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 more than a hundred 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.
Click the links below to jump straight to a section:
- Find out how much gas and electricity you use
- How to compare energy prices
- Fixed and variable tariffs: what’s the difference?
- Fixed and variable tariffs: which is cheaper?
- Economy 7, Economy 10 and time-of-use tariffs
- Smart meter tariffs
- Renewable energy tariffs
- How to avoid paying exit fees
- Change how you pay energy bills to save money
- How to stop your energy company overcharging
Once you've read our tips, use Which? Switch to see how much money you can save.
Use your online account, annual statement 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.
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.
Once you've given a comparison site your information, you'll be able to compare the deals available to you. You’ll often be given an estimated saving for each tariff, compared with your current deal.
Check how much each deal will cost you per month, to double check against your current payments.
What to watch out for when comparing gas and electricity prices:
- Energy comparison sites don’t have to show every available tariff. You might find a cheap deal that’s exclusive to one particular website, or available only if you contact the supplier directly.
- Some websites automatically show you a limited selection of deals, for example only those they can sell you, or just deals from the biggest companies. Check that the setting shows you all available deals.
Our independent energy price comparison service, Which? Switch, includes deals that it can’t sell - so you know you’ll see the best deals and where to get them from.
If you want the same supplier for your gas and your electricity, a dual-fuel deal often works out cheaper than buying the two fuels on separate tariffs.
But sometimes you can save even more by buying gas and electricity from two different suppliers. In January 2019, we found you could pay £33 less per year by buying gas and electricity from two separate suppliers. But in November 2018 we found that doing this would save you far less; just £13 per year. 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.
Energy deals come in two basic types: fixed or variable.
Variable tariffs, often also called ‘standard' tariffs, can change price each time your supplier changes its rates. They’re rarely energy suppliers’ cheapest tariffs.
Your supplier’s default tariff will often be a variable deal. 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’.
Default tariffs are currently subject to a price cap. Energy regulator Ofgem says that this ensures consumers pay a ‘fair’ price for energy. The cap is effectively on the price charged for each unit of energy – not a cap on your total bill.
It’s still worth switching if your tariff is subject to the price cap. The cap is re-assessed every six months and can be increased, allowing energy firms to charge more. Plus you can still save more than £100 a year by switching from a deal set at the level of the price cap, to the cheapest deal on the market.
Many pricey deals aren't affected by the price cap, exclusive Which? research revealed. It doesn't apply to all variable deals – only the ones you can be transferred to automatically. Plus some companies offer cheap variable deals.
Also, unusually, British Gas and Scottish Power’s default tariffs are fixed, rather than variable, deals.
Fixed tariffs have the rate you pay for each unit of energy you use set 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.
Between January 2017 and January 2019, the cost of variable tariffs across the Big Six suppliers increased on average by 9% (£93 a year). This takes into account the price cap, which currently limits the amount companies can charge for their standard or default deals.
In contrast their cheapest fixed deals increased by 2% on average (£26).
The cheapest deals on sale are often one-year fixed tariffs. It's more likely that fixed tariffs are competitively priced, as suppliers compete for customers, so they can't afford to reduce them by as much.
Our monthly research into energy prices reveals that customers of the Big Six energy companies who are on a variable or default tariff could save up to £169 a year by switching to the cheapest deal on the market (correct January 2019). Before the price cap came into force, you could save more by switching.
Even 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, are valid for up to four years. So make sure you check energy prices before you switch.
Economy 7 and Economy 10 are the two most common time-of-use tariffs. If you're on one of these, you’ll probably have a special electricity meter that provides two different readings (also known as a 'two-rate meter').
This will change though - you won't need a special meter as smart meters become more widespread. These will enable all homes with smart meters to access time-of-use tariffs. A few firms are offering these already.
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.
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.
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 British Gas, First Utility and Utilita (correct January 2019). 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.
There has been an explosion in the number of ‘green’ energy deals, 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.
Default renewable tariffs from Ecotricity and Good Energy are not subject to the government's price cap.
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. If prices go up, you are protected; but if they go down, you can 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.
You can often 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.
It often costs slightly more to pay when you receive your bill. If you pay-as-you-go for energy, there’s another price cap in place, limiting how much suppliers can charge. Find out more and whether a prepayment energy meter is right for you.
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.
Whether or not you've just switched, there are several things you can do to keep your bills accurate.
Send your supplier regular meter readings to make sure you're being charged only for the energy you're actually using, rather than you energy company's estimate. Without these, your energy firm will estimate your usage.
If you’re billed or pay monthly, it’s a good idea to send monthly meter readings. Some energy firms will send you reminders to do so, and you can often submit them online.
Besides sending regular meter readings, follow these steps to keep your energy bills in check:
- 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: my energy supplier has raised prices, do I have to pay?