Fixed energy bills cost 27% more!

 

Energy prices are set to soar this winter, but households are being warned against locking into an expensive fixed-rate tariff.

Bob and Anne Henderson

Can't afford it: Read below how pensioners Bob and Anne have been hit with hike

Scottish & Southern Energy announced a 9.4% gas price increase from December 1, adding £67 to the average annual bill.

Other big suppliers may follow, but taking a fixed rate to guard against price increases may be a false economy.

Fixed tariffs can cost 27% more than online deals, adding £231 per year to the average energy bill. But experts say prices are unlikely to rise by this amount over the coming year.

Yesterday, EDF announced it will freeze standard gas and electricity prices until March 2011. EDF's best online tariff - where bills are sent by email - costs £867 per year for the average home. But this rises to £1,098 for the annual fix - a difference of 27%.

Scottish Power's online deal is £962, whereas its fixed tariff is £1,226, according to comparison site Moneysupermarket.com.

Ovo energy is the only provider to offer the same price for its online and fixed tariff customers, at an average cost of £993.

Ann Robinson, of comparison site uSwitch.com, says: 'Fixed tariffs can be expensive; it is only worth paying the extra if you are confident prices will increase by that much.

'There are two key steps to keeping a lid on your energy bills - make your home more energy efficient, and switch to a competitive energy plan so you pay less for the energy you use. This could save around £422 per year.'

With fixed-rate tariffs, it is the price for the units of energy that is fixed - not the amount you pay, which still depends on how much gas and electricity you use.

Online tariffs are typically 15% cheaper than tariffs where people receive paper bills.

An EDF spokeswoman says customers pay a premium for fixed tariffs to 'cover the risk suppliers face with a variable wholesale energy market'.

With energy costs already 31% - or £238 - more expensive than in January 2008, charity Age UK says millions of older people have resorted to drastic measures to fend off the cold, such as staying in bed during the day.

All households should receive an 'annual statement' by Christmas stating annual usage and the exact name of your tariff to allow proper cost comparisons when switching.

Go to a comparison site such as thisismoney.co.uk/householdbills or if you prefer to phone: Energy Helpline (0800 074 0745), Moneysupermarket.com (0845 345 1296), Simply switch (08000 111 395) and Uswitch (0800 404 7908).

If you do not want to switch, then pay your bills by monthly direct debit and tell your supplier you want to be moved to its cheapest tarrif. Submit regular meter readings to ensure your bills are not based on estimates.

If you are in fuel poverty - where one-tenth or more of your income goes on gas and electricity - ask if you are eligible for your supplier's 'social tariff', which gives a discount to the most vulnerable customers.

Your energy supplier may also offer a lower-cost scheme for older people.

The government, energy suppliers and local authorities all provide grants to make homes more energy efficient, such as free loft or cavity wall insulation. To find out about grants, go to www.energysavingtrust.org.uk or call 0800 512 012 for free and independent advice.

Contact Age UK on 0800 169 65 65 to obtain the free guide Winter Wrapped Up. Or you can call the Home Heat Helpline on 0800 33 66 99 for advice on how to reduce bills.

 

'We can't afford hike'

Bob and Anne Henderson

Bob: 'I am reluctant to manage my account online'

Bob and Anne Henderson will be hit by Scottish & Southern's gas hike, which comes in just three weeks before Christmas.

The pensioners, who live near Newcastle, already pay about £800-a-year to heat their bungalow, and say they live in fear of rising bills.

The Hendersons (left) spend most of their time at home, and say keeping warm this winter is a big worry.

Mr Henderson, 70, says: 'We switched suppliers about three years ago, which was straightforward, but I think it's time to switch again.

'I am reluctant to manage my account online, as I like paper bills, so it is annoying that these are the cheapest deals.

'We have loft and cavity wall insulation and use our appliances very carefully.

'It makes me angry reading about energy suppliers' annual profits when we are struggling to get by on the state pension. We simply can't afford such large increases to our bills.'

 

HOW TO REDUCE YOUR BILL

• TURN your thermostat down. reducing your room temperature by 1°C can save, on average, £50 per year.

• IS YOUR water too hot? Your cylinder thermostat should be set at 60°C/140°F.

• DO NOT unnecessarily leave appliances on standby or charge.

• USE energy-saving lightbulbs. These save you around £45 over the lifetime of the bulb.

• WASH clothes at 30°C, and always wash a full load.