Although energy prices should be falling, some households are set to see their bills rise. Also, late-payment fines are coming. Shame!
For the last three to four years, UK households have watched their domestic energy bills soar. Indeed, the cost of gas and electricity has risen so remorselessly in recent years that the average energy bill for a typical household has doubled to more than £1,000 a year.
Then again, during 2006, the wholesale cost of gas and electricity plunged, which suggests that retail price cuts should be in the offing. Aha, but most energy firms are corporations, whose primary responsibility is to maximise returns to their shareholders, so they are dragging their feet in order to maintain their huge profits. What's more, it's winter, so they'd be mad to reduce tariffs during their most profitable time of year, right?
Now along comes a double whammy of bad news to add insult to injury:
1. Capped and fixed rates set to expire
Several reduced-rate electricity and gas tariffs are coming to an end, leaving over 100,000 customers facing big hikes to their energy bills this month. For example, with effect from 8 January, the 29,000 British Gas customers on its Click Energy online tariff saw their gas costs rise by an eighth (12.4%), with electricity costs rising by almost a tenth (9.4%). In addition, 80,000 npower customers on its Gas Guardian tariff can look forward to paying around £15 a month more for their gas, thanks to a price hike of almost two-fifths (39%). Ouch!
2. £5 fine for late payment
With effect from 1 March, British Gas and Scottish Gas customers who fail to pay up within 28 days of receiving a bill will be charged a late-payment penalty of £5. Customers who pay using regular payments won't be affected, but those who pay by cash and cheque are in the firing line. This will hit older customers hardest, as they tend to use direct debits and standing orders far less often than younger consumers do. Booooo!
In order to avoid this fine, I'd suggest setting up a monthly direct debit to pay your bills, which will also earn you decent discounts. Even better, given that British Gas is the most expensive gas supplier in many areas, try switching to a cheaper provider -- which is the course of action recommended by energy regulator Ofgem!
Sadly, if you've remained loyal to your incumbent (local) gas and electricity suppliers, you're probably overpaying by at least £150 a year -- so jumping ship means big savings. If you have last year's bills to hand, the paperwork is fairly straightforward, and there's no rewiring or plumbing involved.
Naturally, I'd recommend visiting the Fool's utilities centre and giving our search engine a spin as it searches over seven thousand tariffs to find you the cheapest deal. What's more, our tariff database is provided by Xelector, which is fully accredited to the new Energywatch confidence code.
Ten minutes of effort could save you £150+ a year in the years to come, which is like earning fat cat wages for your time!
Finally, cutting back on wasted energy is an easy way to minimise your bills, so read the simple tips on using less gas and electricity in Save Money By Saving The Planet.