Save £2,816 by 2012

Donna Werbner explains how to cut hundreds of pounds from your electricty bill and help save the planet at the same time.

If I told you how to save £190 today, no strings attached, would you do it?

If the answer is yes, read on...

Perilous Prophecies

This week, we are discussing Dr David Kuo's final prediction that by 2012, households will face an £8,000 shortfall in their family budget.

Quite a scary thought.

But if you're a regular reader of my articles, you'll know that, when confronted with visions of financial doom and gloom or perilous prophecies of crisis and inevitable disaster, I always try look on the bright side. So today, I'm going to try to make sure Dr David's prediction doesn't come true, by showing you a way to cut hundreds of pounds from your annual utility bills.

All you have to do is estimate how much your annual bills are (that's if, like me, you're not very organised and don't have all your bills to hand) and then visit our Gas and Electricity Centre to compare quotes from different providers.

A Londoner on standard tariffs with British Gas and nPower, spending £500 on gas and £300 on electricity every year, would save £190.19 by switching to British Gas's duel fuel Click Energy 4 Paperless Billing tarrif: a saving of almost 24%.

Here's a table showing some of the other top tariffs available at the moment:

The tariff will vary according to your postcode.

Go Green

Nowadays, when it comes to energy, you may not just be concerned with saving money on your bills - you may also want to save the planet. Or at least, ensure you're massively contributing as little as possible to its destruction.

Again, if you're on standard tariffs with your current energy providers, you may be able to save around £160 a year by switching to a green tariff.

Scottish Power has a particularly cheap green tariff called Online Energy Saver 4 Green, as this table shows:

However, it's worth bearing in mind that these green tariffs may not represent the best value for money, even for those of you who like to hug trees on a regular basis. Here's why: for every Energy Saver 4 Green tariff taken out, Scottish Power will only donate £20 a year to "support the creation of further renewable energy facilities". Apart from this donation, this tariff is no greener than any other.

So you would actually be doing more for the environment if you went for the cheaper tariff from British Gas, and donated the amount you saved (£27.04, based on the tables above) to a green charity instead. If you're a taxpayer you could boost this figure further via Gift Aid.

Shrink and save

Of course, switching suppliers is not the only way you can slash your energy bills and shrink your carbon footprint. There are many other cost-cutting ways to save energy, for example:

         Fill in your draughts

         Install draught-proofing on doors and windows

         Use energy-saving light bulbs

         Insulate your hot water tank with a jacket

         Insulate your loft

         Install wall cavities

         Switch to a high-efficiency boiler

         Install double glazing

         Lower the thermostat on your boiler by one degree

         Make sure all your appliances aren't left on standby

         Install thermostatic radiator valves. 

If you want to find out how energy-efficient your home is and get advice about how you can improve your energy use, you can take this online questionnaire from the Energy Saving Trust. I filled it in, and it claimed I could save £190 a year by upgrading my boiler and insulating my Victorian flat's solid brick walls. Of course, there are significant costs associated with carrying out this work. But once I had paid for this work to be done, as long as I switched to the cheapest British Gas tariff mentioned above, I would save a total of £380 a year.

If I then put this annual saving into the Fool's market-leading ICICI Bank HiSAVE Savings Account, which pays an AER of 6.41%, I would have built up a savings pot of £2,816.57 by 2012. And as an added bonus, I would also have helped to save a bit of the planet too.

So you know what? Perhaps the future's not looking so bleak, after all...

> Visit The Motley Fool's Gas And Electricity Centre to compare quotes and switch providers.

This article first appeared in an email.