although these are usually more expensive to start with, they offer security that the price of energy will remain the same for a period. There may be charges incurred if terminating this tariff early.
Age UK tariffs
Is offered by EON in partnership with Age UK and replaces the old, fixed cost Staywarm. The tariff rates are the same as the standard EON tariffs, but with discount ‘loyalty’ bonus and no cost for terminating fixed price tariffs early.
PAYMENT METHODS
Prepayment
Prepayment meters are usually regarded as more expensive, but reasonable rates are available. For some households budgeting is easier by using pre-payment meters for electricity as electricity costs change little over the year. The standing charge is usually recovered in the form of a weekly rent. This is charged even if no electricity is used during the week and taken the first time the meter is charged up again.
One of the problems is that debts from previous users may still be taken when a new householder moves in. Energy companies may insist that a prepayment meter is installed when there is a fuel debt rather than disconnect the supply. They now charge to return to a ‘normal’ meter.
Prepayment meters are currently around £70 per year dearer for gas and electric.
Pay on receipt of a bill
This was once the regular way to pay bills but is now much less common. It can result in large bills during parts of the year, especially in cold weather. For long standing customers there may be a ‘loyalty’ discount, dependant on prompt payment.
On the face of it this is similar to pre-payment rates, but this does not take account of prompt payment discounts.
Regular direct debit
Regular direct debit is the most common way to pay energy bills. It spreads the bills over the whole year so you don’t have higher bills in the winter. When extra use occurs over a period, the direct debit will increase, which spreads the extra cost. This method is usually (but not always) cheaper. When charges are increased householders can review them with the supplier.
Energy companies now review charges twice a year, including a summer and a winter quarter in each review to be more accurate in predicting future use.
Internet/online accounts
Until recently these have been the cheapest way to buy energy. Payments are made by direct debit and the account can be managed online. Meter readings may have to be supplied on line by the customer.
Paperless bills are sent by email. Often the saving for online accounts has been far more than the actual savings made by the supplier. British Gas admitted that their websaver account was run at a loss in order to be able to claim that they were offering the cheapest tariff. This is now being changed and charges are not so attractive.
Most of the tariffs being offered by the smaller, new entrants into the field are on line accounts.
SPECIAL TARIFFS
Social tariffs/Warmer Homes Discount
Social tariffs have been replaced by the Warmer Homes Discount, which is a requirement of Government. It makes a payment in the form of a credit to vulnerable clients, currently £140 per year.
People receiving Guaranteed Pension Credits should already have received this automatically. All energy companies have an additional discretionary scheme, which people who are struggling with their bills can apply for. Those who can apply for these may be different for each supplier as Qualifications vary. Claims need to be made directly to the energy company.
Applications for the Warmer Homes Discount have been high, so energy companies are now limiting the number of new households getting this and reviewing those people who currently get the discount. Currently this only applied to the ‘big six’ energy providers, so changing provider may result in losing this discount.
Winter fuel payment
Winter fuel payments are automatically given to people over 62 years of age. The starting age for both men and women increases with the women’s pension age. Only one payment (at the highest level applicable) is made to each household.
It is currently £200 for a couple, where one or more is aged over 62 years of age. It increases to £300 for people over 80 years of age. For men aged between 62 and 65 years of age and women not taking a state pension at 62 years of age it may be necessary to make a claim to the Department of Work and Pensions the first year a person qualifies for the winter fuel payment. In some years the payment has been temporarily increased.
Cold weather payments
Cold weather payments are automatically given to people in receipt of qualifying benefits after seven continuous days when temperatures have remained below zero Celsius. People who qualify have to be on earnings related benefits. This payment is not made very often.
Special allowances
Special allowances may be given when a householder has extra energy costs from running electrical equipment for medical reasons. A reduction in bills may be made to compensate for this.
Warmer Homes Discount contact numbers:
Scottish Power 0800 027 2700
British Gas 0800 072 8625 0800 294 8604 (prepayment)
Npower 0800 980 5525
EON 0800 051 1480
EDF 0800 096 9000
SSE 0800 300 111 (including Swalec and Atlantic)
At the moment, when a deal comes to an end, such as a fixed price tariff, the energy companies are putting customers onto their standard tariff rather the nearest equivalent. Customers must then contact their company to return to the previous type of tariff. This is an opportunity to check the value of different suppliers.
Smart Meters
Over the next few years existing electricity meters will be replaced by Smart Meters, which automatically reports meter readings to the billing centre and provides a display of both electricity and gas use. This should ensure more accurate billing but remove some of the cost advantages of online accounts. They are already being installed in England and can be requested in Wales from the Autumn 2014.
Until Smart Meters are fitted a remote electricity monitor, like the Energy Monitor, can be fitted easily to give a guide to how electricity is used.
Providers
There are six main providers of gas and electricity, along with several smaller companies entering the market. Not all tariffs, especially for smaller companies, will appear on price-checker websites and offers are often removed in times of price changes. It is worth checking that you are getting the best deal for your gas and electricity supply, as staying with the same company year on year, and how you pay them, could lead to you paying more than necessary.
When changing suppliers it is not just a case of getting the cheapest tariff (the price of electricity or gas) available, but also one that suits your household situation.
In general, fuel for heating should be paid for over the whole year by some sort of regular payment to avoid heavy bills during the winter months when the weather is colder.
