Energy companies are being investigated and fined for misleading customers or forcing them to sign up to poor deals.
Although the industry says it is sorry and is now cleaning up its act, misleading claims and confusing tariffs are still the order of the day.
But there ARE still great savings to be made and in this indispensable guide, The Mail on Sunday explains how.
Fixed-price energy plans, where what you pay won’t change over a set period, have become increasingly popular in an era of rocketing prices. The latest offers include npower Price Fix September 2016 – the longest deal currently available – and npower’s Online Price Fix June 2014, said to be the cheapest on the market.
Rich recipe: Elaine Hodgkins has saved hundreds of pounds by switching through cashback websitesWhile ‘cheapest’ claims may be true for some customers, the tag can be misleading. In the case of npower’s online deal, the quoted £1,184 annual cost is based on a customer using 3,300 kWh of electricity and 16,500 kWh of gas (a medium user), paying by direct debit and with bill sizes averaged across all regions of the UK. In reality, households whose usage is bound to differ from this average may find a better deal elsewhere. There is no uniform ‘cheapest option’.
More... Npower launches longest ever fixed price tariff - should you fix your bills for three and a half years? Fix your bills: how to cut your everyday costs and keep saving money all year round Compare: Find cheaper energy bills Energy bills: Is it worth switching? What will YOU save? KNOW WHEN YOUR ENERGY DEAL EXPIRESIf you have a fixed-rate deal, watch for the end date or you could end up paying much more if you do nothing and are shifted on to the supplier’s standard tariff.
Comparison website MoneySupermarket warns that households on deals such as npower’s Go Fix 11, which was introduced in February last year and ends on May 21, could see a £300-a-year jump in costs. ScottishPower’s Fixed Saver June 2013 and npower’s Bill Saver May 2013 also end this month.
THE CHEAPEST DEALS ARE FOUND ONLINEWhile energy bills have surged over the past couple of years, there are several ways to cut costs. Ann Robinson, director of consumer policy at comparison site uSwitch, says there are three golden rules to reducing bills.
‘First, always get your bill online. Second, pay by direct debit. And third, always check if it is cheaper to get your gas and electricity from the same supplier – together this can save up to £224 a year,’ she says.
Advice: Ann Robinson of uSwitchEnergy deals should also be reviewed regularly. The average family can save £160 a year by switching, while those who haven’t switched for two years or more can save up to £314 a year, according to uSwitch. Robinson says:
‘Switching provider should be like renewing your car insurance – doing it yearly makes sense.’
Switching via cashback websites, which operate a bit like old-fashioned reward schemes, can bring further savings.
Elaine Hodgkins, 49, from Denton, Greater Manchester, has saved hundreds of pounds over the years by following this advice.
The part-time call-centre worker, who lives with her husband, Rob, 47, and their sons Robert, 19, and Nathan, 15, says: ‘In November 2010 I switched from npower to EDF through cashback website Quidco. Not only did I get a better deal at £1,392, down from £2,000 a year for my dual-fuel bill, I also managed to get £80 cashback.’
Elaine switched back to npower when the deal came to an end last year. ‘Npower was offering £30 cashback if you got the deal via Moneysupermarket. It also offered £25 gift vouchers per fuel, so all in all I got £50 of vouchers,’ she says. ‘This time I saved £93.77 a year on the previous deal, plus the cashback and the vouchers.’
MAKE COMPARISONS BASED ON USAGEThe easiest way to find a better deal is to use comparison sites such as MoneySupermarket and uSwitch. For an accurate comparison you will need details of your current supplier and how much energy you consume.
For those without internet access, uSwitch offers a service where you can send in a copy of your bill and the team will recommend different options. Alternatively, call the helpline on 0800 051 5493. Switching itself takes four to six weeks. It won’t cost anything, but if you leave a fixed deal before it ends there may be a cancellation fee.
The gas and electricity supply will not be switched off at any time during the changeover. On the day of the switchover take a meter reading to make sure the bills are correct.
Making your home more energy-efficient could also reduce your bill: the Government’s Energy Saving Trust suggests households could save between £150 and £300 a year by taking energy-saving measures.
The Government, energy suppliers and local authorities provide grants to help you make your home more energy-efficient. To find out what you are eligible for, call the Energy Saving Trust on 0300 123 1234, or log on to energysavingtrust.org.uk.
UNDERSTAND HOW YOUR TARIFF WORKSFirms offer a bewildering array of plans – many with two different prices within the same tariff.
