How to save money on energy: What you need to know and energy-saving tips that work
- Energy bills remain high, at above £1,700 a year for most households
- Here is everything you need to know about rising electricity and gas costs
Millions of British households face high energy bills, even with the price cap - set by Ofgem - due to fall in January.
Energy bills are currently £1,717 a year for the typical home, and the best estimate is that this will fall to £1,697 from January 2025, according to analysts at Cornwall Insight.
This 1.1 percent fall will be a cold comfort to households struggling with the cost of living, and an alternative prediction from energy firm EDF is that the average bill will actually rise 1.1 per cent, to £1,736.
That rate applies to a home with average energy use, on a variable-rate energy tariff and paying by direct debit.
One way or the other, energy bills will remain high.
In our essential guide to how to save on energy, we explain everything you need to know from how your bills are worked out, to whether you can still fix, if a smart meter is worth it and, of course, some energy saving tips.
Here's everything you need to know about how your bills are calculated, when you should switch suppliers, and how to cut down on your energy use
Can I switch energy providers and fix my bills?
There are now fixed-rate energy bills households can switch to that undercut the Ofgem price cap and will save you money.
However, these these are still low in number and most fixed rates work out more expensive than simply staying on an energy tariff limited by the Ofgem price cap.
Until the energy crunch arrived in late 2021, the advice was simple: people were urged to switch energy providers regularly to get the best deal possible.
The cheapest deals were fixed-rate tariffs, with variable-rate deals normally reserved for households that had reached the end of their cheap tariff and not switched.
On the up: Energy bills remain incredibly high, leaving many households struggling
Affordable fixed-rate deals then began to vanish from Autumn 2021, when energy prices began to rise.
Many comparison sites then paused their energy switching services, energy providers stopped taking on new customers, and the common advice was that most people would be better off on deals subject to the Ofgem price cap.
This left households lumbered with variable-rate deals, which more than 80 per cent of Britons now have.
Fortunately there are other ways to save money on energy bills, but these do require an up-front investment in home improvements.
Money-saving energy tips that work
Draught-proofing
Some of the best energy-saving advice might sound like something your grandparents would have said, like blocking out draughts where possible.
But that is because that advice has stood the test of time – and the test of generations living in colder, draughtier properties than we do today.
Draught-proof gaps around windows, doors and floorboards by fitting foam strips, plastic seals or brushes.
Seal gaps between floors and skirting boards with a simple sealant bought from any DIY store for a few pounds. This small outlay could save you £30 a year in energy bill savings and make your house feel much warmer.
Reduce the flow rate on your boiler
A simple tweak to your combination boiler settings could save you more than £100 a year.
Boilers have a flow temperature – the level they heat radiators to. These work more efficiently if the temperature is set to 60C.
However, boiler flow temperatures are often set much higher than that, according to research from charity Nesta.
Lowering the flow rate on your boiler from 80C to 60C saves nine per cent of total gas use, or £75 a year for an average home.
Settings tend to vary from boiler to boiler so it is worth digging out the manual to find out how to reset yours.
You should also make sure your boiler is regularly serviced and consider boiler insurance, with just one fifth of home insurance policies covering boilers.
Fit thermostatic radiator valves
Your radiators may have little numbered dials attached – use them. These are called thermostatic radiator valves and they set the heat each radiator gives out.
Setting them to the level you need them can save you energy, and therefore money, as you can control which rooms are being heated and by how much.
The cost saving depends on how you use these valves – but some energy firms claim these can cut energy use by up to 40 per cent.
It's worth noting that modern thermostatic valves are a substantial improvement on older ones - and if you get them fitted, learn how to use them properly.
Extra padding: Loft insulation can save households a serious wedge on energy bills
Insulate your home
Insulate your property If you can afford to, upgrading or installing insulation can really help save money. However, this does come with an upfront cost – which might cancel out any cost savings for a while.
What is the energy price cap?
The energy price cap is set by watchdog Ofgem and was created to limit the prices gas and electricity providers could charge those on their default variable tariffs.
The current price cap is £1,717 a year for average use.
The price cap was designed as a safety net for those who did not switch providers to find cheaper bills, but as costs have soared and the energy market has seized up it has become a consumer lifeline.
The price cap is set by Ofgem and adjusted quarterly.
Ofgem says that about 22 million households are on energy price cap tariffs.
