It seems like the only utility bill which gets any media attention is energy – from oil price movements to the Winter Fuel Payment being scrapped for all but the poorest pensioners, energy bills are always hitting the headlines.

However, they are a more pertinent concern to those who pay them, especially in winter when the heating is at the forefront of people’s mind as they worry about the cost of staying warm but there are things you can do to save on your energy bills.

Firstly, in 2019, Ofgem introduced the energy price cap which caps the cost of gas, electricity and the standing charge (the cost before you use any energy). This is an often misunderstood concept as the price cap does not cap the amount the pay, it caps the rate you are charged.

Therefore, if you use more, you are going to pay more (and vice versa). This issue often arises because the media like to quote changes in terms of the figure for those on ‘typical use’ (£1829) but nobody is typical and you don’t pay £1829, you pay a figure related to what you use.

What is relevant is the changes in the price cap. On October 1, the price cap rose 10% compared to where it was previously due to shifts in the energy market. Helpfully, the price cap is based on the previous three months of wholesale price movements so even though oil prices are starting to fall, this is not reflected in our energy bills.

The cap applies to those on standard variable rate tariffs (SVRs) which is nearly everyone these days as the energy market has become very uncompetitive in recent years.

But this is all just information and does not affect the amount of money that you pay and as many pensioners will be £200 short this year, it is probably time to discuss how to actually save money on your energy bills.

The first saving comes from paying by direct debit. According to Ofgem, those on typical use can save £112 (based on the new price cap) by switching to direct debit rather than paying on receipt of bills.

This option is taken by over 65% of consumers but it has an additional benefit in that it spreads the cost of your energy use over the year.

Energy use is not linear. In winter, typically, you put the heating on more and consequently have higher energy consumption than in the summer but those on direct debit do not pay any more in the winter than the summer as their usage is evened out across the year.

This means that you pay the same monthly payment throughout the year and at different points are in debt or credit. By the end of winter, most people are a month worth of direct debit in debt but by the end of summer they are either back to zero or slightly in credit and even though you are paying the same amount overall, it makes energy bills more manageable.

The next way to save on your energy bills is to switch to a different provider. This used to be very lucrative as the energy market was highly competitive but since the conflict between Russia and Ukraine, the UK energy sector has ground to somewhat of a halt.

This is not the end of energy deals, however, but they are less of a winner than they used to be. Some firms will offer fixed tariffs that are slightly below the price cap which are obviously worth switching to but sometimes it is worth fixing above the price cap.

This may sound illogical as why would you lock yourself into paying a more expensive price but in the medium to long term it can work out cheaper.

Current predictions are that the energy price cap will fall from January due to what is happening in the wholesale market but if it looks like prices will rise then it may be worth locking in now before energy prices rise further however at the moment, you’d be better off on the price cap than a costlier deal.

The final thing to check (for pensioners only) is if you may still be eligible for the Winter Fuel Payment. This now only applies to those who are on Pension Credit but it is one of the most underclaimed benefits out there so for pensioners (or helpful grandchildren) it is worth having a look online if you or someone you know is eligible for Pension Credit without knowing.

---

Do comment your thoughts below.