Over the past 2 years in the UK the big 6 energy companies have raised their prices by an average 18% and then dropped them by an average 7% so what might happen in the coming years and what should you do to attempt to migate any rises that may occur in the future ?
There are some other considerations in this deregulated industry. The previous government imposed certain green taxes on all of us so that investment in alternative technologies would hopefully reduce the requirement for fossil fuels. In addition to this they also want every UK home to have smart meters so that data from usage is automatically transmitted to the power suppliers so you don’t need to read your meter and bills are more accurate.
All of these types of investment of course eventually find their way back into the average consumer bill one way or another. Additionally there is the cost of wholesale electricity. This peaked from the winter of 2011 which was harsh but recent winters and general weather has been warm so demand has been lower and the wholesale price has actually reduced. Prices much like petrol don’t seem to reduce when wholesale prices reduce as fast as they increase when the wholesale price increases. So with all of this in mind what can you do to ensure you don’t get nasty surprises when you receive your energy bill in the post ?
Part of the exercise is to check you are on the most effective tariff and that means comparing rates and tariffs from a comparison website such as Electricity Prices to switch and reduce the cost of your average electricity bill in the UK. The process is easy and your supply is never interupted. All you see is a reduced bill and a new logo !. If you have never switched since deregulation or pay your bill by cheque or cash at the bank then you could save perhaps 20-30% just by signing up to one of the online tariffs and paying by monthly direct debit. Having the variable standard rate is perhaps the most expensive method of paying for electricity in the UK but millions of people still choose this option.
So what about the Big Switch campaigns being run at present? If you haven’t seen these some of the comparison sites have suggested people group together like a big “people power” organisation and then have the energy companies bid for all the contracts. There are many issues with this, primarily that the energy suppliers don’t want to bid to their existing customers (and why would they). They all want new customers switching from one of their competitiors. So a few providers have already dropped out of the process and it seems a bit of a mess.
Overall undoubtedly gas and electric prices will continue to increase. There are a range of very long term fixed rate deals in the market place, up to 5 years in length, although the unit prices are much higher than today. It’s a calculated risk that could be taken but check on how much more the unit price is before signing up. As mentioned you can check all the tariffs online for your postcode by using one of the comparison services such as confused.com or moneysupermarket etc. They should present all options to you rather than the ones they are pushing themselves because of commissions.