Smaller energy companies are undercutting the Big Six. With fewer overheads, reduced financial commitments and a tougher avenue to gaining custom, the trend shows the cheapest energy deals are being offered by the smaller suppliers.
But is there more to the story?
Are cheap energy deals always the best?
While we all want to save money on our gas and electricity bills, exercise caution when it comes to cheap energy deals. Cheap doesn’t always equate to best, and sometimes you get what you pay for.
Sometimes though, you get way more, which is why it’s important to scrutinise any deal. When you run your energy comparison with us, you can filter results by cost. But when you do, be sure you look beyond the price tag to see exactly what’s on offer.
How much should I pay for my energy?
When choosing an energy deal, you should take into consideration whether a tariff is good value for money and whether it gives what you want – and need – from your supplier. For example, you may want to ensure you’ve got constant access to top-notch customer service wherever you are, though that could come at a price.
Boiling down to the hard numbers though, we’ll give you some average figures for electricity and gas in the UK. According to Ofgem’s latest data, the average prices of gas and electricity are 4.4p/kwh and 19.48p/kwh respectively.
You can use these as a benchmark to see whether you’re drastically overpaying for your consumption. Of course, usage varies considerably across the board – your own bill will depend on the size of your household, at what times you consume the most energy, and it what ways – but these averages can be insightful benchmarks.
Who is the cheapest energy supplier?
Critically, there isn’t one single cheapest supplier. Energy tariffs are dependent on a multitude of factors, so what is a cheap deal for you may not be for your pal half-way up the country. You may also find that some providers don’t serve where you live, what meter you’re on or even the way you want to pay.
Furthermore, the energy market is fluid, with tariffs constantly revolving to reflect the wholesale price of gas and electricity, which can be impacted by anything from global politics to the weather. Therefore, it’s really a case of which supplier is hot right now.
That being said, there are a handful of names that are, at the time of writing, the cheapest energy suppliers. Some examples of these are Green, Simplicity and Utility Point.
What about the Big Six?
For a long time the Big Six dominated the energy market, and while they still do hold about two thirds of the share, more people than ever are switching to smaller suppliers offering more competitive rates.
However, there have been cases of new companies offering such low rates that they go bankrupt, and the Big Six claim many smaller providers are irresponsibly undercharging for energy. With the Big Six, you won’t get the cheapest energy deal going – in fact, according to Ofgem, their average cheapest available tariff is almost £60 more costly than the average from smaller suppliers. But then again, one might argue you pay for reliability and security.
What is the cheapest energy tariff?
In most cases, a fixed-rate energy deal offers the best rates. This is when the price you pay per unit of energy you consume is fixed throughout a contract term. When you compare energy deals for cheap suppliers, look out for low unit rates.
However, be aware you’ll also need to pay a standing charge: this is a daily fee for having access to energy. You could find a supplier offering tantalisingly low unit rates balances these with high standing charges, so watch out for this.
Your other option is a variable-rate tariff, which is where the price of energy fluctuates with wholesale prices. Therefore, when the cost of energy is low you could find you save money on your bills.
How to get cheaper energy bills
By a country mile, the best way to get cheaper energy bills is to switch providers. You can do so by running an energy comparison with us first to see what suppliers operate in your area and which tariffs are available.
In the same vein, check whether you’ve been transferred onto your supplier’s Standard Variable Tariff (SVT). This is the default rate you’re placed on once your contract ends, and they’re horribly overpriced. If you’re on an SVT, look for a new energy deal as soon as you’ve finished reading this guide of sage advice (we know you can’t possibly look away now!).
Moreover, opting for online payments rather than paper bills cuts out postage costs, the savings of which are passed onto you. Or, one step further is for you to totally manage your account online.