The cost of wholesale gas has hit its highest level this year - meaning we're set to suffer even more gas and electricity price rises just as winter kicks in. However, you can offset the pain by looking at your energy bills now - we guide you through the process.
In the midst of the current heatwave - punctuated by occasional storms - you could be forgiven for not giving too much thought to your gas and electricity bills. Yet with the news that the wholesale price of energy has risen to its highest level this year, it’s worth taking action now - before suppliers pass on the price hike to consumers in the form of higher bills.
Wholesale gas prices have soared by more than 30% since the turn of the year and last week hit an annual high of 57p a therm, according to figures from energy consultancy Nera. Utility firms buy their gas supplies in bulk and typically set their domestic tariffs six months in advance - which means we can expect prices to climb significantly just in time for winter.
The looming price hikes spell yet more bad news for consumers. Although gas and electricity tariffs have fallen over the past 18 months by an average of 10%, in 2008 a series of double-digit price hikes saw average gas bills rise by as much as 40% and electricity bills climb by a quarter.
In real terms, that means we’re paying a significant above-inflation premium on pre-2008 prices. And what’s more, gas and electricity providers are already pulling their most competitive energy deals. npower, ScottishPower, Eon and Scottish & Southern have this month all pulled their cheapest online dual-fuel deals, replacing them with variable tariffs typically 3.6% (or £50-a-year) more expensive.
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The big dilemma
The majority of energy pundits are urging consumers to move to one of the cheapest fixed-rate gas and electricity deals now before prices start to rise.
There are still some competitively priced fixed deals available - leading the way is npower's ‘Go Fix v2' tariff which comes in, on average, at a little over £900 a year for combined gas and electricity.
However, rumours suggest that npower’s ‘Go Fix v2’ deal could be the latest product to be pulled from the market.
The next best fixed deal at the moment is ‘New Energy Fixed' from OVO Energy at £926 annually, or for those looking for an online deal, ‘SaveOnline v2' from E.ON at £882 a year.
Switching made easy
You don’t have to sit helplessly and see your household bills spiral out of control - there are steps you can take now to bring your autumn and winter energy costs down.
There are two simple ways to save money on your gas and electricity bills. The first is to see if you can save by switching to a cheaper energy supplier - the second is to see if you can move to a cheaper energy package. Recent figures show that consumers can still save an average of £259 a year by choosing a dual fuel tariff over a standard deal - even if they’ve switched suppliers in the past.
Recent question on this topic
- pasquires asks:
How can I save money on utility bills when the quoted prices per unit are higher than my current bills?
- MikeGG1 answered "Perhaps you have a price guarantee that was keeping your prices down. The savings quoted are just..."
- champ69 answered "I got £55 and £50 cashback from changing to EDF and Scot Power, when I went through..."
- Read more answers
And the good news is it’s really easy to compare tariffs. Simply use the lovemoney.com energy switching service to track down a better deal! The great thing about switching energy supplier is that nothing physical needs to happen inside your home - you simply get a different supplier name on your bill.
Some simple steps can help you get more from the process. Before you start, make sure you have recent bills to hand so that you can gauge your recent gas and electricity usage - you'll need this information to help you find the best prices based on how much energy you normally use.
It's also worth bearing in mind that the cheapest deals are usually ‘dual fuel’ tariffs repayable by monthly direct debit.
Finally, remember that even on a ‘dual fuel’ deal, you won’t be tied into an annual contract - which means that you’ll be free to switch again if your new tariff starts to rise in price.
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