Fight back against greedy energy firms
Energy prices generally continue to climb ever-higher, forcing some households to make the impossible choice between heating and eating
14:51 09 March 2013
With millions of households struggling to make ends meet, news that Britain's biggest energy company, British Gas, raked in £606million of profit in 2012 has triggered outrage among consumers.
Energy prices generally continue to climb ever-higher, forcing some households to make the impossible choice between heating and eating. The fact that British Gas announced a 6% price hike in November has made the energy firm's announcement an even more bitter pill to swallow.
In fact, each of the 'Big Six' energy suppliers upped their prices over the autumn and winter months.
If you're frustrated that rising bills are being reflected in rising profits for British Gas and its rivals, the best thing you can do is vote with your feet and take your business to another supplier offering a better deal.
It's easy to do, there's an absolute minimum of effort and you could save the best part of £200 a year.
Here's a closer look at the news, what it means and how you can fight back against the energy companies making profit from Britain's misery.
Bitter pill
Six million UK households are now living in fuel poverty (where more than 10% of their income is spent on energy bills) according to Consumer Focus. This grim figure is predicted to rise to nine million by 2016.
British Gas' profits, up 11% on 2011, have understandably angered consumers feeling the squeeze from price hikes of 6% in November last year and struggling to keep their homes warm in record low temperatures in recent weeks.
Sam Laidlaw, chief executive of Centrica, British Gas' parent, has tried to quell consumers' anger by saying it makes just under £50 profit per customer, which equates to an 'acceptable' margin of less than 5% (typical British Gas bills are typically £1220 - £1320).
But this will of course be cold comfort to households who will have received their biggest quarterly bill of the year in the past couple of weeks and who might be struggling to pay it.
And prices will keep rising
British Gas, along with the other energy companies, deny blatant profiteering and say they are at the mercy of the price of gas on international wholesale markets, the cost of moving gas around the National Grid and the financial impact of government green energy and energy-saving initiatives.
Fuel price inflation is likely to increase now that the UK has had its prestigious AAA credit rating downgraded. This has weakened sterling and made imported gas more expensive, with higher costs likely to be passed on to us, the consumers.
The government's Energy Bill has outlined how it will invest in the UK's energy infrastructure over the coming years. That huge investment, an estimated £110billion over 10 years, will have to be paid for by higher energy prices.
In the meantime, Britain will have to rely on imported energy from abroad as it closes down coal-fired power stations and works to bring the new infrastructure into place, which, given the weak pound, will also probably hit consumers in the pocket.
Fight back today
You don't have to sit there and take it. If this week's news from Centrica is the last straw for you, then you need to do something about it today.
MoneySupermarket financial expert Clare Francis, pictured right, says Centrica's profit announcement should serve as a wake-up call for anyone who hasn't switched to a more competitive supplier or tariff recently.
Clare said: "With energy bills already making up a large proportion of monthly outgoings for UK households, today's announcement by Centrica will be difficult for many to stomach.
"Bill payers need to lead the charge against rising bills - and it's quick and easy to do. All you need is a copy of your latest bill and ten spare minutes when you can get online, compare available tariffs and move on to a better value energy deal.
"Anyone still on their provider's standard energy product should take action as quickly as possible; the typical saving they could make by moving to the best value fixed deal is £168.
"This saving would go some way to offset their costly winter bills, and by fixing their energy, they can safeguard against any future price rises over the term of the deal."
What to do
Comparing and switching to a cheaper deal needs to be your first move. Our gas and electricity comparison tool is really simple and will tell you within 10 minutes if you can save money by switching to a new supplier or tariff.
And switching itself is even easier - the whole thing is handled by your current supplier and the new one. It'll take six to eight weeks, you won't need any physical work carried out in your home (no new pipes or wires) and in fact, the only difference you'll notice is that your cheaper bills start coming from the new provider.
But switching is just the first step - there's plenty more you can do to fight back against greedy energy firms.
Plugging draughts under doors and around windows will keep your rooms warmer so that you don't go reaching for the thermostat and lining your supplier's pockets. Investing in more energy-efficient windows or boilers will not only add value to your home, it'll also lower your energy bills. You'll find more tips like these here.
You can even get free cavity wall and loft insulation which will help your home retain heat. The government has challenged the energy companies to lower carbon emissions, so the likes of EDF and British Gas are giving away free insulation to make us use less energy. You can find out more about this here.
And finally, if you're struggling to pay your energy bills you're not alone - there's plenty of help available. I offer advice on what to do if you receive a bill you can't pay in my article 'Get help with hefty energy bills'.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.