Cut costs of electricity & gas utility bills

Introduction

We often hear on the news that the top 6 utility companies own more than 95% of the market share, and that they regularly post 20%+ year on year profits.

Too many people don't take the time to look into this issue, and just end up renewing their existing contract as per the renewal letters that they send out at the end of each year.

It doesn't help that there are hundreds of different tarrifs out there, so how do I know what is right for me?

Disclamer

The information below may not be representative, and may not apply to your case. These are some personal notes that I put together when we faced another utility renewal letter.

Information from existing provider

From existing provider, obtain consumption values for each quarter, and an estimated anual consumption. Ensure that these are converted to Kilowatts hours (KWH), this is what you will be billed for. This information can sometimes be found on bills (if lucky) or call them and ask for the info, worst case look over your bills and tally up the numbers.

If the meter is an economy7 meter (day/night readings) then get estimates for each.

Types of tarrifs

Each tarrif contains the following components:

Cost of paper bills, payment methods, and how regularly you submit a meter reading. You usually save between 5% and 10% of your bill if you do direct debit+online statements + monthly meter reading submissions.
Cost of renting the gas/electricity meter.
The unit cost for the energy (KWH).

Some tarrifs muddle these things and try to give you one overall price, but how do we really know (independantly) that this tarrif is better than that.

Fixed unit cost, standard meter

This type of tarrif is usually given to businesses, but if you ask your sales rep they should be able to quote you one of these. Unit price per KW and meter rent, sometimes they quote it as pence per day, or pounds and pence per year, just convert it.

Then use this python script to compare between the various companies.

#!/usr/bin/env python

def _calculate(anualUse, kwCost, dailyRent):
    anualRent = dailyRent * 365
    anualCost = anualRent +  anualUse * kwCost
    return anualCost

def calculate(name, grent, gkw, erent, ekw):
    gas = _calculate(dailyRent=grent, kwCost=gkw, anualUse=gasAnualUse)
    elec = _calculate(dailyRent=erent, kwCost=ekw, anualUse=elecAnualUse)
    print "%s\n\tgas: %.2f, electricity: %.2f, total: %.2f" %(name, gas, elec, gas+elec)

# estimates of anual cost from existing readings
gasAnualUse = 12775
elecAnualUse = 4363

calculate("british gas", grent=0, erent=0.2323, gkw=0.04617, ekw=0.1008)
calculate("scottish power", grent=0.25, erent=0.2002, gkw=0.03872, ekw=0.1017)
calculate("co-op", grent=0.1761, erent=0.1761, gkw=0.0384, ekw=0.1318)

This of course doesn't take into account any credit that the company may offer you for switching, or being a loyal customer.

Fixed unit cost, economy7 meter

Same as above, but we cant simply do anualUsage * kwCost, but have to do:

dayAnualUsedayKwCost + nightAnualUsenightKwCost

Default tarrif

For this type of tarrif, we dont get a seperated meter and unit costs, but its bundelled together.

If you use less than the 255 kwh (electricity) or less than 670 kwh (gas) per quarter, then you might be saving some money to be on one of these, (single ocupancy, studio?)

The difference between the initial and the there after prices is all about clawing back the meter rent that wasnt explicitly payed for.

A quote could look something like:

electricity, the first 225 kwh of each quarter, 0.2222
there after 0.1055 per kwh
gas, initial 670 kwh of each quarter 0.0637 per kwh
therafter 0.0327 per kwh.

If you got your quarterly estimations, then again you can go through and calculate your overall cost.

Default tarrif, economy7 meter

Same as above, but with day/night energy costs.

Pointless complexity in calculations, since now we have to calculate initial day/night, and therafter day/night.

Summery

If you spend more than 50 pounds for electricity or 40 pounds for gas per quarter, then you will be paying the meter rent.

If you can change your habbits to use more than 40% of your electricity between 10PM and 6AM, then it is worth having an economy7 meter. Any less than 40% and you will be losing money, since your day prices usually are 25--30% higher than a standard meter.

So definitely don't stick with the renewal letter, ring them and say you are considering leaving, do they have any better prices. You should be able to cut about 200 pounds of the anual bill just by switching, or threatening to switch.

End of investigation.

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