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- How to make sure you're on the best energy deal this winter

After raising energy prices by an average of 35% in 2008, energy suppliers have now announced price cuts. Or have they?

British Gas was the first to announce a 10% cut on gas, followed by similar announcements from Scottish and Southern, E.ON and now EDF. See the table below for a view on how gas and electricity prices have changed over the last 12 months for the major suppliers.

The current round of cuts is small in contrast to the extraordinary increases we saw in 2008.

So are consumers being short-changed, when the benchmark price of oil is now approximately two thirds off of their 2008 peak?

The short answer is yes - it is hard to see how the current round of ‘cuts’ (which won’t take more than 5% off your combined gas and electricity bill) are more than window dressing, particularly if one takes into account that the cost of living is still rising at a 3% rate.

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Here is what is putting a brake on price cuts:

Business Energy consumption is crashing. Most energy is actually used by businesses not private homes. The current economic downturn has led to a significant downturn in business demand, and experts predict reductions in business energy usage of 10% or more. Suppliers have reacted by announcing cost-cutting drives, taking steps to mothball power stations, and rewriting their investment plans. Adding to that is that most of Europe’s energy supply companies are heavily indebted, and are now finding it increasingly difficult to refinance their debt. Under these circumstances, energy suppliers have turned conservative, and are possibly looking toward the domestic energy sector as a safe profit haven.

Energy is still running out. We are using non-renewable sources like oil, coal, and nuclear fuel to meet 95% of our energy needs. So even though the current economic recession is reducing demand for energy across the world, we are just slowing the rate at which we are depleting our natural resources. Energy markets believe that prices will again rise sharply once the world moves out of recession and this expectation is preventing a permanent fall in energy prices.

We need to pay to break our dependency on oil. The investment needed to convert our oil-based energy economy to a sustainable one is astronomical. Only 5% of the energy we consume at home comes from renewable sources, and the technology that will push this usage into double digits (let alone past the 50% mark) has not even been invented yet. This is not all bad – many experts believe that investments in a sustainable energy economy will help lift the world out of recession – but the price of moving beyond carbon-based sources of energy is uncomfortably high energy bills for many years to come.

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Is there a way out? The advice to UK consumers is two-fold:

1) Switch energy supplier using our independent price comparison service. Suppliers do compete for your business and constantly introduce cheap tariffs to attract new customers. Savings are attractive – you can currently shave 20% (that’s more than £200) off the average bill just by switching to the best deal. Once you have switched you need to stay on your toes, as most supplier will not reward your loyalty. Suppliers will always offer the best deal to new customers, not their existing ones! So take action to ensure that you remain on the best deal - keep track of your consumption and visit our comparison service on a regular basis.

2) Use less energy. Visit the excellent energy savings trust website www.est.org.uk for a one-stop shop to help take control of your energy consumption. Learn where and how most of your energy is consumed at home, and then take steps to cut back. The site even offers a very helpful calculator to find home energy efficiency improvement grants.

So switch now and use less energy - and the time to act is now before winter is over.

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Florian Ritzmann is Product Director at online comparison service Xelector.com and has been working with energy suppliers for ten years.