How to Switch Your Energy Bills- Switch and Save With This Guide
Many people pay over the odds on their energy bills for the simple reason that they do not know how to switch. Switching energy bills can be complex, if you do not know where to look. However, using our handy guide you will learn everything you need to know about switching your energy provider and so much more. We have information on the types of energy bills, what type is best for you and the best deals around. So read below for some real money saving tips surrounding the seemingly complex world of energy bill switching.
Understanding Your Energy Bills
Your energy bill will be a charge sent to your house every month or every quarter based upon how much energy you have used. Energy usage in this sense is based around how much gas or electricity you have used over that time. However, the amount that you pay is not just as simple as how much you use, there are other costs imbedded in your energy bills which will increase the amount you pay every month.
To give you an example of a broken down electricity bill, here is what a £100 electricity bill is actually made of. £58 of the total goes towards the wholesale energy costs, supply costs and the profit margin of the energy company that you buy from. £16 of the £100 will be a distribution cost. £4 will be a transmission charge, £5 will be VAT, £11 will be an environmental charge imposed by the government and the final £5 will be other unspecified costs.
So to remove all the extra numbers and leave you with what you actually pay for your electricity, only £58 of the £100 is based on how much electricity you use. The other £42 is extras that come from a variety of sources. The same story is true for gas with only 67% of what you pay being directly linked to your actual gas usage.
Out of the £100 only roughly 60% of what you pay for you can actually control. The other 40% or so is made up of mandatory charges like VAT and the government environmental charge and other charges linked to the maintenance of the National Grid. So, for you to be able to change and control your energy bill you need to focus on that 60%.
However, that 60% comes in many different forms- forms you we learn about next.
What are the Different Types of Energy Bill?
When you buy from a certain energy provider you will end up paying for a certain type of energy bill. Here is a brief list of the different types of energy bills on the market, what they mean and how much they will cost you.
The first is a standard variable tariff (SVT) and is the default energy tariff set out by a provider. Essentially the main issue with the SVT is the fact that the price you pay is variable- this means that your bills every month/ quarter will fluctuate depending on the price set out by the supplier you are with. Generally, this means you end up paying more than you should as compared to a fixed price tariff.
Fixed price tariffs are the opposite of the above tariff. Here your energy costs will be set at a rate per kilowatt hour for the duration of the plan- this plan is usually 12 months but some may last as long as 3 years. This means that you are covered if the supplier decides to increase the rate but, you will suffer if the rate decreases as you will not receive the benefits.
Duel fuel energy tariffs deal with both your gas and your electricity bill in one. This means that for any issues regarding the bill you would only need one point of contact and most suppliers will provide a discount on duel fuel energy bills. However, this may not be the best deal so it is worth a check.
Economy 7 tariffs is a type of tariff that has two different prices. Prices during the day will be cheaper than during the night since demand is higher. These rates will be set for as long as you have the economy 7 meter installed.
These four types of energy tariffs are all different and so consequently will be best for different people. Below is a guide on which type is best for who.
Which Type of Bill is Best for You?
Here are the same four types of energy bills, in the same order, except this time there is a brief description as to which type of tariff would favour which type of household.
The standard variable tariff (SVT) is usually the most expensive type of tariff on the market. This is because the price can fluctuate while you are on this type of tariff and your bills will reflect this. Only in very strange scenarios will this be the best deal (regardless of the composition of your household or how much energy you use) as you will only see the benefits of an SVT when prices slump- something that the industry tries very hard to not make happen. If you are on an SVT, something you might be on if your fixed rate tariff ended or if you have recently moved, it is best to switch suppliers or at least tariffs as quick as possible.
Fixed price energy tariffs are probably the best go to for switching energy deals. With a fixed rate you will not suffer from price hikes by the industry and, although you will not benefit from drops in prices, these are rare enough events to not seriously affect your bottom line. However, there will be differences within the fixed price tariff market so it is worth shopping around and comparing deals to find the best one.
