"Up to £124 off your gas bill in 1998" read the headline on the flier that came with our December gas bill. "15% off your gas bills" said the TV advertisement. True? Well, "Yes, if -
If your gas bills on StandardPay in 1997 came to anything less than £250 (enough to heat and cook in a 2-bedroom flat) you will actually pay up to £11 more in 1998. At the £900 level, if you are already using the DirectPay scheme you will save £73. An average saving will be half that.
However, let’s be fair. British Gas has been held back by the Regulator from predatory, perhaps even competitive, pricing, to give the new kids on the block a chance to kick the ball around. Now it is being permitted to get back into the game. What the British Gas leaflet clearly shows is how competition is heating up in the supply industries.
The problem is how to choose between the competitors. None of them can be compared with others by unit price alone because they all offer a two-part tariff, usually in the form of a fixed standing charge and a pro-rata unit charge. Some of them, however, express their two-part tariff in the form of a unit price for the first X,000 units and a lower price for additional units. And then there are discounts, some as a percentage of the whole bill, some as a percentage of the consumption cost and some as an annual or a quarterly lump sum. What matters is your total bill.
Here is a simplified review (compiled at the end of January) for the South East and South West:
The table on the next page shows how the companies’ tariffs vary. It is set out in ascending order of charges for average consumers paying by direct debit. There can be differences of £34 (58%) for low-level users, £68 (19%) for average users and £104 (17%) for high users. The table is based on a range of meter readings in Units, but it also shows what the same levels of use would have cost using the British Gas 1997 direct debit and standard tariffs.
Some of these tariffs will probably change by the time you come to compare the companies. Even so, the table demonstrates that you need to know what your annual consumption is in order to choose the cheapest supplier for your household. An "average user" table is better than nothing, but the size of your house, the number of people in the family and your enthusiasm for warmth will all affect your consumption of gas. If you know from cheque stubs what you paid British Gas in 1997 you can use the table to make a guess about your consumption. Twelve monthly payments is the next best thing, but what you pay British Gas in a year by direct debit is not always what you owe them.
If you have previous bills for a year or more, you can work out your annual consumption (in Units or kilowatt hours). That needs to be the difference between two actual meter readings one year apart. British Gas doesn’t read your meters very often, and its estimated figures can be way off the mark. Its annual review statement for direct debit payers does not contain a guess about your annual consumption, unlike those of some electricity companies.
If you have kept no bills, now is the time to start. Competitive tariffs for gas
supplies are being extended to other areas from the end of February, while competition in
the Electricity market is now to be delayed until September at the earliest. Every time
you get a gas or electricity bill with an Estimated consumption figure on it, go and read
your meter, then enter the reading on the bill. File it, and in a year’s time you
will have an annual consumption figure. The gas market is still settling down, and even if
you change suppliers now you ought to reconsider your choice in a year’s time.
Of course, last year’s consumption may not have been typical, and you still have to do the sums. Have you looked at the back of your gas bill recently? Is there an easy way to make comparisons? Yes - by computer. You need a programme which will do three things:
If you already use such a programme we would be glad to hear from you (phone Ken Frere on 01235 523915). In the meantime NfCG is trying out a suitable programme which will be on offer (probably at £4) in the next issue of the newsletter. It is designed to run with Works for Windows and is easy to use, even if you need to ask your children for time on the computer to run it. The disc contains programmes for gas and electricity supplies. It will come with detailed operating instructions, and some suggestions for calculating your likely level of consumption from the payments you have made.
All the new tariffs show savings if you pay on time, preferably by direct debit. This
method undoubtedly reduces suppliers’ costs, but it has social implications (such as
higher charges for anyone who has difficulty making regular payments). Paying by direct
debit is also not a free lunch. The disc contains more helpful advice about coping with
the cunning ways in which suppliers try to claw back some of the benefits which you are
supposed to get by paying by direct debit.
TRANSCO
, the company responsible for the national gas pipeline network, has issued timely advice for those moving house in, or into, an area where domestic competition in the supply of gas exists. It points out that you can no longer assume that the gas is supplied by British Gas Trading. If you do not sign a new contract when you move in, the companies supplying the house will be deemed to be your supplier and you will have to pay them, whoever they are, for the gas you use.TRANSCO’s
advice is to find out who the supplier is before you move and decide what action to take. Even if you decide to stay with the existing supplier you should enter into a contract and, of course, a new supplier will not supply you without one.
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