The Fool's Guide To Fuel Economy

Cut the cost of your bills and minimise the impact of energy price rises in these eight simple steps.

The price of utilities such as gas and electricity has rocketed of late, and many of us have seen our bills go through the roof at a time when we are also trying to contend with mounting food, mortgage and motoring costs.

Almost every household across the UK has been hit by the soaring cost of oil, and we are all feeling the pinch as rising energy costs start to take ever greater chunks out of family budgets.

Gas and electricity providers have already put their prices up by between 15 and 30 per cent this year --blaming growing pressure on wholesale prices -- and there is now widespread speculation that we've not seen the last of these rises, and that there are higher utility bills in the pipeline.

This has prompted growing concerns that further increases could plunge more people into "fuel poverty", where more than 10 per cent of their income goes on energy -- forcing some to choose between paying for heat or food.

That said, while this makes for rather gloomy reading, there are steps you can take to keep a lid on bills, and minimise the impact of these price hikes on your pocket.

Make the switch

One of the simplest way of cutting the cost of your bills is by reviewing your energy payments and switching supplier.

If you have never switched before, you could save more than £300 by moving to a better deal elsewhere, according to consumer body, Which? -- although the amount will vary according to your supplier and tariff and the size of your annual bill.

Plus, while those who have never switched stand to gain the most, those who have switched before should still be able to make savings.

Switching is simple

Many people worry about switching supplier, but the whole process is very straightforward, and most of the legwork -- and paperwork -- is done for you.

Begin by logging on to a comparison site which will show the different tariffs offered by competing providers in your area; make use of sites such as Fool's gas and electricity centre.

With the help of a cost calculator, you simply need to type in your postcode and how much your gas and electricity bills currently cost -- and you will then be provided with a list of cheaper alternatives.

Once you've chosen your new supplier, you simply sign a form and that supplier will sort out everything on your behalf; and you needn't worry about changes to pipes or wires, as all of this stays the same.

Take a meter reading

When you bill arrives, check if the readings are estimated -- this will be shown by an 'E' next to the reading.

If this is the case, it's worth taking a current reading from your meter and phoning it through to your supplier who will then send out an amended bill; this ensures you are neither under nor over paying for your energy -- and won't get any nasty surprises.

Further, if you do decide to switch, you must ensure that all your bills with your old supplier are fully paid up -- as any outstanding debts could prevent you from switching.

Opt for an online plan

Online plans tend to be cheaper than standard tariffs as providers can limit their costs by reducing the amount of paperwork required.

Plus, in the latest round of price hikes, all the suppliers increased their standard tariffs more than their online tariffs, which means a paperless online tariff is now guaranteed to be the better value option.

Pay bills by monthly direct debit

If you pay your bills quarterly, you can save money by switching to monthly direct debit which allows you to spread the annual amount over 12 equal monthly payments. This makes it easier to budget, and means you're not faced with extortionate bills over the winter period.

Secure a dual fuel plan

You may also be able to make savings by buying your gas and electricity from the same provider -- known as a "dual fuel" plan.

These deals typically include discounts or reduced prices, and can be more convenient as you only have to contact one provider if you have any queries.

Opt for a capped rate tariff

Further, if you're worried about oil and gas prices climbing even further, you can get peace of mind by opting for a capped rate tariff; most of the providers now offer these tariffs where you pay a set price for a set period of time of two or four years, say.

You may pay more initially, but you may well make greater savings over the longer term -- depending on how energy prices move.

That said, you should check for any penalty clauses before signing up; Eon, for example, recently launched its Price Protection Until 2009 tariff with no tie-ins or cancellation fees. As part of the deal it also offers an energy monitor which allows you to track your usage.

Think energy efficient

Finally, another way to shave pounds off your energy bills is by being more energy efficient.

Here are some of the top tips from energy watchdog, Energywatch:

Don't leave your electrical devices on standby, and don't leave appliances on charge unnecessarily.

Turn your thermostat down by 1 degree C -- as this could cut your heating bills by up to 10 per cent, and save you around £40 per year.

Always turn off the lights when you leave a room.

If you're not filling up the washing machine, tumble dryer or dishwasher, use the half-load or economy programme.

Install energy-efficient devices, such as energy-saving lightbulbs; just one can reduce your lighting costs by up to £100 over the lifetime of the bulb, and they last up to 12 times longer than ordinary bulbs. 

Contact the Energy Saving Trust to get a free and impartial, personalised home energy report telling you how you can save money on your energy bills, and advising you of any grants that may be available.