The price of energy is constantly changing, which makes finding the cheapest energy supplier a challenge. Factors like location, household size and meter type will all impact your final bill. The best way to find the cheapest gas and electricity is to use a price comparison tool, which will show you options in real time. Here’s a look at what goes into calculating cheap electricity and gas deals.
Location is one of the first factors that impacts the cost of gas and electricity. For example, some regions will enjoy cheap energy deals due to a high population density that spreads the cost of distribution. Energy will typically cost more in remote or rural areas. Saving a few pounds on your energy bill probably isn’t reason enough to move house, but it does highlight the need to compare deals using your own postcode to see relevant pricing plans.
The best energy deals are always changing due to competition, market prices and regional fluctuations. To find the cheapest gas and electricity in your area, you need to compare your options. This is particularly important if you’ve just moved to a new house, have a prepayment meter installed or have just come to the end of a fixed rate tariff. If you don’t switch suppliers in these cases, you’ll be stuck with a standard variable rate tariff which tends to be the most expensive option.
The big six energy suppliers are:
Scottish and Southern Energy (SSE)
These are the original go-to options for comparing plans and prices, and they’re still a good first port of call. An increase in market competition means the big six often supply attractively priced cheap energy deals for new customers. In addition to pricing, you should consider factors like payment methods, eco-friendliness and exit fees when comparing plans from these major suppliers. An online comparison tool is the best way to see this information clearly laid out.
Small companies outside the big six are also well worth including in your comparison. These offer competitive rates in order to attract customers from the larger brand names. This segment is growing rapidly, with a third of the market now taken up by small and medium suppliers like Bulb and OVO Energy.
Are you worried about security with a smaller supplier? Some small energy firms have disappeared or gone bust in the past. However, there are now firm rules in place to protect you should this happen. Ofgem regulations ensure customers are moved to a different supplier without any disruption to service.
For the cheapest gas and electricity plans, consider signing up for a fixed price energy tariff. As the name suggests, these lock you into a fixed monthly price for the length of your agreement, which tends to run between one and two years. The fixed price applies to the cost of energy per unit, so your bills will still fluctuate each month depending on your household usage.
By contrast, a variable rate plan offers prices that go up and down in relation to global energy costs. When the market prices go up, you’ll see this reflected in your bill – but at the same time, a reduction in global prices will mean cheaper energy.
There are certainly potential benefits to both options, but if you want a sure-fire cheaper tariff, you’ll find very competitive fixed rate plans. Apart from the lower costs, fixed rate plans keep your bills predictable. The cost per unit of energy will stay the same, so if your energy consumption is regular your bills will be easier to plan for. You’ll also be protected from sudden price hikes should there be a drop in global supply.
One thing to be aware of with a fixed price plan is the possibility of exit fees. If you switch suppliers before the end of the term, you may need to pay this fee. You should have a 49-day grace period at the end of your agreement to switch without penalty, but always read the fine print to make sure.
Cheap suppliers come in all shapes and sizes, as do plans and meters.
Economy 7 meters – To reduce your energy bills, you may wish to consider an Economy 7 plan. With this type of set-up, you’ll pay normal prices during the day and up to 50% less overnight. You’ll make the most of an Economy 7 plan if you use appliances like washing machines during off-peak evening hours. The specific hours will vary depending your region and choice of supplier. This type of plan requires an Economy 7 meter (or White Meter in Scotland) which shows two sets of numbers to differentiate between day and night usage.
Prepayment meters – Another type of plan and meter that could potentially reduce your bills is a prepayment meter. These are usually installed when a customer has fallen behind on their bills, operating with a pay-as-you-go system using keys or tokens. Although prepayment meter plans are less competitively priced, they do allow you to take control of your budget. You’ll see where every penny of your money is going when you pay for it in advance, so that you can tweak your use to save energy.
Smart meters – Smart meters achieve the same result, with in-home displays showcasing details of your energy use. You can download an accompanying app to keep track of your household habits and how they impact your final bill. Meter readings are automatically submitted to the energy supplier on a regular basis, which improves the accuracy of your bills and creates a more efficient energy network.
According to industry regulator Ofgem, the average UK household spends around £1,254 each year on a standard variable energy plan. Even with the cheapest gas and electricity tariff, there are always ways to save at home. Here are a few tips to cut your consumption:
Turn down your thermostat – One degree may not feel like much of a difference, but it certainly adds up to savings over time. Turn down your thermostat just one degree and you could already save up to £75/year from this action alone.
Install a smart thermostat – Smart thermostats only heat the rooms you’re using. They’re fully programmable and learn your household habits over time to predict when and where you’ll need heat. You can control them by smartphone app, which means you can turn heating off at a distance when you’re not home.
Upgrade to efficient appliances – Don’t go rushing out to throw away your current appliances, but when they’ve come to the end of their natural lifespan you can upgrade to a more energy-efficient model. Look for colour-coded energy ratings before you buy. They may cost more upfront, but will save a bundle over time.
Switch off standby mode – Shave money off your energy bills by remembering to turn off your appliances when they’re not in use. Leaving your electronic devices in standby mode is a waste of electricity, particularly as you can now buy standby savers.
Draught-proof your home – Most homes will lose some heat through draughts around windows, doors and flooring. According to Energy Saving Trust, sealing these cracks can save you about £20 per year on energy bills, with an added £15 saved by installing a chimney draught excluder.
These are just a few examples of simple actions to take. Factors like double glazing and insulation will also help make your home more efficient for cheap energy bills.
As you’re comparing cheap energy deals, it’s important to take fees into account. It shouldn’t cost you anything to switch supplier. The only time you might need to pay a cancellation fee is if you’re under a fixed-term contract and haven’t yet reached the 49-day grace period. All you need to switch is your postcode, name and address, and basic details of your current energy plan. Simply plug these into a comparison website in order to see which cheap energy deals are available in your area today.
In the end, there’s no single answer when it comes to the issue of finding the cheapest energy supplier. The price of cheap electricity and gas will vary on a day-to-day basis. To save the most money, adopt a two-pronged approach: switch to the best possible deal and conserve energy at home.