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Energy price war hots up


Updated on 15 February 2010 | 10 Comments

Christina Jordan takes a look behind the headline rates to see which energy company offers the cheapest tariff.

Last September newcomer OVO Energy fired the first salvo in the current utilities battle, leading to a raft of price cuts over the following five months.

The 'big six' utility giants have fought it out against a new breed of young pretenders -- British Gas and Npower both launched headline-grabbing cheap tariffs in December, as did some of the smaller players.

Only two weeks ago, British Gas hit the headlines again with the news that it was cutting its standard gas tariff by 7%, benefitting eight million households to the tune of an average £55 a year each.

The energy giant said that no matter where in the country you live, it was now offering on the cheapest gas, electricity and dual fuel prices (for average users).

However, less than a week later the crown was snatched from the Goliath fuel provider's head by an altogether smaller rival -- self-styled challenger brand First Utility. It launched a standard dual fuel tariff that it claims shaves a few pounds off the British Gas deal, meaning it now offers the new cheapest standard tariff in the UK.

But there could be a catch.

Apples and pears

Comparing gas and electricity tariffs is ridiculously complicated because there are a number of factors to consider. Indeed, it is unusual for one tariff to ever be uniformly the cheapest on the market. And as a rule of thumb any provider's 'standard' tariff is rarely its cheapest.  

The First Utility standard tariff is only available from them via the telephone and is not as cheap as its online deal. It is pretty clear it's been launched to give direct competition to the British Gas standard tariff, and has been described as a ploy to hit the headlines and quickly usurp the energy giant.

Whatever the motives, the First Utility standard dual fuel tariff will not be the best deal available for many people -- including myself.

I used lovemoney.com's utility comparison tool to see if I could better my current deal and to check out what would work out cheapest for me. Not only did I have the results in a couple of minutes, they were very interesting indeed.

The First Utility standard dual fuel deal didn't even make the top 20 tariffs for me, though its cheaper Isave Dual Fuel v2 came in at number 12. Even British Gas's best tariff for me -- the Websaver 6 -- only came seventh.

While fuel isn't quite individually priced, it is dependent on a number of personal factors -- where you live, your energy usage and whether you want a online tariff for example, and if you are willing to pay by monthly direct debit. It means that what is market-beating for one of us can be an average deal for others.

Different scenarios, different best buys

In my case it turns out I have particularly low gas and electricity usage, according to my bills (£30 a month for electricity, £20 for gas). This really surprises me as I work from home and it's been a cold winter. While I admit I go to great lengths to keep warm without turning on the heating (more layers than you can imagine, more tea than you'd believe) there are some months of the year when the radiators are on for hours a day.

Based on my miniscule usage the best tariff is actually Scottish Power's Online Energy Saver 9, which would cost me £468 a year. And this is not surprising because the provider is known for offering decent deals to those who use little energy. So if you have a smallish property, or you're a young person with better things to do than stay at home every evening (using up gas and electricity), it could be that you are a low usage energy customer and you could switch to a better deal. Second best for me was Southern Electric's Go Direct v3 and Npower's Sign Online v17 was a close third.

I decided to do the same search again but tripling my bills to reflect a family household -- or a less frugal one. I checked again inputting £90 a month for electric and £60 for gas. This time First Utility topped the table with its Isave Dual Fuel v2 deal (costing £1,334 a year), closely followed by EDF Energy's Online Saver v5 tariff. British Gas's WebSaver 6 wasn't far behind.

These deals may not be the best for you but note that neither the British Gas nor First Utility standard tariffs got a look in -- regardless of the level of usage. This only serves to emphasise the fact that it is the online, monthly direct debit tariffs that consistently come out top.

A question of region

The figures above are also specific to my region -- I'm in Stockport in the North West.

I did the search again using my old address in West Kensington, London and the results were very different.

On the lower usage figures Scottish Power's Online Energy Saver 9 slumped from top to third place. Instead Npower's Sign Online v17 came top followed by Scottish and Southern Energy's Go Direct V3.

On the more expensive usage example First Utility's Isave Dual Fuel v2 deal was still top but this time followed by Eon's Fix Online v6 tariff and then British Gas's WebSaver 6.

It's important to stress there is no one single provider that offers the best electricity, gas or dual fuel tariff to every customer. It completely depends on where you live, how much energy you use, and the way you prefer to receive and pay for your bills.

The only way to find out if you can save on your energy bills is to do an accurate search, for example using lovemoney.com's utility comparison tool. You need to input your specific details, including where you live and how much you spend on energy -- either get this from your last bill, or estimate it.

Then you will see exactly what is best for you, and I'm pretty sure it will be an online fuel tariff that works out cheapest. If that's not the case, do let us know who is best, and which region you live in.

Compare energy quotes at lovemoney.com

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  • 29 September 2011

    [B]Bills price goes up again[/B] Did anyone seen energy bills price going down? Gas and electricity went up this year about 18% and they will continue to grow. [B]Why is that are bills going up?[/B] More and more people decided to install solar panels. Every house with that kind of installation its a lost in business for electricity sup-layers of about £1,600 [B]How to solve the problem of increasing bills?[/B] Install solar panels? Check them out at http://www.tudorsolar.com Hope it help ( some of you ) =)

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  • 19 February 2010

    Hi Mansuk, Elec daily use at moment is 12.82kwHr per day(average 11.62) on momentarily .53 kwhr according to the OWL. Normally the OWL says around .9Kwhr when the kids are on-line. Gas at 8.27 units per day for january (yearly average 3.53) or x11.25 to get kwhr 90 kwhr (average 40)kwHr. 10 years ago we were on total Elec and Gas was 23,000 kwHr and now it is 18,500 kwHr per annum and now have 3 kids and the wife works at home using a work PC. Current lounge temp is 21.5C with no jumpers! hall temp control set to 21.5C. Thermal store set to 72C. Timer on boiler normally set to allow boiler to run from 6:00 to 24:00. Timer on hall digital temp controller set to 6:30-8:30 and 15:30-22:00 5 days week, rest of time eg weekends and school hols at 6:30 - 22:00. The lounge only drops to around 18C by morning! We did have to leave the heating on all night during the really cold snap. The temp control has a Night setting, which we rasied from never on 13C to 17C. Up here in the frozen North West, I'm sure we have around 20% lower temps than London, (eg 25 there 20 here) but we are on the coast so don't get proper Pennine weather. We switch the big light on special occasions too. There are ways; hot water supply to the dish washer, no timble drier, doors kept shut, as few possible standbys on, foil behind the radiators, no gas fire used (the flue is covered to stop the draft too.)... Sorry, Charles125, love the idea of a solid stone wall, but unless you can get the neighbours to turn their heat up, add a couple of wind turbine, solar panels, 5 cycle generators and get the kids to move out then you're on a hiding to nothing. Electric showers, yikes, how is it that the girls manage to get a whole bath of water through the shower head everytime. How many units do you use a year? The medal is in the post! Hope that helps, Mansuk Cheers, Nev

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  • 19 February 2010

    Hi BlueNev, I am quite impressed with £30 for elec per month(£360yr) and £40 (£480yr) for gas. What is your daily gas consumption per day? Do you keep your heating on max? Thanks

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