How can you cut your energy bills?

Rising energy bills are nasty. No one whose real income has been static for nigh on a decade will be pleased to be hit with an 8.2% in their domestic fuel bills – as customers of SSE were this week. So how can you cut costs?

You will have read thousands of articles over the years about setting your thermostat one degree lower, wearing extra jumpers, taking the state up on its offers of subsidised insulation and boiler loans, and putting old-fashioned draught-excluding snakes along the bottom of your front door.

And you will know that you should encourage competition by moving suppliers to cut your bills – just as Ed Miliband tells The Mail on Sunday he has.

But we all know the real answers lie in more macro areas. Some 9% of the average fuel bill is made up of the cost of social and renewable policies successive governments have decided to hide in your energy bill.

It doesn’t matter how many door snakes you use. You can’t make that 9% spent on welfare provision vanish. And unless the government can be persuaded to repeal the rules that commit us to supplying 15% of our energy from renewable sources, you can’t stop them rising either: by 2030, says the FT, these stealth taxes will make up 41% of the average fuel bill.

But the UK’s high prices aren’t just about these levies. They are also about high gas prices, says the FT. Natural gas “which heats most British homes” costs more as supplies from the North Sea dwindle.

Then there are transmission costs – which make up around 20% of the average bill, and according to SSE at least are 10% higher than they were a year ago.

The final culprit is lack of transparency, something that more often than not covers up lack of competition. The energy firms insist they are not making super profits but “there is a still a lack of clarity about companies’ trading profits”, particularly given that several are foreign-owned, “so splitting out the UK part is difficult.”

So what do you do if you really want to cut your bills? You could switch to a fixed tariff from one of the cheaper independent providers (try Spark Energy or First Utility).

Next check that you aren’t overpaying on your monthly direct debits: according to the Daily Mail, the big six are sitting on more than £2bn worth of pre-paid bills and earning interest of £36m (that’s interest you aren’t earning) on it.

These are only ever going to be short-term solutions. Otherwise you need to vote for a government that is genuinely anti-stealth taxes, keen on cutting overall taxation, genuinely pro-competition and prepared to re-evaluate the UK’s embrace of green subsidies. We just aren’t sure where you’ll find one these days. Best keep going with the snakes.

  • Tomrob

    Switch supplier by all means but do some due diligence first. There’s plenty of stories doing the rounds about First Utility customers, for example, ending up much worse off than before they switched due to the cockups First Utility make in (mis)managing customer accounts that’s even before allowing for the time cost incurred by customers in trying to get any sense out of their shambolic and unresponsive customer ‘service’ team.

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