Energy bills are a major headache. With so many different companies, tariffs and price plans, it is almost impossible to work out if you getting the best value for your money. So how can you navigate the market and work out the best deal for you, especially if you are on a limited budget?
Pros and cons
The best way to begin is by looking directly at price plans offered by different companies. It is notoriously difficult to compare like for like, but there are a few websites you can visit that may help. Consumer Focus recommends you check on a Confidence Code accredited price comparison site - UkPower.co.uk, for example, which breaks down energy prices by looking at the type of consumer you might be, and working out the most appropriate price plans based on this and give you an indication of the amount of energy you might use in each situation. For example, if you live in a small flat and are out at work most of the time - your bills will be lower than a family living in a large house, who have young children around the house. Price comparison websites such as Comparethemarket.com can offer some good deals for switching provider, even though new research has found that only 33% of customers use a price comparison service when switching. You should also look at Moneysavingexpert.com, on which you can sign up to a weekly newsletter advising you of any changes to the prices of the major energy providers.
Choosing a price plan
Next step is choosing a price plan. Once you have decided on the company, you need to look at the method of payment. Do you want to pay the same amount each month, or would you rather pay a different amount depending on the season, the energy market or the amount of electricity you are using?
What are the advantages and disadvantages of each? Well, a fixed-rate tariff works well if you are on a budget. It enables you to plan exactly how much you are likely to spend and pay only this amount each month. The downside here is that since the price plan is fixed, you won't be able to save any money, if, say energy prices come down, nor will you be able to adjust costs based on how much you are using: the bill is simply based on a projected output depending on the type of property, number of inhabitants amongst other variables. The energy company may also charge you a premium for the security of knowing your bills beforehand.
Another type of payment plan is a variable rate tariff. Here, instead of paying the same amount every month, you'll be billed according to the price of energy in the market at that time. So if energy prices go down, your bills may go down. If energy prices rise, so will your bills.
On the other hand, a metered tariff works in the same way as a pay-as-you-go phone - so you pay according to the amount of energy you have used in a given month, so it could vary drastically - February, for instance, will be much more expensive than July, as you are likely to have central heating on in February. The good thing about this sort of plan is that it is you can control how much energy you are using by doing simple things, such as keeping the heating down and improving insulation. It also means you can save money if prices do suddenly go down, although this means that if prices increase, it won't be long before you get a bigger gas or electricity bill.
In the end though, the choice is down to the individual and individual circumstances. After all, it is still possible to keep to a strict budget on a variable rate and it is possible to have a little flexibility with a fixed tariff, as long as you keep an accurate record of your meter readings.