Take steps to keep a lid on energy costs as prices are on the up

Esther Shaw / 01 August 2016

The costs of the cheapest energy tariffs have risen for the first time in 2016, as a host of suppliers pull their best deals; here’s how you can avoid paying more.

With many parts of the country enjoying warmer weather, energy bills may be the very last thing on your mind.

But you can’t afford to ignore your household gas and electricity completely right now, as prices are on the up.

Over the past few weeks, the costs of the cheapest energy tariffs have risen for the first time in 2016, as a host of suppliers have pulled their best deals.

In fact, all of the “top ten” cheapest deals from June have now been removed, according to Energyhelpline.

Further research from the comparison site shows that in just the last few weeks, the top ten cheapest deals have gone up in price by £46 or 6 per cent.

It's not too late to budget to be better off in 2016

Prices had been falling

Over the last three years, we have seen a period of generally falling wholesale energy prices. This gave rise to a competitive price war in the household energy market, fuelled by lots of new entrants.

As a result, the “best buy” 12-month dual-fuel fixed tariffs had tumbled below £1,000 a year – and then all the way down to £740 this year. But this all looks set to change.

Why are prices rising?

There are a number of factors contributing towards this upward movement in prices, including rising wholesale costs and Brexit uncertainty.

This has led to a host of providers withdrawing their best deals and introducing new, more expensive tariffs.

Take action

With prices on the rise again – a trend which is expected to continue in the coming months – now is the time to take action and switch to one of the more competitively-priced deals.

While switching may not be at the top of your “to-do list” in the summer, it makes sense to make the move ahead of the colder weather in the autumn and winter when your usage will go up.

You may have long been a loyal customer of one of the “Big Six” suppliers, but the key is to look further afield, as almost all of the top deals currently available are from newer, smaller suppliers.

More people are switching

New figures from Energy UK show summer switching reached a new high in June, with more than 360,000 customers making the move. This is a huge 58 per cent increase from June 2014.

Further figures show that more than two million customers have switched in the first half of the year – almost a million more than in the first six months of 2014.

The latest electricity switching data also shows over 120,000 customers switched to small and mid-tier suppliers in June; this is a third of all switches for the month.

Which tariff to choose?

Historically, variable tariffs have been cheaper. With this type of tariff, the price can go up or down.

However, at present, some of the cheapest rates are being offered on one-year fixes.

A fix will give you a fixed price for a set period; this can make it easier to budget.

Even through prices are on the up, you may still be able to get a fixed deal for around £760.

Be more energy efficient

As well as switching to a more competitive tariff, one of the easiest ways to keep a lid on gas and electricity costs is by being more energy efficient. Here are a few simple steps you can take around the home:

• Switch gadgets such as TVs and games consoles off standby

• Change to energy-saving lightbulbs

• Turn the thermostat down by one degree

• Move furniture away from radiators

• Wash clothes at lower temperatures

• Don’t overfill the kettle

• Take a shorter shower.

More on saving money by being energy efficient

Spend now, save later

Replace your boiler 

The older your boiler, the more inefficient it could be, so you may want to consider upgrading to a new A-rated model. While this could be pricey – at around £2,000 – you will soon recoup the money you spend in savings on your energy bills.

Invest in insulation 

It might cost you a few hundred pounds to install loft insulation at the recommended depth of 270mm, but once again, you will soon recoup the cost. 

Equally, a cheaper insulating option is to buy foam pipe jackets for your pipes; this should only cost you a few pounds per metre.

You can also save both heat and money by wrapping your water tank.

Reduce your energy consumption in the summer

In addition to these simple steps, with the hotter weather now upon us, it is worth making a few “seasonal” changes around the home to reduce your energy consumption, and thereby lower your energy bill.

For example, if you don’t already, you could think about drying your clothes on the washing line, rather than using a tumble drier.

It’s also worth filling your fridge, as fridges run much more efficiently when they aren’t empty. That said, it’s important not to over-fill your fridge, as it does need some space and air to run at an optimum level.

If you are heading away on holiday, you should uses timer for your lights to save money. These plug straight into your wall and often allow you to programme in several time slots. In addition, you should turn your hot water system off altogether. 

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The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.