Energy price war hots up

Christina Jordan takes a look behind the headline rates to see which energy company offers the cheapest tariff.

Last September newcomer OVO Energy fired the first salvo in the current utilities battle, leading to a raft of price cuts over the following five months.

The 'big six' utility giants have fought it out against a new breed of young pretenders -- British Gas and Npower both launched headline-grabbing cheap tariffs in December, as did some of the smaller players.

Only two weeks ago, British Gas hit the headlines again with the news that it was cutting its standard gas tariff by 7%, benefitting eight million households to the tune of an average £55 a year each.

The energy giant said that no matter where in the country you live, it was now offering on the cheapest gas, electricity and dual fuel prices (for average users).

However, less than a week later the crown was snatched from the Goliath fuel provider's head by an altogether smaller rival -- self-styled challenger brand First Utility. It launched a standard dual fuel tariff that it claims shaves a few pounds off the British Gas deal, meaning it now offers the new cheapest standard tariff in the UK.

But there could be a catch.

Apples and pears

Comparing gas and electricity tariffs is ridiculously complicated because there are a number of factors to consider. Indeed, it is unusual for one tariff to ever be uniformly the cheapest on the market. And as a rule of thumb any provider's 'standard' tariff is rarely its cheapest.  

The First Utility standard tariff is only available from them via the telephone and is not as cheap as its online deal. It is pretty clear it's been launched to give direct competition to the British Gas standard tariff, and has been described as a ploy to hit the headlines and quickly usurp the energy giant.

Whatever the motives, the First Utility standard dual fuel tariff will not be the best deal available for many people -- including myself.

I used lovemoney.com's utility comparison tool to see if I could better my current deal and to check out what would work out cheapest for me. Not only did I have the results in a couple of minutes, they were very interesting indeed.

The First Utility standard dual fuel deal didn't even make the top 20 tariffs for me, though its cheaper Isave Dual Fuel v2 came in at number 12. Even British Gas's best tariff for me -- the Websaver 6 -- only came seventh.

While fuel isn't quite individually priced, it is dependent on a number of personal factors -- where you live, your energy usage and whether you want a online tariff for example, and if you are willing to pay by monthly direct debit. It means that what is market-beating for one of us can be an average deal for others.

Different scenarios, different best buys

In my case it turns out I have particularly low gas and electricity usage, according to my bills (£30 a month for electricity, £20 for gas). This really surprises me as I work from home and it's been a cold winter. While I admit I go to great lengths to keep warm without turning on the heating (more layers than you can imagine, more tea than you'd believe) there are some months of the year when the radiators are on for hours a day.

Based on my miniscule usage the best tariff is actually Scottish Power's Online Energy Saver 9, which would cost me £468 a year. And this is not surprising because the provider is known for offering decent deals to those who use little energy. So if you have a smallish property, or you're a young person with better things to do than stay at home every evening (using up gas and electricity), it could be that you are a low usage energy customer and you could switch to a better deal. Second best for me was Southern Electric's Go Direct v3 and Npower's Sign Online v17 was a close third.

I decided to do the same search again but tripling my bills to reflect a family household -- or a less frugal one. I checked again inputting £90 a month for electric and £60 for gas. This time First Utility topped the table with its Isave Dual Fuel v2 deal (costing £1,334 a year), closely followed by EDF Energy's Online Saver v5 tariff. British Gas's WebSaver 6 wasn't far behind.

These deals may not be the best for you but note that neither the British Gas nor First Utility standard tariffs got a look in -- regardless of the level of usage. This only serves to emphasise the fact that it is the online, monthly direct debit tariffs that consistently come out top.

A question of region

The figures above are also specific to my region -- I'm in Stockport in the North West.

I did the search again using my old address in West Kensington, London and the results were very different.

On the lower usage figures Scottish Power's Online Energy Saver 9 slumped from top to third place. Instead Npower's Sign Online v17 came top followed by Scottish and Southern Energy's Go Direct V3.

On the more expensive usage example First Utility's Isave Dual Fuel v2 deal was still top but this time followed by Eon's Fix Online v6 tariff and then British Gas's WebSaver 6.

It's important to stress there is no one single provider that offers the best electricity, gas or dual fuel tariff to every customer. It completely depends on where you live, how much energy you use, and the way you prefer to receive and pay for your bills.

The only way to find out if you can save on your energy bills is to do an accurate search, for example using lovemoney.com's utility comparison tool. You need to input your specific details, including where you live and how much you spend on energy -- either get this from your last bill, or estimate it.

Then you will see exactly what is best for you, and I'm pretty sure it will be an online fuel tariff that works out cheapest. If that's not the case, do let us know who is best, and which region you live in.

Compare energy quotes at lovemoney.com

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