Until fairly recently, everyone got their gas through British Gas and their electricity through their own regional electricity company. In the late 1990s, the British government decided to deregulate electricity companies and British Gas and allow competition from different companies to supply domestic utilities. It was a move designed to decrease prices because of that additional competition.
In reality, the cost of supplying gas and electricity is enormous and only the larger, most successful companies have survived. British Gas still exists and now supplies electricity as well as gas and, in the first few months of 2009, led to way to discounting its prices. However, because of the state of the economy in 2009 and the global recession combined with very high oil prices, the cost of power is still a great deal more than it was 10 years ago when deregulation happened.
It is unlikely that we will ever see a return to those levels but things are expected to stabilise as more EU countries follow the plan of deregulating. This is taking a long time – Spain only brought in deregulation on July 1 2009.
How Can You Switch Provider?
With common use of comparison sites on the internet, it is very easy to compare the prices offered by different suppliers and to choose the cheapest of the moment and switch to them. Most sites offer an online application facility and sometimes there are freebies on offer to sweeten the deal. These may take the form of cash-back or Amazon vouchers. At the time of writing, if you switched both your supplies to the same supplier, you could benefit from £35 of Amazon vouchers.
Does it Pay to Switch?
The comparison sites ask you to estimate how much electricity or gas you use based on your recent bills from your current supplier and then tells you how much you might save by switching to a range of different suppliers. By choosing the one that offers the cheapest deal you can make significant savings. I tested my own bills and found that one supplier could save me around £211 each year – so I went ahead and switched (and got the Amazon vouchers…).
One of the companies offering very good deals at the moment is Eon, which is committed to providing a large proportion of its power from renewable power generation, so as well as saving money, you can support the efforts to make power generation more sustainable for the future.
Do You Have to Keep Switching?
There is no obligation to switch and no obligation to stay with the same provider year after year. You can also choose to get your electricity from one company, your gas from another, or both from the same supplier. The latter makes billing easier and it is a good option to set up a monthly direct debit based on your average annual usage. That way, you know how much money will be going out of the monthly household budget each month, and you spread the heavier bills of the winter months more evenly over the whole year, so there are no nasty surprises.
Keeping a Close Eye on Things
The real advantage to having so much choice comes with the responsibility of having to check up each year on what the rates are. It may be that switching each year will give you a much better long term saving. Like many types of insurance, like car insurance and home insurance, it no longer pays to be loyal to one particular company. They rarely offer the same tempting deals to existing customers as they do to people they are trying to tempt to buy one of their products.
Using comparison sites, checking out the cost annually and making the effort to do the switching, whether between electricity or gas suppliers or insurance companies will save money and it will make sure the companies continue to offer the best rates. Its not the easiest route to managing your household finances but you have to weigh up the time involved against the savings – for most people, the couple of hours it takes each year is well worth the savings.