Should You Fix Your Energy Bills Now?

If you’ve never switched supplier before then you could save nearly £300 off your annual bill by switching gas and electricity provider, based on figures quoted across energy comparison sites.

However, if you’ve already switched then the savings are likely to be much smaller, maybe £50 a year, and often dependent on when you switch and how you pay your bill.

You can slash money off your bill by switching to an online tariff and paying by direct debit.

If you choose a fixed tariff then the cost of your energy will be locked in for a period of time, usually a year but sometimes two, before you can leave without paying a penalty.

Some experts think that households should always be looking at fixed price deals. Mark Todd, from Energyhelpline, said: The risk of a price rise is always a great prompt for people to fix. Where the difference is small and there is no cancellation fee, or a low cost to exit the tariff, then I would suggest that people always go for a fixed tariff.’

Scott Byrom, energy expert at MoneySupermarket.com said; ‘With a lot of uncertainty over the movement of energy prices I recommend getting on to good value fixed price energy product to safeguard from any increases to the cost of gas and electricity over the term of the deal.'

But if customers want to leave during this period then they are likely to have to pay a termination fee and this may cancel out any benefit of fixing in the first place.

Ann Robinson, director of consumer policy at uSwitch.com, says: ‘It’s important that consumers ensure that they sign up to the best deal for them and that they make sure they know about any exit fees before they sign on the dotted line.’

Deciding whether a fixed tariff is suitable for you is dependent on prices – if bills start to fall then you could end up paying more.

What is happening to prices?

In the past month, two of the big six energy suppliers, British Gas and E.ON have reported that their profits had risen by nearly a quarter in the first six months of the year.

The news does nothing to help their financially squeezed customers who have seen energy bills more than double in the last ten years.

Meanwhile wholesale prices have been falling and this has put pressure on energy firms to follow with price cuts.

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Centrica defends 23pc leap in British Gas energy profits

Centrica defended a 23pc surge in profits at its British Gas household division, insisting the jump was due to the comparison with a “weak” 2011.

Chief executive Sam Laidlaw refused to bow to demands to cut energy prices - amid analyst predictions that Centrica was likely to increase its consumer tariffs.

Operating profits in the British Gas division rose to £345m in the six months to the end of June. The rise contributed to a 15pc increase in group profits, to £1.45bn for the period.

Ann Robinson, at uSwitch.com, said: “These soaring profits show that British Gas could and should cut its prices ahead of winter.”

Mr Laidlaw insisted the criticism was “purely because people have landed on a comparison with a prior year that was particularly weak”.
Profits had been low in the first half of 2011 due to an unusually warm winter, and gas consumption had increased again this year, Centrica said.

But gas consumption increased just 3.5pc, with the vast majority of a 21pc leap in gas supply revenues in fact due to increased prices.

Centrica said the bill rises has been needed to cover rising costs of commodities, increased social and environmental levies that it collects for the Government, and higher energy transmission costs, set by the regulator.

Mr Laidlaw said “nobody” he had spoken to felt its British Gas operating margins of 7.2pc - up from 6.9pc in 2011 - were unreasonable.

He added: “Because British Gas residential has got 16m customer accounts, the residential figure is a lot of money. But our profits equate to £3.50 a month per account before tax.”

Profits in British Gas’s business supply division slumped 27pc to £93m, as customer numbers fell. Centrica said this was due to some of the business customers going bust, and some switching supplier.

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Great diesel myth

Diesel cars’ reputation for saving drivers money has been shattered by research showing they are often more expensive than petrol models.

It concludes that ‘diesels are no longer the default option for frugal motoring’.

While diesel engines may deliver more miles per gallon, it can take up to 14 years before they save the average driver any money.

This is because of the higher cost of diesel cars and of the fuel, which can be almost 6p a litre more expensive than unleaded petrol.

A report today by the consumer watchdog Which? says: ‘With drivers having to pay a premium for a diesel car – typically £1,000 to £2,000 more on a new car – our tests reveal it could take up to 14 years to recoup the up-front costs in fuel savings.

‘Lower pump prices for petrol and advances in petrol-engine efficiency mean petrol cars now often provide better value for money.’

Ironically, the findings come as diesels make up more than half of the new car market for the first time.

Which? compared similar-spec petrol and diesel versions of six popular cars – the Ford Fiesta, Vauxhall Astra, Volkswagen Tiguan, VW Sharan, BMW 5 Series and Peugeot 308 SW.

It calculated the annual fuel bill for each based on an average mileage of 10,672, and concluded: ‘In four out of our six examples, the petrol engine was the best choice for a driver covering 10,000 miles a year.

The report says diesels have become more refined than in the past, but ‘with petrol now around 5.5p a litre cheaper, and some makers offering super-economical petrol engines, it’s getting harder to justify the price premium’.

It adds: ‘Not only have we moved on from the bad old days of clattery diesels, but we’ve also moved on from diesels being the default option for frugal motoring.’

In the year to May 2012 diesel cars accounted for 51 per cent of new car sales, with petrol models at 47.5 per cent. Alternative fuel cars accounted for 1.5 per cent.

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Solar Panel Calculator

The big winner for those paying to have solar panels installed is not thesavings on their electricity bills from generating green electricity to use, but the income derived from subsidies under the Feed-in Tariff scheme.

Through this they get paid for every unit that they generate whether they use it or export it to the grid.

The subsidy is currently paid at two rates, the Generation Tariff, of 21p per KWh (Kilowatt Hour) for all energy generated, topped up with the Export Tariff, which adds an extra 3.1p per kWh for electricity exported to the grid.

That return is tax-free, backed by Government guarantee for 25 years and has an added benefit in that it is index-linked to retail prices inflation.

As reported above subsidies and their lifespan will now fall from 1 August. But crucially the rules are that those who install certified solar panels systems before set cut-off dates are locked in at that period’s rate for 25 years, so homeowners who beat the deadline should have nothing to fear, however much the Feed-in Tariffs are cut by in the future.

Of course, the other added benefit does come from a reduction in bills, as when homes are using solar energy they are not racking up electricity costs from suppliers.
So is this worth doing?

There are three big things to consider about buying solar panels: the direction your roof faces in, where your home is and the size (and quality) of the installation.

A south facing roof, in southern England, will deliver the best returns and the largest a home solar panel system can be to get the best Feed-in Tariff rate is 4kWp. Adjusting each of these factors of location, direction and size will impact on performance and what you get back.

The Energy Saving Trust has a calculator on its site that can work out potential returns for you, although bear in mind that the £10,000 figures quoted for installation costs are more expensive than what solar firms are now suggesting they can do.

We crunched the numbers on the 3kWp system example that Evo Energy said would cost about £7,000, on a south facing roof, in South East England, for a home with £35 per month electricity bills.

Generation Tariff - £534

Export Tariff - £38

Energy bill saving - £79

Total return - £651

Disregarding the savings on electricity bills, that delivers a total return of £572 from Feed-in Tariff payments.

If a householder paid £7,000 for the solar panels, that equates to a 8.2 per cent annual income return, tax-free. (Including energy bill savings it is 9.3 per cent.)

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