To find out the best value tariffs you need to know how much gas or electricity you have used (generally in a year). This will be on a statement from your supplier, along with the tariff charged. You can request copies of statements from you supplier.
Most online price checkers allow the amount currently being paid to be entered, but it is often difficult to find the current tariff in order to calculate usage.
How charges are made
There are two parts to the charges made by energy companies, a standing fixed charge for the connection and charges for how many units of gas and electricity have been used. There are two several main ways that the energy companies charge:
1. Until recently most bills showed a much higher charge for the initial units used then a lower charge for the remaining units.
2. Most common now is a A fixed standing charge per day and a single price per unit for the electricity or gas used.
3. A single charge rate where the standing charge is included in all the units used. Although the charge will be higher than other tariffs, it can
work out cheaper for households that are low users.
Electricity meters read kWh directly, so the readings from the meter can tell you what the cost will be. Gas meters read either m3 or (older meters) 10’s of ft3. This is then converted by a formula into kWh which is laid out on the bill.
If there is a price change during the period of the bill the energy company will estimate how much gas or electricity has been used up to this point so that the new tariff levels can be applied.
Fixed price tariffs
Suppliers can offer tariffs that are guaranteed not to increase for a fixed period. Although these are usually more expensive to start with, they offer security that the price of energy will remain the same for a period. There may be charges incurred if terminating this tariff early.
Age UK tariffs
Is offered by EON in partnership with Age UK and replaces the old, fixed cost Staywarm. The tariff rates are the same as the standard EON tariffs, but with discount ‘loyalty’ bonus and no cost for terminating fixed price tariffs early.
PAYMENT METHODS
Prepayment
Prepayment meters are usually regarded as more expensive, but reasonable rates are available. For some households budgeting is easier by using pre-payment meters for electricity as electricity costs change little over the year. The standing charge is usually recovered in the form of a weekly rent. This is charged even if no electricity is used during the week and taken the first time the meter is charged up again.
One of the problems is that debts from previous users may still be taken when a new householder moves in. Energy companies may insist that a prepayment meter is installed when there is a fuel debt rather than disconnect the supply. They now charge to return to a ‘normal’ meter.
Prepayment meters are currently around £70 per year dearer for gas and electric.
Pay on receipt of a bill
This was once the regular way to pay bills but is now much less common. It can result in large bills during parts of the year, especially in cold weather. For long standing customers there may be a ‘loyalty’ discount, dependant on prompt payment.
On the face of it this is similar to pre-payment rates, but this does not take account of prompt payment discounts.
Regular direct debit
Regular direct debit is the most common way to pay energy bills. It spreads the bills over the whole year so you don’t have higher bills in the winter. When extra use occurs over a period, the direct debit will increase, which spreads the extra cost. This method is usually (but not always) cheaper. When charges are increased householders can review them with the supplier.
Energy companies now review charges twice a year, including a summer and a winter quarter in each review to be more accurate in predicting future use.
Internet/online accounts
Until recently these have been the cheapest way to buy energy. Payments are made by direct debit and the account can be managed online. Meter readings may have to be supplied on line by the customer.
Paperless bills are sent by email. Often the saving for online accounts has been far more than the actual savings made by the supplier. British Gas admitted that their websaver account was run at a loss in order to be able to claim that they were offering the cheapest tariff. This is now being changed and charges are not so attractive.
Most of the tariffs being offered by the smaller, new entrants into the field are on line accounts.
SPECIAL TARIFFS
Social tariffs/Warmer Homes Discount
Social tariffs have been replaced by the Warmer Homes Discount, which is a requirement of Government. It makes a payment in the form of a credit to vulnerable clients, currently £140 per year.
People receiving Guaranteed Pension Credits should already have received this automatically. All energy companies have an additional discretionary scheme, which people who are struggling with their bills can apply for. Those who can apply for these may be different for each supplier as Qualifications vary. Claims need to be made directly to the energy company.
Applications for the Warmer Homes Discount have been high, so energy companies are now limiting the number of new households getting this and reviewing those people who currently get the discount. Currently this only applied to the ‘big six’ energy providers, so changing provider may result in losing this discount.
Winter fuel payment
Winter fuel payments are automatically given to people over 62 years of age. The starting age for both men and women increases with the women’s pension age. Only one payment (at the highest level applicable) is made to each household.
It is currently £200 for a couple, where one or more is aged over 62 years of age. It increases to £300 for people over 80 years of age. For men aged between 62 and 65 years of age and women not taking a state pension at 62 years of age it may be necessary to make a claim to the Department of Work and Pensions the first year a person qualifies for the winter fuel payment. In some years the payment has been temporarily increased.
Cold weather payments
Cold weather payments are automatically given to people in receipt of qualifying benefits after seven continuous days when temperatures have remained below zero Celsius. People who qualify have to be on earnings related benefits. This payment is not made very often.
Special allowances
Special allowances may be given when a householder has extra energy costs from running electrical equipment for medical reasons. A reduction in bills may be made to compensate for this.
Warmer Homes Discount contact numbers:
Scottish Power 0800 027 2700
British Gas 0800 072 8625 0800 294 8604 (prepayment)
Npower 0800 980 5525
EON 0800 051 1480
EDF 0800 096 9000
SSE 0800 300 111 (including Swalec and Atlantic)