A two-tiered pricing structure means a higher price per unit is paid for the first chunk of energy used and then once a certain level is reached, a cheaper price applies.
This has a big impact on lower users – about 500,000 households – as they pay much more (nearly double the rate of some lower-cost plans on the market) for a larger proportion of the total energy they use.
Consumer group Which? has called for an end to this practice and for a simple, single unit price on tariffs so customers can make easier comparisons. It also warns that regulator Ofgem’s proposals to simplify tariffs would leave 3.4 million customers worse off – and by a combined £55 million a year.
This is because the regulator’s plans for a Tariff Comparison Rate – much like an APR for mortgages and credit cards – would be based on medium users of energy, which make up about a quarter of households. But many use much more or much less than ‘medium’.
A standing charge also applies to both types of fuel, which is the cost for delivering gas and electricity, and is a fixed rate regardless of how much energy is used.
There is more confusion because of seemingly arbitrary discounts, typically for paying for gas and electricity from the same supplier via monthly direct debit and with paperless billing. Prices also vary according to postcode.
Price comparison websites should absorb these differences and take stock of discounts.
Use annual energy consumption figures when comparing, as this gives a more accurate reading than just entering the figures from the last monthly or quarterly bill. Higher usage over winter will make a customer look like an energy guzzler and does not take into account lower usage over the summer, skewing comparison results.
PROVIDE REGULARMETER READINGSDifferences between real and estimated meter readings distort bills, leaving customers potentially in debt to their supplier.
This has happened to more than a third of households, resulting in an average debt of £154, according to uSwitch. In some cases, it has exceeded £500.
Discrepancies typically arise because of ‘smoothing’, where a monthly direct debit stays the same each month, cutting through peak periods of usage in winter and troughs in the summer.
If the monthly payment is too low, there won’t be enough paid over the course of a year to cover the cost of lighting and heating the home. People who pay too much each month will be ‘in credit’ and the supplier may owe money to the customer.
Providing regular readings can help to prevent paying too much or too little. Smart meters, which relay meter readings automatically to a supplier, also combat the problem. A national roll-out of these meters has been delayed until autumn 2015.
Sales rep assured me I’d save by switching – but my bill actually doubled Bill shock: Mark and Alison Locke with Flora, Archie and dog SeonidhCustomers thinking about switching to a better energy deal should watch out for contracts that seem too good to be true.
Energy suppliers promote cheap deals to lure people to switch, but they could later be stung by a higher bill.
Mark Locke searched for a better deal on his electricity bill last year, but ended up paying a lot more.
Mark, 39, who lives in Edinburgh with wife Alison, 41, and their children Archie, 5, and Flora, 3, switched from Eon to Atlantic, part of the SSE Group, in May 2012.
He says: ‘I switched because we were looking to save on our monthly utility bills. The person I called at Atlantic took all my details and calculated that my monthly payments would be £40 – a monthly saving of £38. So obviously, I signed up.’
Mark, who works in marketing for a pension company, received three quarterly bills that were all in line with his expectations, but the fourth, on April 23, was for a whopping £690.93.
Mark says: ‘I called Atlantic to complain and it transpired that the £40 a month was an estimate and so were the first three bills.
‘The fourth one was based on an actual reading. It turns out that the estimated monthly payment of £40 had been woefully inaccurate.’
To add insult to injury, two days later Mark received another letter from Atlantic saying his monthly direct debit would have to increase to £160 a month to cover the debt – a 300 per cent increase and double what he was paying before the switch.
After looking into Mark’s complaint, Atlantic has agreed to reduce the outstanding debt to £230 but the monthly direct debit will increase to £92. Mark has decided to take the matter to the Energy Ombudsman.
A spokeswoman for Atlantic says: ‘We are sorry to hear that Mr Locke remains unhappy with our proposed resolution, but we feel this final offer is fair.’
EDF and SSE were forced to repay £4.5 million and £10.5 million respectively for mis-selling electricity and gas tariffs. ScottishPower is also understood to be facing a fine for mis-selling, while Eon and npower are being investigated.
Ann Robinson from uSwitch warns: ‘Don’t trust the salesman who says they’ve got the cheapest deal, challenge it.’
REASON TO COMPLAIN?Anyone who is unhappy with their energy bill should first complain to their provider. It has eight weeks to respond to a complaint.
If it has not been resolved within that period, or if you are unhappy with the outcome, the matter can be directed to the energy ombudsman. Go to ombudsman-services.org, or call 0330 440 1624.
