How to save on your energy bill
How to get the best energy deal
Article 2 of 4
How to get the best energy deal
One of the easiest ways to cut your gas and electricity bills is to make sure you get a good energy deal in the first place. Find out how to choose the best tariff for you.
Choosing the right tariff could save you several hundred pounds a year.
The more you know about the kind of energy tariff and features you’re looking for, the more likely you are to find an energy supplier and deal that you’re happy with.
Keep reading to find out more about the different types of energy tariff on offer. Or find out how to switch energy supplier, including a step-by-step guide through the process.
- Comparing gas and electricity prices: what you need to know
- Refer-a-friend switching incentives
- Fixed and variable energy tariffs: which is best for me?
- Fixed and variable energy tariffs: which is cheaper?
- Economy 7, Economy 10 and time-of-use tariffs
- Smart meter tariffs
- Renewable energy tariffs
- Should I bundle gas and electricity with broadband or boiler cover?
- How to avoid 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 compare gas and electricity prices and see how much money you can save.
Price comparison websites are the most popular way of looking for energy deals. They display a range of tariffs in price order, but they don’t have to show every available tariff on the market.
You might find a cheap deal that’s exclusive to one particular website, or available only if you contact the supplier directly. Some price comparison 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 the settings to make sure it 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.
Automatic switching services are becoming increasingly popular. Like price comparison websites, these aren’t necessarily able to compare every deal available. Check their terms and conditions carefully so you know how they pick which tariffs to switch you to.
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 slightly more by buying gas and electricity from two different suppliers. In October 2019, we found that you could pay £44 less a 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 a 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.
Many suppliers are now offering financial rewards for switching to them, including via refer-a-friend schemes. If you’re invited to switch via one of these, make sure you check:
- the price of the tariff you’ll be signing up to – is it the supplier’s cheapest deal?
- how the price compares with other deals on the market once the incentive payment is factored in
- whether there are other conditions attached to the switching incentive – for example being a customer for a certain period, or getting a smart meter – and whether you're happy with these
- if the supplier charges exit fees if you want to leave
- how good is the supplier’s customer service is. Check the best and worst energy companies for 2019.
Energy deals come in two basic types: fixed or variable. Which would suit you better will depend on how much certainty you want over the price you pay, and how often you want to switch.
Variable tariffs, often also called 'standard' tariffs, can change price each time your supplier changes its rates.
Your supplier’s default (or out-of-contract) 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's very likely that you're on its standard variable tariff, or default tariff’.
Default tariffs are currently subject to a price cap. This is effectively a cap on the price charged for each unit of energy – not a cap on your total bill.
However, some new small energy firms offer variable tariffs that are much cheaper than those from the large suppliers. They too can change their rates, but are still worth considering if you’re looking to pay less without the tie-in of a fixed contract.
Fixed tariffs set the rate you pay for each unit of energy you use for a certain period of time (one or two years, for example).
This means 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 its prices drop, either.
The very cheapest deals on the market tend to be a mixture of fixed and variable. So it’s not as simple as picking one type to guarantee you get the cheapest rates.
But when we checked in October 2019, 41 of the cheapest 50 tariffs on sale were fixed deals.
These tend to be one-year fixed deals – you'll pay the same price per kilowatt hour of gas or electricity you use for the length of the tariff. Energy firms compete to tempt customers to join them on these tariffs, which is why they're attractively priced.
The risk of cheap variable deals is that companies can change the prices if, for example, the price of wholesale energy rises. So the cheap deal you sign up for in the summer might get more expensive in winter.
However, there's a price cap on some variable deals. This applies to out-of-contract or default tariffs, which you’re likely to be on if you haven’t switched supplier or changed your tariff recently.
The cap limits the amount companies can charge customers on these tariffs. It doesn’t mean you'll get a cheap rate, though.
It’s still worth switching if your tariff is subject to the price cap, because it's probably not your supplier’s cheapest deal. You can save more than £300 a year by switching from a deal set at the level of the price cap, to the cheapest deal on the market (correct October 2019).
To complicate things further, while most of the cheapest tariffs we found in October 2019 were fixed deals, some of the most expensive ones were also fixed tariffs. These tend to be for longer terms, for example 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 – as smart meters become more widespread, special meters won't be necessary. This 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 some appliances overnight (though you shouldn't leave your washing machine, dishwasher or tumble dryer running when you're asleep). Use less than 30% on the cheaper rate and you might be better off on a single-rate electricity tariff.
If you have a time-of-use tariff and don’t think it’s the best deal for you, all energy companies with more than 50,000 customers must make their single-rate tariffs available to customers with restricted meters. This includes 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.
Some companies offer deals specifically for households with a smart meter.
Smart meters track the amount of gas and electricity you use, send this to your energy company automatically, and show you how much it’s costing you. Find out more about smart meters and how they work.
You might not need to have a smart meter already installed in order to sign up to one of these deals, but it will 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. 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 simply 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.
You can buy multiple services from some energy firms, including broadband, mobile phone packages, boiler cover and smart home devices. Utility Warehouse was the first to bundle utilities contracts, but now British Gas, Shell Energy and SSE are among the companies selling multiple products and services.
Utility Warehouse customers value the convenience of having multiple services combined into one monthly bill. If you’re tempted to buy more than gas and electricity from your energy company, check whether it would be cheaper to buy the equivalent from separate firms. When we checked in 2018, it usually was.
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.
- Not all fixed deals have exit fees. Choose one of these and, 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 – it's worth asking.
- Exit fees are usually between £5 and £30 per fuel, so it’s worth working out whether you'd still be better off switching and paying the exit fees.
You can sometimes get a discount 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. Without these, your energy firm will estimate your usage. If you have a smart meter, it should send these automatically. You can choose between monthly, daily and half-hourly readings.
If you’re billed or pay monthly, and don't have a smart meter, 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 you think you may be eligible for extra help with your energy bills, check if you can get the Warm Home Discount, Cold Weather Payment or Winter Fuel payment, or a free boiler or insulation.
- 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.
- Question direct debit changes. If you don't agree with them, contact your energy company and ask it to explain how and why it has calculated the change.
- If your direct debit payments are increasing, your supplier 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.
- If you are disproportionately in credit, ask for a refund. But remember that it's normal to be in credit in the summer.
- 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 on to 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?