UK Domestic Energy Price Guide


Energy price plans

According to OfGem, the UK’s gas and electricity regulator, over the winter of 2004/05 consumers paid £5.2 billion more for their gas and electricity than the year before.

However, prices are finally set to fall. Npower and Scottish and Southern have just reduced prices on selected tariffs and similar reductions are expected to follow across the market.

So what’s the best way to handle your amenities? We all know that we should be shopping around for the best gas and electricity prices but the array of price plans and offers available can confuse and dishearten even the most dedicated money saver. Yet switching to a more appropriate tariff can save you hundreds of pounds each year.

The range of options to be considered when switching plans can be very confusing and the benefits are not always clear, so we’ve set out the pros and cons of each type of tariff so that you can make an informed decision.

1. Online Plans

As internet connections have swept across the country, they have paved the way for a new way of controlling finances and bill payments, and have also given birth to new, cheaper gas and electricity tariffs.

Basically, online tariffs cost less for suppliers to maintain, allowing them to pass the savings on to you. For example, many UK supplier offer saving if you pay and review bills online. Not having paper bills is also good for the environment and you can enter your own meter readings, thus eliminating estimated bills and the risk of overpayment for good. You can also claim bonuses for doing your switching online.

2. Fixed price plans

At a time when the cost of living seems to be ever-increasing, fixed rates have become popular with homeowners and money borrowers, and a host of fixed price energy plans have cropped up in the market. But are they actually worth it?

The energy market changes much quicker than the mortgage market, so while homeowners are sensibly protecting themselves from imminent Bank of England base rate rises, they could also be needlessly tying themselves into more expensive tariffs by committing to fixed price plans.

You will have to pay a premium to fix you energy bills, but while it protects you from price hikes, you should check whether or not your bills will still go down with any price drop.

Signing up to a fixed plan also means that you have to stay with your supplier until your agreed term has expired and won’t be able to cash in on the benefits of switching.

You should also consider the cost when your fixed prices are unfrozen. Customers who signed up to Npower’s “Gas Guardian” tariff back in 2005 protected themselves from three price hikes last year, but the offer has now expired leaving thousands of customers with a 39 per cent rise in their gas bills, all in one go.

3. Green tariffs

The environmentally conscious consumer can now switch to a green energy plan which promises to provide a portion, or all of your energy used, from renewable, environmentally friendly sources. Smaller, green electricity suppliers such as Ecotricity are also cropping up to compete with the big energy players.

Obviously, using renewable energy means less pollution, reducing your carbon footprint and the damage to the environment. Some tariffs, such as Scottish Power’s “Green Energy H2O” option even allow you to make savings of £15.75 a year by going green. Scottish Power will also put £10.50 a year into their Green Energy Fund to support renewable energy projects. Other green tariffs like those offered by Npower and Powergen match your electricity consumption by putting the same amount into the national grid, from renewable sources like wind farms, at no extra cost to you.

However, there has been much in the press lately about the somewhat false advertising of green energy products. Signing up to many of the “green” tariffs does not always mean that suppliers will increase their green output; they simply have to meet the targets already set by law. So do your research to ensure that your energy really does come from green, renewable sources.

4. Capped tariffs

These are similar to fixed price plans in that your cost is set at a fixed cost for a fixed time. This is per unit though, so your actual bill will vary depending on your usage.

5. Over 60s tariffs

The massive increases in utility bills over the past few years have had a huge impact on the elderly who have faced ever increasing difficulties in paying their bills. As a result of this, the Government, charities and suppliers have teamed up to offer special tariffs and discounts for the over 60s. Winter Fuel payments are also available.

If you’re having trouble paying your fuel bills, no matter what age you are, contact the Home Heat Helpline,, on 0800 33 66 99 for free advice.

6. Dual fuel

Many suppliers offer further discounts if you choose to get both your gas and your electricity from them. But you should still shop around to be sure that you are getting the best deal.

8. Bonuses and discounts

Lots of companies also offer bonuses and extra discounts for switching online, for being loyal and staying with them for a certain amount of time or for agreeing to receive your bills electronically (this isn’t the same as an online account). However, you should be wary of bonuses and discounts that are awarded after a set period, causing you to miss out on deals elsewhere.

9. Direct Debit

Using Direct Debit to pay your utility bills can save you around £2 a month, and ensures that your bills are always paid on time.

But be careful if you have estimated bills as you can end up overpaying and the excess can prove difficult to get back. A survey by gas and electricity watchdog Energywatch cited 11 per cent of customers complaining about this problem.

You also need to make sure that there is always enough in the bank when paying by Direct Debit, otherwise you could face fines by your bank.

10. Switching

In such a fast-paced market, one of the easiest ways to save money is to switch to a new supplier. You should check the market for the best deals every six months or so and bear in mind that prices are expected to fall this year, so tying yourself to one company isn’t the best idea, especially as you can already get very competitive prices on more flexible tariffs.


Source by James Bergin


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