British Gas Turns Up The Heat

While we bask in a heatwave, the UK's biggest gas supplier warns that more price rises are in the pipeline.

After what seems like weeks of non-stop rain, the sun is finally shining across the UK. Alas, within days of this heatwave beginning, the Department for Environment, Food & Rural Affairs released its first summer smog warning! Warm, sunny weather causes air pollution and ozone levels to rise, which can cause breathing problems for those with respiratory problems, asthmatics and the elderly.

Another choker is the news that Centrica, parent company of British Gas, today warned that it is being squeezed by higher wholesale gas and electricity prices. Thus, in order to improve its profit margins, Centrica has indicated that household fuel bills may well rise again this year. Given that price rises usually kick in two months after announcements of this kind, we can look forward to price hikes in July or possibly August.

According to British Gas, wholesale electricity prices have doubled in the past year, with wholesale gas prices almost doubling (up 92%) over the same period. In January, British Gas increased its tariffs by around a seventh (15%). Alas, it's likely that the average household will see energy costs rise by about a tenth (10%) this summer, with a further rise of perhaps 15% early next year.

Obviously, where British Gas goes, its rivals are sure to follow. At present, a typical household spends around £1,050 a year on gas and electricity. Therefore, if tariffs go up by 10% and a further 15%, this energy bill will rise by £278 to £1,328 a year. In other words, a typical household will need to find an extra £23 a month to cover higher fuel bills. Ouch!

So, given that household energy prices are set to soar once again, what can we do to minimise the impact of these forthcoming increases? There are two simple methods:

1.    consume less fuel; and

2.    pay less for the fuel that you do use.

Use your common sense

When it comes to using less gas and electricity, most energy-saving measures are largely common-sense measures. For example, now that outdoor temperatures are in the mid-twenties, it makes sense to turn down your thermostat or switch off your central heating altogether. Likewise, why boil 2½ pints (1.4L) of water in order to make two cups of tea when 1¼ pints (0.7L) will suffice?

Another easy way to cut back on wasted energy is to switch off appliances when they aren't in use. Although it's very convenient to hit the `standby' button, electrical devices continue to use a considerable amount of energy until physically switched off. As well as wasting money, these items use precious fossil fuels and, therefore, damage the environment.

So, if a device is quietly humming away, or a little indicator light shows that it is on standby, then it's burning money. This is particularly the case with computers and associated hardware, which are often left on 24 hours a day. It doesn't take much effort to crouch down and unplug or switch off an appliance at the mains, so why not go green, switch off and start saving today?

For lots more energy-saving tips, read Save £2,816 by 2012 and Ten Ways to Save Energy.

Paying less for gas and electricity

Here at the Fool, we're rather proud of our gas and electricity comparison service. Being powered by Fool partner Xelector makes it the most accurate and comprehensive energy-comparison wizards available today.

For example, unlike many other energy services, we include tariffs from Ebico, which charges socially fair prices and is particularly attractive for households with pre-payment meters. Also, we allow applicants to enter unit prices directly, in order to produce exact comparisons with current tariffs. So, you don't even need to know which (ancient?) tariff you're on in order to get an accurate calculation of the savings to be made!

Of course, because the UK energy market is so fiercely competitive, it's also incredibly confusing. As Florian Ritzmann of Xelector told me, there are fourteen different regions, twenty suppliers, at least three tariffs per supplier, three different payment methods, dual-fuel discounts, and other factors to take into account.

Thus, in total, there are between four thousand and seven thousand tariffs from which to choose. Naturally, you need an expert guide to navigate this energy maze, which is why hundreds of thousands of Fool readers have tried our service. In January, the average saving was £163, with top-end savings as high as £450. Give it a try today -- you won't be disappointed.

More: Compare gas and electricity tariffs | Save More Money On Energy | British Gas Raises Prices Again