How to save on your energy bill
How to get the best energy deal
Article 2 of 5
How to get the best energy deal
One of the easiest ways to cut your gas and electric bills is to make sure you get a good energy deal in the first place. Find out how to choose the best tariff.
Choosing the right tariff could save you hundreds of pounds a year. Use our independent switching service, Which? Switch, to compare gas and electricity prices.
The more information you give a price comparison service, the more accurate your quote will be. Use these tips to make sure you're offered the very best deal for you.
Once you've read our tips, use Which? Switch to see how much money you can save. As Which? is not-for-profit, any money made by Which? Switch helps fund our campaigning activities.
Find out how much gas and electricity you use
Use your annual statement from your energy supplier or your last year's worth of bills to find out:
- the name of the tariff(s) you're on
- how much gas and electricity (measured in kilowatt-hours – kWh) you use.
If you have an online account with your energy company, this may include information on your annual energy use.
Annual use figures will get you the most accurate results when searching for a new tariff. This is because price comparison services calculate costs and savings based on a year.
If you rent your home, Which? Switch can also compare gas and electricity prices based on the length of your contract.
But if you're not able to find your annual use, you can estimate it. See our guide to estimating how much energy you use. Take care though; using estimates about your usage means that any quotes – and how much money you could save – are estimates too. If the estimate was too high or low, the amount you pay could change once you have switched.
If you don’t provide information about your supplier, tariff and how much gas and electricity you use, check what the price comparison uses as its default setting. This is likely to be a standard tariff with a Big Six energy company which could be pricier than your actual deal if you switch often.
Compare energy prices to find the best deal
Once you've given a comparison site your information, you'll be able to compare the deals available to you. If you want the same supplier for your gas and your electricity, a dual-fuel deal often works out cheaper because of the dual-fuel discount.
But sometimes you can save even more by buying gas and electricity from two different suppliers. In May 2018, we found you could pay £25 less per year by buying gas and electricity from two separate suppliers. But in September we found that it was just as cheap to buy both fuels from one supplier. This is because new energy deals are launched all the time so it's worth looking at both options if you're keen to cut costs.
Fixed or variable energy tariff?
Energy deals come in two types: fixed or variable.
Variable deals, often also called ‘standard' tariffs, can change price each time your supplier changes its rates. They’re rarely energy suppliers’ cheapest tariffs.
However, variable deals are also usually your supplier’s default tariff. So if you have been with your supplier for a while or didn’t switch after your fixed deal came to an end, it is very likely you are on its standard variable tariff, or ‘default' tariff’.
These will be subject to a price cap from the end of the year. Energy regulator Ofgem says that this will ensure consumers pay a ‘fair’ price for energy. But the cap is effectively on the price charged for each unit of energy – not a cap on your total bill.
Plus, exclusive Which? research reveals that there are many pricey deals that won’t be affected by the price cap.
Not all variable deals will be subject to the cap – only the ones you can be transferred automatically to. Plus some companies offer cheap variable deals.
Also, unusually, British Gas’ default tariff is a fixed, rather than variable, deal.
Fixed tariffs, in contrast, have the rate you pay for each unit of energy you use fixed for a certain period of time (one or two years, for example).
This means that you know the price you pay for energy won’t rise during the period of your contract. So if your energy company raises its prices, you won’t be affected. But you won’t benefit if it drops prices either.
Variable of fixed: which energy tariff is cheaper?
Between September 2016 and September 2018, the cost of variable tariffs across the Big Six suppliers increased on average by 17% (or £184 per year). While their cheapest deals (which are usually fixed tariffs) increased by 10% on average (or £96).
But this doesn't mean standard tariffs are cheaper. Quite the contrary - the cheapest deals on sale are often fixed. It's more likely that fixed tariffs are more keenly priced, so suppliers can't afford to reduce them by as much.
Our monthly research into energy prices reveals that the cheapest deals are often fixed one-year deals from small suppliers. In fact, our analysis of energy tariffs has found that customers of the Big Six energy companies who are on a variable tariff could save up to £396 a year by switching to the cheapest deal on the market (correct September 2018).
So if you’re on a variable or default tariff, you need to see if you could save money. Use Which? Switch to compare gas and electricity prices.
But beware: fixed does not always equal cheap. Some of the priciest deals are also fixed tariffs, but often longer-term ones, valid for up to four years. So make sure you check energy prices before you switch.
Time of use tariffs
Economy 7 and Economy 10 are the two most common time-of-use tariffs. If you're on one of these tariffs, you’ll probably have a special electricity meter that provides two different readings (also known as a 'two-rate meter'). Although this will change - you won't need a special meter as smart meters become more widespread.
