How to rebel against energy price rises

December's cold weather will add around £50 to the average energy bill. On top of that, suppliers are hitting customers with price rises. But you don't have to accept them, says Ruth Jackson. Here, she explains how to avoid the increases - and why switching supplier is a good idea.

By Ruth Jackson-Kirby

published 21 December 2010

in Features

It's freezing outside. So what we all want to do is curl up inside by a nice hot radiator and forget about the cold. But if the energy firms have their way we'll soon be shivering indoors as well as out. npower is the latest provider to put its prices up. Its customers will see their bills rise by 5.1% from 4 January. That will add around £60 to the average annual dual fuel bill. npower is the fourth of the 'Big Six' energy companies to up its prices in recent months. Scottish Power, Scottish & Southern and British Gas have all pushed up their tariffs. That leaves just Eon and EDF still offering lower prices. EDF have promised not to introduce any increases before March but Eon are now expected to put their prices up in the New Year.

With this month's arctic conditions expected to add around £50 to people's energy bills for the month the last thing we all need is a price rise on top. So what can you do to minimise the financial hit of this cold snap?

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How to reject the price rises

You can avoid the price rises for much of the rest of winter by using a little known regulatory rule, says Miles Brignall in The Guardian. Under the rule customers are allowed to reject price rises while they are in the process of switching supplier. You can reject the price rise up to 20 working days after receiving the letter informing them of the rise. Respond within that time and reject and you will enjoy the pre-rise prices until your switch to another supplier is complete. You then have 15 working days to find a new supplier and then the switch itself usually takes around six weeks. So time it all right and you can stay on a lower price until the worst of your winter heating usage is over.

Why you should switch

Even if you aren't wanting to reject your provider's latest price rises you probably should still switch to a different energy firm. If you have never switched before you could save as much as £370 a year by moving to a cheaper deal. And if you have switched before you should consider moving again. Prices have been rising fast the average energy bill has doubled in the last five years so if you haven't moved provider in the last two years you could save money by switching again. To get the lowest possible bills you should switch supplier every one to two years says Mark Todd, the managing director of Energyhelplineon Thisismoney.co.uk.

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Changing supplier is so unbelievably simple there really is no excuse not to. No-one needs to visit your home, there are no changes to your pipes or central heating system. You simply need to spend ten minutes online and then hand in a meter reading when asked and that's it.

If you can be bothered then spend an extra second ticking the box to say you'll switch to online only and you'll save even more money. With these deals you manage your account online and don't receive any bills in the post. They are usually around £100 cheaper a year than a standard deal.

Also consider paying by direct debit, it's cheaper than paying on receipt of the bill and allows you to spread the cost of your heating across the year so there are no big shocks in winter. The average household would save between £50 and £200 a year by paying by direct debit.

To fix or not to fix?

When you go to switch supplier you will be offered fixed or variable deals. A fixed deal does exactly what the name suggests your energy prices will be fixed for the length of the deal. You will pay slightly more for that security but given the constant rise in prices it is an attractive proposition.

The downside to a fixed deal is that if prices were to drop highly unlikely but you never know and you wanted to break your deal to switch to a cheaper deal you would have to pay an exit penalty. The penalties are usually around £20-£50. But given that when wholesale prices dropped by 40% last year the energy firms only dropped rates by 10% it's almost impossible to conceive of a situation where they would drop far enough to make a fixed deal worth breaking.

So switch, fix and protect yourself from any more price rises.

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Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.