The way we pay for our energy has been through some big changes over the past decade. The days of meter readers and paper bills are fading, to be replaced by smart meters that automatically report our usage back to our provider and online billing. So far these changes have benefited energy firms more than customers. Smart meters save them having to pay meter readers and e-bills save them print and postage costs. However, recent changes could see the benefit shift back towards customers.
One new idea is Scottish Power's PowerUp scheme, which lets customers buy their electricity and gas in daily or monthly bundles. The idea is that people will refuel their house in a similar way to how they refuel their car. "You go to the garage and put £50 in your car. Inherently you know that will last you two to three weeks. We thought why don't we do the same thing with energy," says Keith Anderson, chief executive at Scottish Power.
The key difference with this scheme compared with many tariffs is that customers don't pay a standing charge. While it won't work out cheaper for everyone, it might be useful for properties that are often empty, such as second homes, as there's nothing to pay on days when no energy is used.
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Another fairly new idea is to use people power to get a better rate. Groups such as The Big Deal or MoneySavingExpert.com's Cheap Energy Club organise collective energy switches, under which they sign up thousands of members and then ask the energy firms to bid for the group's custom. This can result in companies offering good deals in order to secure a large number of new customers. MoneySavingExpert's last switch saw 135,000 people move firms, with some reporting annual savings of over £1,000.
With these kind of deals, you join, they'll negotiate the deals and show you what is on offer, and you then choose whether to switch or not. If you decide to go down this road, make sure you read the small print of the arrangement, and go with a service that continuously checks that you are on the cheapest deal. Otherwise, you may still be able to cut your energy bills with some simple tips.
Three top tips tocut your bills
The best way to save money on your energy bills is usually to switch providers. Despite the fact that many of us do energy is the second most-switched product now after car insurance two-thirds of us are still on expensive tariffs and missing out on significant average savings of up to £292, according to comparison site GoCompare.com. The key is to keep switching when your fixed-rate deal ends otherwise you will typically be back on an expensive variable rate. MoneySuperMarket.com, another comparison site, says that 120 fixed-rate deals will come to an end in the next two months. If yours is one of them, start shopping around.
Another way to put a dent in your bills is to turn the thermostat down. Reducing the temperature by one degree saves around £80-£85 a year. The Energy Saving Trust recommends heating your house to between 18 degrees and 21 degrees. Installing individual thermostats on your radiators will also cut your bills. These mean that you can switch off radiators in little-used rooms and turn down the heat in other rooms. This can save you as much as £155 a year.
When it's time to replace a household appliance, such as a fridge or washing machine, make sure you buy an energy-efficient one. You could cut your annual bills by up to £267 a year by choosing more energy-efficient appliances, according to Which. Finally, if you are still paying utility bills by cash or cheque, switch to direct debit and your energy provider will reward you. Most providers offer discounts worth as much as £100 a year for doing this.
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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.
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