Duel fuel tariffs will be the simplest energy tariff on this list as you have both bills in one. But, not all duel fuel tariffs are created equal- so shop around and check prices, see if some have a fixed or a variable rate and check to see how long the contract lasts for.
The last is an economy 7 tariff. These types of tariffs will have different rates so it is important to know what those rates are before going forward. The main benefit of an economy 7 package is the reduced night time charge, if you do not see this benefit then it may be best to change. You could change to a different economy 7 package with different rates or just switch to a fixed rate tariff and have a safe option.
The next section will tell you everything you need to know about how to change your energy deals and some examples of great deals you can take advantage of now.
How to Switch Energy Provider?
This section here is probably the most important section in this article. Here are all the best methods for changing your energy provider and finding the best deal for you.
The first and most obvious would be to do a comparison. To do this you wold need to find a comparison website. This sounds simple, however, there are different types of comparison sites all of which do different things. The way to do so is this…
Firstly, you will need to find what type of tariff is best for you. Generally speaking, the best deal for most households will be a fixed rate tariff lasting for as long as you can. This is far superior to an SVT, in the long run will probably provide you with better value than a duel fuel tariff and you will see the benefits more acutely than an economy 7 plan. However, there will be exceptions to this so make sure you know your options first.
Then once you have your preferred deal go onto an impartial site like USwitch and use their postcode comparison tool to find what the best deals are in your area. The reason for using a postcode comparison tool rather than one dictated by price is because many deals are only available in certain areas. Therefore, if you do find a deal on a price comparison site you may go all the way through the application process before realising it is not available to you. Also, by using USwitch’s tool, you can specify what type of deal you are looking for in a certain area. For example, if you are looking for a fixed rate deal then you can type in your postcode and view only the best fixed rate deals in your area.
Once you have found a supplier you like you will need to do a few extra things. You will need to provide details to both your new and old suppliers. Then allow 21 days for the switch to be completed and you are done.
What are the Best Energy Deals Out There?
The best deals across the board, regardless of which type of plan you think is best for you, come from smaller providers rather than larger ones. Below is a graph showing relative prices from Ofgems June 2019 report…
What the graph shows is that it is often the smaller providers that will give you the best deal across all types of tariffs. Below is a list of some of the cheapest energy deals on the market, where to find them and what type of deal they are.
The cheapest variable or SVT is from Outfox the Market. They have an SVT called One Variable Tariff 6.0 and will cost you £71 every month and in total £848 a year. This is cheap for an SVT and will beat out larger competitors fixed deals as well. This is a really good option to look into and may end up better for you than other types of deals.
Avro is another small supplier who has the title of the cheapest fixed rate on the market. Their Simple and SuperSave tariff will cost you £897 a year which works out at £75 a month. Despite being a fixed rate it still ends up being more expensive than the cheapest SVT around- however, because it is fixed it will not fluctuate and so you will not suffer at the hands of price increases.
If you wanted to still shop with the big brands, then Scottish Power is the best of the Big Six providers in terms of price. Scottish Power will do their Super Saver deal for £971 a year, coming out at £81 a month. This is the worst option out of the three and proves that large providers will not give you the best deal.
(All facts correct at time of writing.)
The Best Tips for You
However you look for your next energy deal make sure you use these tips to find you the best deal and save you money.
Make sure you use comparison sights. In this article both price and postcode comparison sites were mentioned. Ideally you would use a postcode comparison site, but make sure you use some kind of comparison site. This will be the quickest and easiest way to compile the best deals and will save you both time and money.
Do not be taken in my fancy advertisements. Many of the smaller energy providers mentioned above do not run expensive advertisements and many of the bigger companies do. This will mean you will see far more of a larger energy company than you would a smaller one and far more exposure to their more expensive offers. Do not succumb to this and make sure to give the smaller companies a chance- you bank balance will thank you.