Archives for posts with tag: Tariff

Gas and electricity price rises have many people wondering: ‘Should I switch to a fixed price energy tariff?’

With a fixed price energy tariff, your unit rates stay at one price for the duration of the plan, so you’re protected if prices go up. (Fixed price does not mean that you pay the same price however much energy you use.) However, fixed price plans can be more expensive than cheap online deals.

Use this chart to see how much (or how little) a fixed plan could save you if prices go up. (Click to see a larger version.)

For more info, and to compare prices, check out our guide to fixed price energy.

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By Lauren Pope, content editor at uSwitch.com

Could you send 13,000 meter readings a year? You’d get an accurate bill, that’s for sure, but by my calculations (at an average 10 minutes a reading) it would take you 2166 hours, or 180 days a year to do it.

However (as I learnt yesterday at an event organised by First Utility), that’s just what a smart meter does. An electricity smart meter takes 12720 meter readings a year, while a gas smart meter takes 365.

The readings are sent straight to the energy supplier automatically so there’s no need for someone to come and take it for you – and you always get accurate bills. Plus, they could help you to cut your energy costs by giving you lots of data and information about how much energy you’re using and when you’re using it. (According to First Utility, one of its customers saved £600 in the first six months alone, another cut his bills by 50%.)

If you’re thinking ‘I like the sound of that’, then I have good news for you: we’re all getting smart meters by 2020 and, if you’re really keen, you might even be able to get one now.

First Utility is a relatively new energy company it has made its mark by offering smart meters to its customers since it was launched in 2008, and introducing its ‘Smart as Standard’ tariff in October 2010.

But is First Utility ahead of the curve or jumping the gun when it comes to smart meters?

The government has yet to set the technical specifications which smart meters will have to meet for the 2020 roll-out, so the meters First Utility is installing may not be compliant when they are decided.

First Utility’s Darren Braham explained that this isn’t a big issue for customers – you’re not charged directly for the cost of installing the meter so you won’t lose out or pay any extra if you need another one.  The cost of the meters themselves and the installation (around £240) are factored into the rates the company charges. With no upfront payment so no real risk in diving in and getting a smart meter now.

Interestingly, the meters are not owned by First Utility but by National Grid OnStream  – First Utility then rents them back, and it is these rental charges that form part of the rate you pay.  (Metering charges are a feature of any energy bill whether you have a smart meter or not.)

A concern that many people have around smart meters is the security and privacy of the data it gathers and sends to the supplier. First Utility says that the data is encrypted when it’s sent and is also subject to the same data privacy laws as normal – it will only be shared if you explicitly give your permission.

Another question that often comes up is whether you can switch your energy supplier when you have a smart meter. The rules for 2020 have yet to be confirmed, but it could well be a very simple process because all the data will be held by a central office rather than by the energy suppliers individually.

For now though, if you were to switch to First Utility and a smart meter and then decided that you’d like to switch to another energy company, you’d be free to do so. However, your smart meter wouldn’t stay smart – it would revert to being what’s known as a ‘dumb’ meter, which means you have to go back to giving meter readings again.

Is there anything else you’d like to know about smart meters? Post your questions here and we’ll do our best to find out the answers.

Sarah Harrison, Senior Partner of Sustainable Development at Ofgem tells us about its new campaign with Citizen’s Advice to give advice on how to save money on household energy bills:

The findings of Ofgem’s latest investigation into the energy supply market showed that just one in five customers actively check to see if they can save money by switching supplier or moving onto a different tariff or payment method. This is despite that fact that customers can still save around £170 a year on average if they have never switched.*

Our investigation also showed that suppliers are bamboozling customers with the number of tariffs on offer – over 300 at the latest count.  Ofgem has proposed reforms to reduce and dramatically and simplify the standard tariffs, and the way they are presented, to make it much easier for customers to compare deals. 


While these reforms are being developed, we want to help empower consumers with straightforward information about energy choices, customer rights and how to get the most out of the deals that are on offer in the market today.

This is where the next stage of Ofgem’s joint campaign with Citizens Advice – Energy Best Deal – comes in.

The campaign started in 2008 as a face-to-face help scheme through which advisers from Citizens Advice and other organisations give impartial advice on how to save money on household energy bills.

This has been targeted at customers on low incomes, managing tight household budgets, or in fuel poverty. More than 60,000 customers have benefitted from Energy Best Deal and today we are taking things a step further by launching the campaign on line in a bid to reach more people

The advice and help normally available through face-to-face sessions has been boiled down into six videos covering the most important things customers need to know about their energy supply; including how to switch supplier, and what to do if you get into debt on your bills.

Many suppliers provide special discounts and tariffs for low income and vulnerable consumers and the videos also help promote this. The videos also cover advice on how to be more energy efficient and one also focuses on what to look out for when dealing with door-step sales people.