It is worth checking to see if you can get a better deal elsewhere, or to see if your current supplier can move you to a rate that would suit you more.
If you have an electric car, it is worth exploring what you supplier could offer - as some do special discounted time rates.
Don't get your hopes up, do the maths carefully, beware expensive fixes and watch out for any charges to leave.
How do I ensure my meter readings and bills are right?
If you do not have a smart meter, giving meter readings to your supplier is the only way to be sure you pay only for what you use and your bills do not end up way out of line.
Without meter readings your supplier will estimate how much energy you are using and charge you based on that - this can mean big bills suddenly landing as you fall behind.
If your last bill was larger than expected, there could be many legitimate reasons why you could be asked to pay more:
Check it: If your energy bill seems wrong, take meter readings and check with your energy firm
- Your energy supplier has increased prices
- Your usage has risen, for example, due to cold weather
- Your bill is based on an actual meter reading, rather than an estimated reading
Unfortunately though, it can be common for errors to occur when submitting your meter reading, and they can prove costly if not dealt with swiftly.
How to challenge energy bills you think are wrong
If you suddenly get a big bill, the most important thing to remember is that consumers are protected against back billing of more than a year by Ofgem rules.
This means that you can't be charged for gas or electricity used over a year ago if you were incorrectly billed, or not correctly informed beforehand.
This also includes situations where a supplier could increase your direct debit because it was set too low originally, but the rule does not apply if you have behaved obstructively or unreasonably, preventing accurate billing.
If you do receive a back bill then you should get in touch with your energy provider, letting them know that you are protected by the back billing rules and will only pay for the energy you have consumed within the last 12 months.
But, if you receive a bill for energy within the last year, and you are worried that it is incorrect, you should contact your energy provider as quickly as possible to resolve any potential issues that may be the cause.
If you are unsure if your bill is correct, it could be worth calling your provider's customer service team, who will be able to talk you through your bill in more detail.
If you do not get a satisfactory answer you should write to your supplier, via post or email, explaining why you think your bill may be incorrect, along with an up-to-date meter reading and any evidence to back it up.
Ask them to provide you with evidence of meter readings and rates being charged for different periods. Ensure you keep a record of all evidence and communication too.
How do I read my electricity meter?
There are three types of standard electricity meters that you could come across in your home: single rate meters, two rate meters and dial meters.
For single rate meters, you should read the numbers from left to right. You should not include any numbers in red, or after a decimal point, when you submit them to your energy provider.
The reading for this old-school dial meter would be 33823: they can often be the most confusing for customers
For two rate meters it can get a little more complicated. Two rate meters are usually used for economy 7 or economy 10 tariffs, which charge different rates of energy in off-peak hours, usually one for your day usage and one for night usage.
If you have a digital two rate meter, you should be able to change your settings to show you your 'rates', with Rate 1 for your peak energy consumption, and Rate 2 for off-peak.
Dial meters can be the most confusing type of meter, but they are relatively simple to read once you know how.
The dials move in alternating clockwise and anti-clockwise directions, and you should read them from left to right, ignoring any numbers in red.
When the pointer is between two numbers, record the lower number, and if it's between 9 and 0, you should record the number as 9.
When the pointer is directly on a number, check the next dial to the right. If the dial on the right reads 8 or 9, then you should lower the reading for the dial with the pointer directly on the number.
If you have a smart meter, your energy provider should be receiving regular meter readings automatically, though you can change the frequency of your meter readings by speaking to your provider or online, or by changing the settings on your device.
Smart meters should also be regularly checked to make sure they are sending the right information - making sure the meter tallies with your bills.
If you are worried that you may be paying too much for your energy, it is always worth submitting an additional meter reading and asking your provider to confirm how much you should be paying.
For single rate meters, you read the numbers from left to right, but you shouldn't include any numbers in red, or after a decimal point, when you submit them to your energy provider
Can I get money off my bill for energy saving?
Ensuring every device you do not need to use is turned off completely could still save you money on your energy bill, but you will need to stay super vigilant to reap the rewards.
Ultimately, most energy saving tips do not make a huge difference on their own, but if you try to do as many as you can, you will save money - often helped by using less water too. They won't make much a huge dent in your bills, but as the slogan goes, 'every little helps'.
What help is available if I am struggling to pay my energy bills?
If you're struggling to pay your energy bills, or are worried you may miss a payment, you should speak to your energy firm. Many have dedicated teams to help you and can work out payment plans for big bills.
