What makes up your energy bills?
Demand for energy is increasing every year all over the world, which makes it one of the largest factors influencing energy prices. It is true that many UK’s electricity generation plants and coal fired power stations have closed down due to EU’s Large Combustion Plant Directive and to reduce emissions. Though sustainable energy like wind and solar power are popular but have not become mainstream yet and the cost of transporting gas and electricity is predicted to rise by around 5-6% in the next few years. With the increase in demand and transportation cost, it is likely to affect energy prices this year.
Having a good understanding of your energy bill is key to successfully compare energy prices and find the cheapest gas and electric deal. 46% of the overall energy bill is made up of wholesale energy costs. Energy delivery charges account for 24.3%. Other contributors of your energy bills are taxes (5.9%), government policies (10.2%) supplier’s profit (4%) and operating costs (9%)
The wave of price hikes in 2018
Energy customers have been experiencing rapid price hikes since 2016. If you are using one of the ‘Big Six’ energy suppliers, you are likely to see a significant price bump sooner or later. E.ON recently announced they will be getting rid of many of their tariff discounts. According to The Guardian, the news was delivered on the coldest spring day on record. Most UK consumers also remember British Gas raising electricity prices by 12.5% in 2017, after not having a price rise for nearly four years.
30% of the Consumers Have Switched Energy Suppliers in a Year
According to Energy UK approximate 3.5 million customers have switched their energy suppliers so far. 445,000 customers switched to a cheaper gas and electric deal last month compared with the 342,000 loyal customers who moved in August 2017.
The sheer number of consumers who moved to alternate better tariffs is a proof that people in UK are not taking energy price hike lightly. According to Ofgem, people are moving out from the larger players and relying on the small and medium energy suppliers. However, a large section of the population is still on standard variable tariffs which are comparatively higher than the cheaper deals in the market.
What can you do to pay less?
According to money saving expert Martin Lewis, households are missing out on the cheapest gas and electric tariffs by not switching suppliers. With more than 50 energy companies, it is difficult to find the best energy deal.
If you don’t compare energy prices regularly and still use the same old fixed rate deal, chances are you are probably already paying too much.
You need few key information from your current bill when comparing energy prices
- How is the payment made, eg through direct debit, prepayment, etc
- Name of your current supplier
- Tariff Name
- Do you have Economy 7 – 2 electric rates
- What is the annual usage in KWH
And if you just don’t have the time, you can also get some extra help from the professionals and price comparison sites to find the cheapest gas and electric tariff in your locality. Following your decision to switch, your old supplier should contact the new one and agree to the final/first reading ensuring a hassle free change.
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