It’s January and millions of people are tackling their bills. One of the biggest and easiest savings is energy. 11million people are paying massively over the odds, by sticking with a big six energy provider’s standard tariff. Who better to help slash your bills than our Money Saving Expert Martin Lewis, who’s here with his masterclass.
Who are the 11 million overpaying, and why?
11m are certainly overpaying, but it’s likely even more can save and everyone should check now, as in the last few weeks the prices of the cheapest energy deals have dropped even further. People often think energy companies have one price. They don’t. They can have lots of different tariffs.
And to prove the point, those on British Gas standard tariffs right now are paying £1,177/yr – roughly the rate of the price cap. Yet British Gas has another tariff at around £900 a year and it’s fixed so you know the price won’t rise. So it’s £280/yr cheaper, same gas, same electricity, same safety and same service – just a different price. And most existing customers are eligible to get it too.
And those willing to move company can save even more, the cheapest deals on the market are currently around £830 for typical usage. So move to that and you could be paying £350/yr less.
When you say typical bills what is that?
It’s a definition from the regulator Ofgem – don’t worry about it too much. It just shows you the scale of savings compared to what you pay. It’d be more accurate to say you could save 25% to 30% by switching, but doing it in money terms shows the impact more.
So how do people get these deals?
This is all about using a comparison site like Martin’s ‘Cheap Energy Club’ which is whole of market and also gives you £25 cashback per dual fuel switch, which you wouldn’t get direct, or any Ofgem-approved comparison sites.
There are two reasons to do this:
1) There is no one cheapest provider. I’ve been talking average prices, but who your cheapest is depends on where you live and how much you use. A comparison site works that out for you and tells you the exact saving.
2) Some of the cheapest tariffs – especially the super-cheap ones from the big six providers like British Gas, but also E.On and EDF for example, are ONLY AVAILABLE via comparison sites. You can’t just call it up and ask for it. This also gives you the advantage of seeing how the deal stacks up for you, as who is cheapest depends on where you live and how much you use.
Though do beware, as comparison sites are now allowed to only show you tariffs that pay them, which means you may not see all the deals (for the sake of transparency Martin’s Cheap Energy Club defaults to all deals).
So are you suggesting people stick with the firm they’re on?
No, generally the best thing is to do a comparison, then scroll down to find the cheapest company with a decent customer service reputation. There are few cheaper deals including medium-sized suppliers with good service ratings. Yet I know many people won’t take that step switching to another firm so this is a rare opportunity, as right now you can make big savings without even changing firm.
So carpe diem (ie, get your backside in gear) and sort it out.
What information do you need to do a comparison?
Bare minimum; you need to know your name, address, and who your existing provider is. Even better if you have details on your bill, plug in your usage too. Yet the sin of inaction is bigger than the sin of inaccuracy – so if you don’t know the comparison site will estimate for you. This will only take you a few minutes. Then it's switched over in 17 days.
What happens when you switch?
Those who worry about switching, well if you’re sticking with the same company, very little changes. Even if you do switch to another company, while it’s the same pipes, gas, meter, safety – you don’t lose supply – the only difference is price and customer service.
What about those on prepayment meters?
If you pay by a key or card meter, as many of the country’s poorest and most vulnerable do, then outrageously there’s nowhere near as much competition, and you pay more – though prices have been capped which has helped a touch. If you do a comparison there are often savings to be made, but often less than £100.
Yet if you can, try and switch to a billed meter. It’s free to do with one of the big six providers, and you’ll usually be credit scored to check you’re capable of keeping up with payments.