Energy prices can be confusing. There’s a wealth of information out there about them – not to mention frequent news reports about price rises. And with so much to take in, finding a cheap fuel deal for your home may seem a daunting task.
But it doesn’t have to be a headache. We’re here to help. In this guide to home energy, we give you the facts, explain how energy companies measure your usage, and look at some of the tariffs available to you. We’ll also cover how to compare energy companies and their tariffs to help reduce your utility bills.
What exactly is ‘fuel’?
By ‘fuel’, we mean whatever you use to power and heat your home. Electricity, gas, oil and wood are all types of fuel. And while we can’t help with your wood-burning stove or oil lamps just yet, we can compare gas and electricity quotes, to help you find the best energy deals for your needs.
How is my gas and electricity usage measured?
Electricity and gas companies measure your fuel consumption in different ways.
Electricity suppliers measure usage by how many watts of power you use each hour. This is called a kilowatt-hour (or KwH). If you use 1,000 watts of electricity in an hour, that’s 1KwH. Similarly, 2,000 watts of electricity used in an hour is 2KwH – and so on.
Meanwhile, gas suppliers measure in cubic metres – or if you have a very old gas meter, in cubic feet. But this will show on your bill as either units or converted into KwH. But don’t worry: the measure your meter uses won’t affect how much you’re charged.
How do energy suppliers decide on their rates?
This can be tricky. Since energy companies compete on cost and service to win customers, their standard charge per KwH or cubic meter can vary from month to month. The back of your bill should explain how your usage is calculated, but it won’t necessarily make clear how your supplier decides what to charge per unit of energy.
The most important thing to remember is that prices are always changing (unless you have a fixed tariff, in which case they’ll only change after this period). They depend on many factors, including your tariff, who supplies your energy, the wholesale market price for electricity and gas, and the cost of getting the fuel to your home.
It’s a good idea to regularly compare energy suppliers and their different tariffs, and find out who offers the most suitable deal for your needs.
What sort of tariffs are available?
There are many different energy tariffs. They vary greatly between suppliers, but we’ll help you understand these. Some of the more common tariffs include:
1) Standard tariff. This is the supplier’s ‘regular’ tariff. Standard contracts have no tie-in periods, so they’re worth considering if you’re not keen to tie yourself into a long-term arrangement. They also come without cancellation fees, making it easier for customers to switch. However, standard tariffs are also subject to the biggest price hikes, so you’ll need to keep an eye on how much you’re paying.
2) Fixed rate tariff. If you prefer to know exactly what you’re spending, fixed tariffs offer consistent energy prices for a fixed period of time. They’re usually cheaper than standard tariffs, but you’re tied into a contract period. You can still switch at any time, but you’ll probably have to pay a cancellation fee to do so. However, suppliers must remind you 42-49 days before your contract ends. If you switch during that period, they can’t charge you for doing so.
3) Economy 7 tariff. Economy 7 tariffs offer cheaper electricity at night (seven hours of it – hence the name). They can be beneficial if you use electricity to heat your home and water, but since daytime electricity costs more under Economy 7 deals, they could prove costlier if you use a lot of electricity during the day.
4) Dual fuel tariff. For the convenience of gas and electricity from the same supplier, there’s dual fuel. Suppliers offer discounts for customers who buy both fuels from them, but separate contracts for each fuel could still work out cheaper. Be sure to compare suppliers to find the best dual fuel deals for you.
Can switching energy providers save money?
A common myth is that energy companies reward loyalty by offering cheap fuel to long-term customers. Sadly, this isn’t true.
In fact, the very opposite is the case. Energy suppliers like to use their most attractive deals to win new customers. According to Energy UK on average over 200,000 households switch energy every month. And withcomparethemarket.com we save our customers on average £439.59 when they switch.**
How can I find the cheapest electricity and gas?
Energy tariffs can be hard to understand, but comparethemarket.com can do the hard work for you. Simply answer a few quick questions about your current usage, supplier and bills, and we’ll do the rest.
Whether you want help finding the cheapest gas and electricity, or the best dual fuel deals, click the button now, and start your energy price comparisons today.