How to choose the most cost-efficient energy tariff for you
If making sense of your energy bill leaves you feeling more confused than a chameleon in a bag of skittles, you’re not alone.
According to a recent study by energy supplier, Powershop, which looked into Brits’ relationships with their energy supplier, the nation finds understanding their energy bill more challenging than cooking their first Christmas dinner.
In fact, receiving an energy bill has become such a frustrating experience, that 55% of Brits feel anxious when opening the dreaded envelope, and 23% of men find the ordeal more stressful than going for a job interview.
To calculate reduced rate VAT on your energy bill use this 5% VAT calculator.
While the jargon-filled communications are simply an annoyance to some, for others it can make the difference between paying above the odds and finding a deal that’s the most economical for them.
If you think you could benefit from changing energy supplier or tariff, read on to discover how to find the right deal for you.
Shop around
When it comes to choosing your energy supplier, it pays to shop around. Many believe the answer to an easy life is sticking with the same provider year in year out – 16% of Brits surveyed have never switched energy provider – but changing tariff is much simpler than you might think and could save up to £300 a year.
Things to consider when choosing a tariff are the price of energy per unit, how flexible you need the contract to be (for example, do you think you will be moving in the near future?) and what companies supply to your area. Using a comparison site is a really quick and easy way to track down a good deal, as they’ll do the leg work for you.
Once you’ve found a tariff that suits your needs, simply sign up online or give them a call with a recent energy bill to hand. Make sure that you take a meter reading on the day of transfer too, or you may end up being charged for energy used before the switch. Some providers may also charge a cancellation fee, so be sure to check this first.
Plus, if you’re concerned about having to inform your old energy provider of your change, don’t fret, as lots of companies will be happy to break the bad news for you!
Choosing the right type of tariff
At first glance, energy tariffs can be complex and confusing. To start off, you need to understand the two basic types of tariff to select from – a fixed price, or variable tariff.
While each of them has its own benefits, it’s worth getting to grips with each type to make an educated decision about what is most suitable for your set up:
- Fixed energy tariff – this guarantees that the price you pay per unit of energy remains the same for a defined period of time (usually a year). You still pay for the amount of energy you use, meaning monthly bills can fluctuate, but basic prices won’t go up or down.
- Variable energy tariff – this means that the price per unit of energy is not fixed and can go up or down in correlation with changes in wholesale energy or other industry costs. The main advantage of this type of tariff is that you can usually change tariff at any time with no exit fee.
Understanding the jargon
Results from Powershop’s study found that Brits are frequently left baffled by the jargon used by their energy provider, meaning they often don’t fully understand their bill. For example, over 20% of Brits don’t know what a ‘dual tariff’ is (FYI, it means that you can receive both your gas and electric from one supplier).
Many people choose to go down this route as it makes billing simpler and some providers offer good deals for doing so. Here are some more terms you need to know:
- Estimated bill – if you don’t supply your energy provider with meter readings, they will calculate your bill using an average or ‘estimate’, based on your previous usage.
- Standing charge – the charge that your energy provider bills for you to be connected to the main energy supply. While your bill will fluctuate with the amount of energy you use each month, the standing charge will remain the same.
- MSN – this means Meter Serial Number, the number that identifies your specific meter and ensures you are being billed correctly for your energy usage.
As you now know, changing energy tariff or supplier doesn’t need to be a chore. Many people stick with the same energy provider for years, clueless of the savings they could be benefitting from if they were to change.
So, spare a few minutes today to check out your options and you could well be on your way to becoming more energy bill savvy (with change to spare)!
Photo by taner ardalı
