As winter rolls in it is more important than ever to switch your energy supplier and save a lot of cash. There are many bills to pay in life so paying more than necessary should be avoided where possible. This step to step guide shows my approach to the process and the key things to consider. Any savings can be used for acquiring assets such as investments rather than losing the cash forever.
Why you should switch you supplier regularly
The main reason why you should switch your supplier is that in the energy industry loyalty does not pay. Energy suppliers know that a lot of customers believe that they will be treated well by staying with the same provider for a long time, therefore are very unlikely to change a supplier.
Companies exploit this by jacking up the costs once the initial, usually cheaper, contract period has elapsed by moving you to the deceptively named standard tariff. In other cases customers simply cannot be bothered to switch as they see this as a hassle or think that the process is difficult. These reasons should be disregarded as I will show here.
Know how much your use in kWh
Knowing your annual usage is critical as it enables you to calculate how much a prospective deal will cost. The units to use for energy are Kilowatt hours (kWh). 1kWh is equal to 3.6 megajoules. For a constant supply, overall energy used is equivalent to the power supplied (kilowatts) in for the period in hours. It is not difficult find out your overall use figure; this can be done by recording meter readings for a certain period or obtained from your energy supply account and bills.
Above is an example for my electricity only usage of about 5.2 kWh a day or 1,898 kWh per year.
Compare energy suppliers’ tariffs
The next step is to compare different supplier tariffs when your contract comes to an end. If it is a fixed term contract, you can do this from 49 days before the end date. Within this period you can switch without paying an exit fee.
Look for 2 key pieces of information; the daily standing charge and usage per unit. The standing charge is fixed while the usage per unit determines costs according to your needs. Armed with the annual usage information and tariff information, you can estimate with reasonable accuracy how much you will spend with different suppliers. The following shows the figures I used while carrying out my recent electricity supplier switch.
|Current Supplier||Renewal offer – current Supplier||Best Quote – new Supplier|
|Standing charge (daily)||17.47p x 365 = £63,77||17.17p x 365 = £62,67||21.20p x 365 = £77.38|
|Usage per unit||14.25p/ kWh x 1,898 = £270,46||18.49p/ kWh x 1,898 = £350,94||13.60p/ kWh x 1,898 = £258.13|
|Total per year||£334.25||£413,61||£335.51|
Annual Electricity Supplier Comparisons
Even though I have not managed to reduce my annual bill, it is projected to remain about the same which is less than inflation and 25% less than if I had been loyal to my current supplier. It is worth noting the renewal offer from you current supplier but I have always found this to be more expensive than the previous tariff or other suppliers’ offers.
Make the switch
There are numerous websites which can be used to compare energy suppliers once you get to that 49 day final period. All you need are details of your current tariff and estimate usage. These online services are generally good but care should be taken when using them as they do not facilitate the switch to all suppliers on the market.
This is not much of a problem as it is only a few extra steps to contact the other, often cheaper, suppliers directly and request a switch. Once you give the instruction the switch is painless, there will be no interruption in supply and should take about 3 weeks. Both companies will handle the changeover and all you need to do is supply the final meter readings.
Notes on gas supply
If you also have a gas supply the steps above apply. I always find that it works out better value to avoid using dual-fuel tariffs where a single supplier provides both gas and electricity. A dual-fuel tariff seems easier to manage but it is definitely not cost effective.
For gas the meter readings refer to recordings of gas volume consumed in cubic metres (m³) or cubic feet (ft³) for older ones. However, as with electricity, customers are billed in kWh following a conversion.
As shown above it can be tricky to determine the best deal for energy. The table provided and tips within this article should make that decision easier and lead to long term savings if applied consistently. It is also useful to set up reminders and to document essential tariff details such as name, switch date, cost rates, start date, log in details etc. The next switch will come before you know it.
I recommended switching energy supplier once a year separately for electricity and gas supplies in order to get the best value. There are numerous small energy companies out there which offer a decent service and the best prices. In such a competitive industry there is no need for the customer to pay more than needed.