The videos are available on  http://www.ofgem.gov.uk/Consumers/smebd/Pages/smebd.aspx. They will also be posted on the Citizens Advice section of You Tube. We are encouraging consumer groups and switching websites to feature them so they can reach as many customers as possible.

We anticipate that the videos will prove just as useful to customers as the face to face advice sessions. An independent evaluation in 2010 showed that 98 per cent of consumers who received face-to-face Energy Best Deal information found the sessions useful and more than a third went on to look into getting a better deal on their energy.

The campaign is just one example of what Ofgem is doing to make the energy market clearer for customers.  In future we hope that our proposals for market reform and simplification will make a huge difference to customers allowing them to more readily choose the best deal for them.

*This is for an offline Dual Fuel Direct Debit customer switching to the best deal available.
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Image by Crethi Plethi via Flickr

The world is in turmoil.  Egypt, Libya, Yemen and Japan, natural or manmade, rarely have we seen such frequent and diverse unrest.  While the impact of these events will be felt for decades to come by the people who live in these regions, the consequences will be felt in less direct ways much closer to home, not least following the impact this turbulence is already having on energy markets.  So will our bills go up and should we all be rushing to switch onto fixed tariffs to protect our prices?

Global unrest has caused dramatic increases in wholesale gas markets and it is looking more and more likely that this will impact standard domestic prices.  The relationship between wholesale rates and the prices we pay isn’t as direct as you might think; the majority of the gas and electricity you receive from your supplier is bought years in advance through confidential contracts.  In fact, suppliers only buy a minority of their energy on the open wholesale markets so it should be possible to control the impact on domestic prices.  That said, suppliers do purchase a non-trivial proportion of their energy in this way, they are facing higher costs than were forecasted and history tells us when suppliers face higher costs so do we.

The price increases we saw during the winter are fresh in people’s minds and it will be a very brave supplier who imposes further price hikes on its customers in the very near future.  Nor will they want to run the risk of having to push up prices twice in quick succession if they underestimate the impact, so increases towards the end of this year seem more likely, by which time markets should have stabilised.

In the meantime, we are already seeing a much more immediate impact on online and fixed tariffs which are being withdrawn from market at a dramatic pace.  EDF Energy, npower and SSE have all withdrawn their most competitive offerings in the last two weeks without introducing alternatives while fixed tariffs, particularly the cheaper ones, are also disappearing fast.

These tariffs are designed by suppliers, in a large part, to attract new customers.  This means they to need buy incremental energy over and above that which they have bought on long term contracts, for this suppliers look to trade on wholesale markets and as these costs here rise their margins erode and tariffs are withdrawn.

There are a range of fixed price tariffs still available, however, but are they the answer to our problems?  Will the protection they offer from price rises work out financially better in the long term?

To answer this, let’s first remember a few axioms of fixed products, risk rewards and protection costs.  Put another way, to guarantee the price you pay markets will typically set prices at a level which they expect will represent a premium against non- fixed products, across the term of the contract.

So does this mean that fixed plans are bad?  Well, in short the answer is no, for two reasons: first, suppliers and markets can’t predict the future and prices could rise faster than they forecast, meaning you are financially better off. Second, paying a little extra to have the peace of mind that you will not be face rising energy costs will represent its own value to many people.

If the security and protection fixed plans offer appeals to you, you then need to pick the right plan for you.

There are two key elements of fixed tariffs: the price and the length of the fix. The trade-off is the longer you want to fix your prices the more you will have to pay.  Tariffs range from three month fixes, costing not much more than cheapest online plan to four year fixes charging a premium in the region of £185.

Everyone has a different attitude to risk, but I tend to shy away from recommending short term (one year or less) fixed term products.  Here’s my reasoning… if I sign up to a one year fixed product today paying a representative £65 premium on the cheapest tariff in the market how much would prices need to go up by for me to ‘win’?  Let’s assume that prices go up in six months’ time (which seems reasonable), then they would need to go up by £130 per year for me to benefit enough in the second six months of the fix to outweigh the additional cost in the first year.  This is equivalent to a 15% price increase, which is higher than I expect to see this year.

Once you get past 1 year fixes, for example with npower’s Go Fix 5 giving you an extra 2 months fix, or EDF Energy’s fixed plan lasting all the way to 2015, things start to get more interesting. From this point it’s all down to your own preferences around risk.Do you want to be paying the cheapest prices available right now and risk future price rises or are you happy to pay more now in the hope that in years to come you could be protected from ever rising prices?  The choice, as they say, is yours.

See also:

News: How do wholesale prices affect our gas and electricity bills?

News: Customers told to hurry as suppliers pull their cheapest energy deals