Others offer grants for low-income homes to help with their energy bills.
Most energy providers should allow you to change from a prepayment meter to a direct debit tariff or credit meter for free, as long as you are not in debt with your energy provider
Can you ditch your prepayment meter?
If your home currently has an old-style prepayment meter, you can ask your energy supplier to replace it with a new credit meter, or a smart meter, for free.
A prepayment meter is a type of gas or electricity meter that requires you to pre-pay for your energy before you use it. They are often more expensive for energy use.
You have a prepayment meter if you have to 'top up' a prepayment card, key or app to pay for your gas or electricity.
You can switch to a credit meter, which allows households to pay a set amount a month for their energy usage, or make the switch to a direct debit tariff.
However, its worth noting that your supplier usually won't replace your meter or change your smart meter setting if you are currently in debt to them.
If you are in a rented property, you do not need your landlord's permission to change your meter, though they could ask you to change your meter back when you move out.
If your current energy supplier charges for prepayment meter removal or suggests you are unable to switch from a prepayment meter, you can consider switching to another supplier.
Prepayment meters are being phased out by the smart meter initiative, which aims to offer a smart meter in a bid to make it easier for households to top up their energy and to help them better understand how they consume energy throughout the day.
| Pros | Cons |
|---|---|
| Sends automatic meter readings | Concerns over user data privacy |
| Accurate, up to date energy bills | Doesn't guarantee long-term savings |
| Easy to track what the energy you use | Constant access to monitor energy use |
| Could reduce carbon footprint | Long wait time for free installation |
| Gain access to cheaper tariff options | Not available with every energy provider |
| Easy to switch suppliers and keep your smart meter | Limited data options in rural areas |
How do I get a smart meter and will it save me money?
Energy companies and the Government are encouraging customers to make the move to smart meters.
Available at no upfront cost, they offer a number of benefits over traditional meters from automatic readings, more accurate energy bills, and real-time reports on your current energy usage.
They also unlock special energy tariffs with discounted rates for offpeak use.
However, many customers are unconvinced and reluctant to move to them. This has led to delays in the rollout and rows over smart meters, especially as they are seen as a potential threat to privacy and can be unreliable.
Your choice: Energy firms are promoting smart meters, but the devices are not mandatory
Nonetheless, the great advantage of a smart meter is that your bills should be accurate, and there are millions of satisfied households already using one.
To make the switch, you should speak directly to your current energy provider to discuss your eligibility and the tariff options that a smart meter can offer.
It is worth remembering though that smart meters are not mandatory.
What is a standing charge?
A standing charge is a fixed, daily figure that you pay for your energy, no matter how much you use, even if your property is empty.
The charge covers the costs from maintaining the energy networks, wires and pipes that carry gas and electricity across the country to your home, keeping your home connected to the energy network, and meter readings.
It can also cover the costs of government initiatives that help vulnerable households and reduce CO2 emissions, as well as recouping some of the debt left over by failed energy suppliers.
Breakdown: The electricity standing charge pays for things like customer service, and the cost of running the power network and operating meters
If you have a dual fuel energy bill, you’ll pay an electricity standing charge and an gas standing charge.
If you pay by direct debit these charges are currently capped at 60.99p and 31.66p respectively per day, though this can vary depending on where you live.
Standing charges are also included with prepayment energy tariffs and smart meters, which will usually be shown in the total you see on your in-home display.
There are some energy deals with no standing charges, but these typically charge higher unit rates to make up the difference.
Regulator Ofgem is pressuring energy firms to launch more deals with no standing charges, to give consumers more choice.
How is my energy bill calculated?
Energy bills are made up of a number of costs covering what companies do (and how they make a profit) as well as the gas and electricity actually used by a household.
The wholesale market price of gas and electricity accounts for the biggest portion of the average energy bill at around 50 per cent.
The next largest chunk of the typical customer's bill, around 18 per cent, goes towards providing and running energy infrastructure, such as pylons and gas pipelines.
Policy costs currently account for around eight per cent of your bill. This covers energy company obligation schemes, which pay to upgrade home insulation for households on low incomes; as well as renewables obligations, which require suppliers to get some of their electricity from renewable sources.
Energy companies are currently able to claim operating costs equating to around £220 of the annual average price-capped energy bill.
The Government also takes 5 per cent of the typical energy bill in VAT.
