Cut Your Energy Costs

Here's a question: Why, when wholesale energy prices are falling have we yet to see a difference in our bills?

Energy suppliers are right up there on my gripe list, at the moment, and there's good reason. The recent cold snap has meant most of us need to turn up our heating, but with energy prices remaining so high many are too scared to do so, in fear of facing whopping bills next year. And even though the energy regulator Ofgem has demanded a commitment from energy companies that they will pass on the recent falls in energy prices to us by February at the latest, so far few have done so, which of course means the vulnerable are suffering.

Overpaying by direct debit

What's more, pay by direct debit and you could find your energy company is squeezing even more from you.

Our energy usage, over a year, is not uniform as we tend to use more in the winter and less in the summer. Suppliers typically estimate what they think we will use over the year and charge direct debit customers a twelfth, each month. 

Unsurprisingly, estimates are typically very generous (they're not going to risk charging too little!) meaning you could easily find yourself still being charged, even though your account is in credit (this happened to me not so long ago!). Building up hundreds of pounds worth of credit with your supplier can take very little time, meaning you're effectively giving your energy company an interest- free loan!

What's more, British Gas has taken this to a new level, having written to demand higher payments from its standing order and direct debit customers - even the ones in credit!

So what can we do to protect ourselves?

Well, if like me you prefer to keep any extra cash in your own bank account, rather than someone else's, the solution is to not pay a penny more than you owe.

You could obviously do this by cancelling your direct debit and choosing to pay your bills when they come in. This works well, although as most companies offer a small discount (typically 5%) to those paying by direct debit you would miss out on this.

Another method is to tell your supplier you'd like to pay by direct debit, but you'll decide how much your payments will be. You can dig out your bills, work out how much you've used over the past 12 months and divide it into twelve payments, or decide upon a nominal sum and pay that. Either way, if you think there could be a chance you won't be paying enough, stashing the extra each month into an instant access savings account will mean it's available when you get billed for the extra.

Claim back your cash

And if your supplier is hoarding some of your cash, claim it back! Provided, in most cases that you've been making payments for 12 months or so, you should be able to call up, find out how much you are in credit and ask for a cheque to be posted to you/the excess to be credited back to your bank account.

Now you're on an even footing, it's a good time to look into how else you can save. Read the tips in Serena Cowdy's recent article. 

Some good news

On a more positive note, I was pleased to see that Ofgem has fined Npower £1.8m for failing to stop mis-selling of energy contracts. 

Ofgem has also had some success with British Gas. The supplier has introduced a tariff that will always be 10% less than the British Gas standard rate for the next 15 months. 

Let's hope the others will hurry up and introduce their own - and start giving us some real choice.

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