Prepare now for a £500 rise in gas and electricity bills

By Chris Ray. Published on June 18, 2008 This post currently has no comments.

Gas and electricity bills are to rise by an average of £500 over the next twelve months as gas and electricity prices soar by at least 30%.

The average home already spends around £650 each year on gas, however it is expected that gas will rise in price by 20% this summer and then by another 30% after Christmas. A 40% rise in total over the next 12 months.

Kettle on a gas cooker

Unfortunately electricity costs will increase by around 30% over the next year too so the combined rises will cost an additional £500 per year.

The problem stems from the rising oil price. Even though oil and gas production are not directly connected, a European pricing model links the price of gas to the cost of oil. With oil prices rocketing, gas prices will inevitably follow.

So what can you do about it?

Well, as far as gas and oil prices go, there is little that you can do as these are determined by world wide markets. However there are steps that you can take to reduce your use of gas and electricity in your home and also to find better deals for these utilities.

Insulate your home as best you can now

We talk a lot about ensuring that your home is as well insulated as possible. Now is the time to see if your loft is insulated well enough and maybe to see about cavity wall insulation if you don’t already have it.

Companies that provide insulation services are generally less busy during the summer months so you should be able to negotiate some good prices now. Southern Electric, for example, are offering an insulation grant for their customers who currently don’t have any loft insulation.

You may well find that your energy supplier offers a similar deal with insulation grants, so it is worth checking their web site.

It is also very easy to install modern loft insulation yourself. The time and money are well spent as your home will feel warmer and those heating bills will be kept to a minimum.

Find fixed price gas and electricity deals

Some gas and electricity companies are offering fixed prices for their gas and electricity. You pay a fixed amount over a one or two year period, thereby gaining peace of mind that your energy costs will not rise above your fixed rate cost, even if oil prices continue to increase.

Scottish Power offer a fixed rate deal for two years, however you have to read the terms and conditions very carefully and you are likely to pay more for your energy now, than with their other plans, particularly their discounted and online energy offers.

You should pay particular regard to cancellation fees and other tie ins that may apply to fixed rate energy deals offered by the various utility companies.

Capped rate energy prices are also available. E ON, for example, will cap your energy costs with their price protection 15 plan. You will not pay more than the capped rate, even if prices go beyond that level, however you will also benefit from falling prices if energy costs decrease within the capped term.

Although there are no tie in periods with E ON’s capped rate plan, they do state that “a premium applies, which varies by consumption, payment method, meter type and location” which is something to consider. This means that you will be paying more per unit for this capped rate plan, compared with some of their other offers.

If you wish to avail yourself of a fixed rate or capped energy offer, then you should hurry as many of these deals are running for a limited time and may become over subscribed by customers eager to protect themselves from future gas and electricity price hikes.

Large increases in gas and electricity costs are inevitable, so it will pay to start thinking about how to improve the energy efficiency of your home and ensuring that you have found the very best energy deals possible for your circumstances.

Now is the time to do this.

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