Good energy tariffs to switch to now

Following the decision by British Gas workers to strike, Neil Faulkner looks at whether you should switch energy companies, and highlights good tariffs to move to right now.

British Gas workers have joined British Airways workers and  National Rail maintenance staff in voting overwhelmingly to strike, with  hundreds of engineers set to walk out over pay and conditions.

The company has tried to reassure its customers, claiming it has made “contingency plans” – understood to involve paying sub-contracted engineers to undertake any necessary work – and insisting customers would not be affected by any industrial action.

The workers who voted to strike say that British Gas has turned from being a reasonable employer into one with a culture of bullying, customer exploitation and profits at all costs, forcing them to cut the amount of time they can spend fixing a customer’s boiler and other appliances by 22%.

If you’re a British Gas customer, and you’re sick of the service you get from British Gas, or if you’re a customer of any other energy company and are simply looking for a better deal, then you’re in luck.

All of the big six energy companies have now cut their prices – making now a perfect time to switch.

Or is it?

Best time to switch

When British Gas announced its price cut in February, I said you'd likely be better off switching immediately to the cheapest tariff available to you (from any supplier, not just British Gas) rather than waiting for the other five major suppliers to follow British Gas down, like they have done in recent years.

Now that all six have announced reductions, how did I do with my forecast?

It worked last year

This forecast is a repeat of the one I made in February last year and for the same reasons. If you'd followed my advice then, you'd be better off today (as I revealed in Recent energy-price reductions were a sham) probably to the tune of £60 or more.

The reason it works is that the suppliers, despite their announcements, don't actually change their cheapest offerings all that much, if at all. Therefore, if you sit through winter on your existing tariff, next to your radiator, and wait for the suppliers' price shuffling to play out, you'll end up paying more during the cold months for no reason.

Now that all of the big six have announced their price changes, let's see how the same forecast went this year by comparing prices a month ago with current ones:

Price test in a Farnborough post code

*Measured on 23/03/10 and including all the big six's announced changes, even if they haven't yet taken effect, except for Scottish Power's. More on that below.

Those figures include the prices of all suppliers (not just the big six). They're just illustrative, because the exact savings and best tariffs for you will depend on your area and usage. All my figures in this article are based on dual-fuel tariffs.

Should we have waited?

Despite announcements of gas cuts approaching 10%, low users based in all my test areas will find that the cheapest tariff for them remains unchanged. Medium users will find that their tariff has come down £9 to £894 and high users down £25 from £1,228. Those tiny changes of 1% and 2% respectively are also, for all intents and purposes, no change.

If you had switched as soon as British Gas announced its cuts rather than waiting for the rest to follow, you may now be on a tariff that's up to 2% more expensive than the latest deals. However, you would still have saved money because you'd have moved to a cheaper tariff earlier and during a time when you use your heating and lighting a lot more.

My figures show that those switching on the British Gas announcement will reap savings on about an extra 15% of annual usage (more if the switch takes less than four weeks), which compares with about 7% of usage over the same length of time during the summer months.

• Watch our video: Slash your energy bills

Smoke and mirrors

Despite the price announcements of the big six, none of them have made the top spot any cheaper in my tests. The cheapest spots for both high and medium users goes now to small supplier first:utility and its iSave tariff. The cheapest spot for low users in most of my tests continues to go to npower – although notice it hasn't got cheaper, despite npower's price-reduction announcement.

Indeed, the big six have not reduced the cheapest price of energy available to us at all. Their recent major price-announcements have been smoke and mirrors. If you're an existing customer and see your prices reduced as a result, it almost certainly means that you're on an expensive tariff that's just got a little bit cheaper.

The dawdlers

I've not yet been able to factor Scottish Power's reductions into my results. Although its prices are due to drop on 31 March, it still hasn't given the new tariff details to comparison centres such as ours. Usually, suppliers do this at roughly the same time as they announce the change, which is typically a good few weeks before it takes place. This way, the comparison sites can update the prices immediately.

However, based on some limited data it's revealed, I don't expect them to surprise us by making an impact on the cheapest tariffs, but I'll be sure to let you know if I'm wrong.

Good tariffs to switch to now

As with last year, winter will likely be the best time to switch. Therefore, if you want to get cheaper energy now, you want a tariff that also won't penalise you for switching in about six months' time.

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first:utility's iSave looks good for that purpose. Your energy might end up costing you about £10 more than you're quoted due to the loss of a small 'discount' (although what it calls a discount is actually cashback) but that should be it. There are no other tie-ins.

Another option might be E.ON's Fix Online, which for many is one of the cheapest. It charges £30 to quit before the beginning of April next year, which is beginning to get on the heavy side but, on the other hand, it's a fixed tariff, so you'll have peace of mind with repayments if you choose to stick with it.

All the other cheapest tariffs that showed up in my tests currently have high early-exit penalties of £50 or more, so if you're planning to switch again in six months they're to be avoided. These include: ScottishPower's Online Energy Saver, Scottish & Southern's Go Direct, npower's Sign Online, Atlantic's Online Fixed Price and Ovo Energy's New Energy.

If I've not mentioned here some tariffs that show up cheap in your own price comparison, take a look at the 'more details' section in the results page of your search, because we typically summarise the exit penalties there. Do also read the small print before you sign up.

See which tariff is cheapest for your usage and area by doing a comparison.

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Read more about energy exit penalties in Avoid these massive hidden energy charges.

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