Make energy savings by switching supplier

The cost of owning and running a house rose by 7% in the financial year 2004/05, more than three times the headline rate of CPI inflation, according to new research by Halifax based on the latest ONS data. In fact, over the past three years, the total costs of housing have increased by 14%, far outpacing the 4.6% rise in inflation over the same period.

Significantly, over the current year (2005/06) and for the first time since Halifax produced this survey, council tax and utility bills combined are estimated to represent the single biggest component of total costs - more than the average mortgage! Both water supply and electricity, gas and other fuels expenditure increased by 6% in 2004/05 and accounted for 15% of the 7% increase in total housing costs for the year.

Halifax estimates that higher fuel and council tax bills will more than offset lower mortgage costs in the current financial year, pushing up the costs of running a home in 2005/06. Additionally, both council tax and utility bills are expected to rise by well above inflation in 2006. The UK's biggest energy supplier, British Gas, increased gas and electricity tariffs by 22% on 1 March 2006. The number two supplier, nPower, announced that it would raise its prices for the second time this year on 10 March 2006 by 15% for gas and 13.4% for electricity.

Council tax bills in England are set to increase by an average 4.5% in April, more than double the rate of inflation, according to a survey conducted by CIPFA. Council tax and utility bills will represent 35-36% of total housing costs in 2006/07.

Tackling the domestic energy crisis

Tax is pretty much unavoidable but there may be something you can do to mitigate the impact of rising fuel costs. Average household gas bills increased by 20% in 2005 and by 15% in 2004 according to the EnergyShop.com's report The UK's Domestic Energy Crisis. The report also showed a rise in average household electricity bills of 13% in 2005 and 12% in 2004.

The most expensive electricity region is SWEB (South West England) followed by Swalec (South Wales) and Scottish Power (South of Scotland). SWEB turned in the worst relative performance, going from fifth most expensive in January 2004 to most expensive in January 2006 - a league table achievement not to be proud of!

Unfortunately there is little for consumers to look forward to other than yet more cost increases. Following a sharp spike in September 2004, which prompted a Commons Trade & Industry Select Committee enquiry, the wholesale gas price has continued to trend upwards in a highly volatile fashion. Wholesale gas for delivery in the first three months of 2007 is already trading at prices higher than current costs.

Remember that gas is used as a fuel in the production of electricity. If the price of gas does keep rising, it will certainly feed through into higher electricity prices. However, despite the background of rising prices it is still possible for us to save money by switching supplier. The EnergyShop.com's report suggests customers paying by monthly direct debit could make an average saving by switching away from their local electricity supply company of around £46 over the year.

More impressively, the potential saving available for customers switching away from the combination of British Gas for their gas and their local electricity supplier for their electricity AND changing payment method from cash/cheque to direct debit is a massive £220 a year!

When was the last time you checked how much you could save with another fuel supplier?

13 March 2006 © Moneyextra.com

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