Page last updated at 11:55 GMT, Friday, 18 January 2008

Q&A: Switching energy suppliers

Electricity meter
Reducing your energy usage is a good way to cut your bills.

British Gas is the third energy supplier to announce significant price rises since the beginning of January.

The UK's biggest power provider has said that around 13 million customers will see their gas and electricity bills go up by 15% with immediate effect.

It follows the prices increases already announced earlier this month by EDF Energy and Npower.

I am a British Gas, Npower or EDF customer. Should I look to change providers?

Not necessarily - yet.

Three of the big six suppliers have now announced price rises, making it highly likely that the others will follow suit.

The best advice therefore could be to wait until all have declared so you can make an informed comparison.

Otherwise you may switch to a company which looks cheaper today, only to find that they will also put up their prices.

So switching is a waste of time then?

Not quite. The argument goes that savings can still be made, especially if you have never switched before and are still with either British Gas or the company that took over from your regional electricity board.

In those cases, you are likely to be on their highest tariff.

So you may still be able to achieve a significant relative cut in your bills.

How common is energy switching?

The full figures for 2007 are not yet available, but in 2006 about 4 million households changed their gas or electricity supplier, according to the energy regulator Ofgem.

In April 2006, when wholesale energy prices were last at very high levels, and price increases were starting to bite, a record 900,000 customers changed supplier.

However about 50% of UK households have never taken the opportunity to switch their provider and it is these people who are likely to have the best opportunity to make hefty savings.

How do you switch energy companies?

In theory, it is relatively easy to switch your energy supplier - and should certainly be less arduous than changing, say, a mortgage provider.

Regardless of where you live in the UK, there are several suppliers to choose from.

You can opt to have separate firms supplying your gas and electricity - or choose one company to supply both, commonly known as dual fuel.

The most common and effective way is to firstly identify the company which can offer the cheapest deal is to use a price comparison service.

Energywatch has approved 13 companies providing price comparison services both via the internet and on the telephone - and it lists these firms on its website.

Most of these companies will deal with your new supplier on your behalf, and also contact your old supplier to organise the switch. It does not cost the consumer anything - with the firms receiving a payment from the energy company which has won the new business.

However if you would rather go it alone, you can talk with the firm you want to be your new supplier and agree a contract. Then you tell your existing provider that you wish to end the service - usually having to give about one month's notice.

What if I use a pre-payment meter?

You too can also change suppliers.

People using pre-payment are often on low fixed incomes and could really benefit from moving to a less expensive provider, Energywatch says.

But despite this, industry figures suggest that just over a third of pre-payment gas users and four out of 10 electricity customers have changed supplier.

This compares with more than half of those who pay by direct debit and monthly bills.

How much can I save by switching

This depends on how much you are currently paying and on your personal circumstances - for example where you live and your level of usage.

Firms often offer discounts if you buy both gas and electricity from them.

But the industry regulator Ofgem has said that households changing their supplier for the first time can save an average of 100 per year.

Besides switching supplier, how else can I reduce my energy bills?

Changing your method of payment is one way that you may be able to save money.

If you can afford to pay by direct debit rather than by cash or cheque, this typically can knock about 40 off your annual bill, Energywatch says.

The other key thing to think about is reducing the amount of energy you use and the Energy Saving Trust has plenty of advice about this.

Tips include:

  • Don't leave appliances on standby
  • Unplug chargers for mobile phones, MP3 players etc. when not in use
  • Turn off lights when leaving a room
  • Wash clothes at lower temperatures
  • Turn the thermostat down

Double-digit rise in Npower bills
04 Jan 08 |  Business

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