Time-of-use tariffs charge different rates for electricity used at different times of day. For example, a more expensive rate for electricity used at times of peak demand in the daytime, and a cheaper overnight rate.
- Economy 7 gives seven hours of cheaper electricity
- Economy 10 gives 10 hours.
Energy firms are starting to offer other time-of-use tariffs for customers with smart meters.
To make the most of these tariffs, you need to use a certain proportion of electricity during the cheaper hours. Such as heating your home with electric storage heaters or heating your water or running appliances overnight. Use less than 30% on the cheaper rate and you might be better off on a single-rate electricity tariff.
Since 1 September 2017, all energy companies with more than 50,000 customers must make their single-rate tariffs available to customers with restricted meters, including Economy 10 meters and white meters.
If you think you’d be better off on a single-rate tariff, and your meter needs changing to make this possible, your supplier cannot charge you to install a new meter. For a faster fix, some suppliers are willing to add the peak and off-peak readings together and charge you a single rate.
Smart meter tariffs
Now that smart meters are being rolled out, some companies have begun offering deals specifically for households with a smart meter.
Smart meters track the amount of gas and electricity you use, and show you how much it’s costing you. Find out more about smart meters and how they work.
Some smart meter-specific tariffs are companies’ cheapest deals, for example Nabuh Energy, Solarplicity and Utilita (correct Sept 2018). You might not need a smart meter already installed to sign up to one of these deals, but it’ll be a condition of the tariff that you’ll need to get one installed.
Renewable electricity tariffs
There has been an explosion in the number of ‘green’ energy deals over the past year, since rules were removed limiting the number of deals energy companies could sell at once.
Some of these deals are among the cheapest on the market, while others are among the most pricey. Plus there is no set definition of what a ‘renewable’ tariff must include. Some companies play a part in funding or generating renewable electricity or ‘green’ biogas, others buy the equivalent of what their customers use in renewable electricity. Companies also offer different proportions of renewable electricity, and some offer other social or environmental perks.
If you’re keen to support renewable electricity, check your potential supplier’s arrangement.
Before you switch energy supplier, check the terms and conditions of your deal.
If you want to leave a fixed-term tariff before the end of the contract, you may have to pay an exit fee. But don’t let this put you off:
- Some of the cheapest deals on the market have no exit fees, despite being fixed deals – so why not switch? If prices go up, you are protected; but if they go down, you could always switch at any time at no cost.
- Your supplier can't charge an exit fee if you switch in the last 49 days of your fixed tariff.
- You should not have to pay exit fees if you’re moving home, provided you keep your tariff but just change the address.
- If you switch tariff but stay with the same provider, some may waive the exit fee - so do ask.
- Most fixed deals have exit fees of between £5-£30 per fuel, so it’s worth working out whether you would still be better off switching and paying the exit fees.
Change how you pay for energy
You can sometimes get a discount off your energy bills if you pay by monthly direct debit. The amount you pay each month will be worked out by your gas or electricity supplier. It's based on the amount of energy you use, or are likely to use, in each year, divided by 12.
If you’re happy to view your bills online, opt for paperless billing. Requesting paper bills will often add to the cost of your tariff.
Keep your energy bills in check
Whether or not you've just switched, there are several things you can do to keep your bills accurate.
Send your supplier meter readings
Make sure you give regular gas and electricity meter readings to your supplier, to make sure you're being charged only for the energy you're actually using, rather than you energy company's estimate.
Take a look at our guide to understanding your bill to make sure you're paying the right amount.
Avoid being overcharged for energy
- If your energy company increases prices, read your meter and submit the reading on the day the rise takes effect. This way, you get the lower price for the maximum period.
- If your bills are based on an estimated reading, regularly check them against your own meter readings. If different, contact your supplier.
- Question direct debit changes. If you do not agree with them, contact your energy company and ask for further clarification. Remember that it's normal to be in credit in the summer.
- If you are disproportionately in credit, ask for a refund.
- If your direct debit is changing, your supplier must tell you why. If your payments are going up, it must give you at least 10 working days' notice before the new amount is debited - either by a separate letter or email, or as a note on your bill. If it doesn’t, complain and ask for compensation. You can also make a claim under the Direct Debit Guarantee.
- Know the end date for your fixed tariff and switch to a new deal before it expires. This way you’ll avoid being moved automatically onto your supplier’s default tariff, which is unlikely to be its cheapest.
- Use our letter template to complain to your energy supplier about being overcharged.
For more information, see our five tips to avoid your energy company overcharging.