How to find a cheap energy supplier

Why should I switch suppliers?

If you’re on the hunt for the best value gas and electricity prices, it might be worth comparing suppliers. There’s no single cheap energy supplier with the lowest prices across the board. Energy costs will vary depending on numerous factors, ranging from your location to your household size and meter type. 

Because energy prices are always fluctuating, the cheapest gas and electric supplier will change accordingly. If you’ve come to the end of a fixed term contract, have just moved to a new house, or simply feel that you’re paying too much for your current energy use, it’s high time to switch suppliers. It’s easy to run a quick comparison to see what deals are out there, giving you access to cheap energy suppliers in your area. 

Why are my energy bills so high?

Naturally, your own usage will determine how high your energy bills are to some extent. However, if your bills have suddenly risen, there are a few potential reasons. 

Your supplier has raised prices

If you’re on a variable rate plan, your energy supplier has the right to raise prices at any time during your contract. They will typically do this in a reaction to a global rise in supply costs. 

End of a fixed price plan

One of the main reasons why your energy bills may have increased is due to the conclusion of a fixed term tariff. When this type of plan comes to an end, you could automatically switch over to a standard variable or default tariff. 

Estimated meter readings

Do you regularly submit your own meter readings to the supplier? If not, you’ll be paying based on estimated use. This could be higher than what you’re using, so it’s always worth submitting regular readings. 

Steps for finding a cheap energy supplier

Once you’ve made the decision to switch suppliers to find the cheapest gas and electricity, there are a few simple steps to take. 

Step 1: Consider your location

One of the first factors that determine the cost of your electricity and gas is your postcode. Remote, rural parts of the country typically involve higher costs, while the South East of England enjoys the best value gas and electricity. 

Step 2: Use an energy comparison website 

The best way to find a cheap energy supplier is by searching for current plans using a trusted comparison website. You can opt to compare gas and electricity prices separately or view dual fuel prices. In any of these cases, all you need to do is input your postcode, address details, and figures from your latest energy bill. If you don’t have a bill close to hand, the comparison website will walk you through a few basic lifestyle questions to estimate your household’s usage. 

Step 3: Compare the big six suppliers

When you’ve entered your details, you can compare prices from the country’s big six energy suppliers. These include npower, Centrica plc (British Gas, Scottish Gas and Nwy Prydain), E.ON, EDF, Scottish Power, and Scottish and Southern Energy (SSE). 

These suppliers won’t necessarily have the cheapest offers, but they will tend to feature the widest range of plans and prices to choose from. Because they’re well established, they also run little risk of going bankrupt like some smaller suppliers. Be sure to look at factors like payment methods and exit fees as well as the listed tariffs. 

Step 4: Consider smaller suppliers 

Small suppliers can often provide more competitive rates than the big six because they need to attract new customers. They’re starting to dominate comparison tables with cheap prices and a host of other features. Many of these smaller companies, like Bulb or OVO Energy, have been in the market for quite a while as well and this segment is a rapidly growing component of the industry. If a new company goes under, your supply won’t be interrupted. Industry regulator Ofgem ensures that energy customers are simply moved over to a different supplier should this happen. 

Step 5: Look at fixed vs. variable rates

In addition to the size and reputation of the supplier, another factor to consider during your search is the type of contract. When you run your comparison, you’ll see both fixed and variable plans listed. Fixed rate contracts tend to last between 12 and 24 months, guaranteeing a fixed rate to pay for your energy throughout this time. This rate applies to the cost of energy per unit, so bills will still vary depending on monthly usage. 

Variable price tariffs will go up or down depending on the price of wholesale energy. This is important to keep in mind because although today’s variable tariff might be the cheapest electricity deal, if supply prices rise next month that may no longer be the case. Generally, standard variable rate tariffs should be avoided. These are the default contracts that providers automatically move customers to at the end of a fixed deal, and they are usually much higher in price. 

Step 6: Look at different types of metered plans

Do you have a special meter installed at home? This will impact your cheap energy options.

Economy 7 plans

If you have an Economy 7 meter, you’ll note that it shows two sets of meter numbers. This is because it operates using a dual-pricing plan. You’ll pay normal energy prices during the day but will qualify for cheap electricity overnight – ideal for doing loads of laundry, running the dishwasher or charging an electric vehicle. 

Smart meter plans 

Sometimes energy suppliers will offer cheaper rates for customers who have smart meters. Smart meters submit regular digital readings to the supplier, which tends to lead to cheaper bills anyway because it eliminates the inaccuracies of estimated readings. 

Prepayment plans 

Prepayment or pay-as-you-go plans are available from all the big six suppliers and many of the smaller names. These require you to purchase credits in advance in order to receive your energy. While they give the advantage of tracking exactly how much money you’re spending on your energy, they tend to cost more overall. You can narrow down the list of prepayment plans to find the cheapest options within this category. 

How do I switch to a new cheap energy supplier?

After you’ve followed these steps and weighed your options carefully, you can simply select the cheapest gas and electric plan. The process of switching is free of charge. Fill out the requested information online and the new energy supplier will get in touch with your old supplier to arrange the changeover. You’ll receive a welcome pack including all relevant details of your new plan. If anything doesn’t look right, there’s a 14-day cooling off period during which time you can cancel without penalty. 

Remember to take a meter reading on the final day of your contract. That way, when the old supplier sends you a final bill, you’ll be able to compare figures for accuracy. In some cases, they may owe you money. This is quite common for those who pay a set amount each month via direct debit. It’s particularly common if you switch suppliers at the end of the summer, when you may have been overpaying for energy you haven’t yet used. 

How can tenants find cheap energy?

If you’re renting a property, you could still switch suppliers to find the best value gas and electricity prices. However, it’s important to check your tenancy agreement first to see who is responsible for paying bills. If they’re in your landlord’s name, you will need to consult him or her first. When the bills are listed in your name, you have the right to switch to the cheapest energy supplier whenever you wish. 

What if the cheapest energy supplier is my current one?

Although in most cases you’ll find a cheaper deal with a different supplier, it’s not unheard of for your current plan to be the best. There’s no obligation to switch after you’ve run a comparison, but this is something to keep track of over time. It’s also possible that your current provider is the cheapest energy supplier, but you’re not on their cheapest plan. You can contact them to switch plans, which is a very simple process. 

How do I know a supplier is right for me?

The best energy plan won’t necessarily be the cheapest. In addition to looking at prices, you should also consider factors like customer service, supplier reputation, and freedom within the plan. An increasing number of consumers are looking for green energy plans, which tend to cost a bit more. You can filter your results to find the plan that not only offers the cheapest gas and electric prices, but also ticks all these other boxes. 

Ben GallizziEnergy Expert - Nov 1st 2019