Tuesday 16 December 2008

Energy direct debits

Many thousands of people across the UK have had their energy direct debits hiked in the last few months, sometimes by as much as two or three fold. Yet often it seems the increase bears little or no resemblance to the increased cost of gas and electricity.

Worse still, many providers WON'T lower the payments without a fight, even when it's obvious you're overpaying enormously.

The price and what you pay aren't the same

The reason this can happen is the difference between the price and what you pay.

  • The Price. Power costs are set by suppliers, usually with a daily 'standing charge' plus an additional amount based on energy used measured in kilowatts/hours. So the lower the rate and your usage, the less you owe.
  • What you pay. With MONTHLY direct debit, the company estimates annual usage and then divides it by twelve so you pay that each month. Thus with low summer use, you'll usually build up a credit, but this'll be needed for winter months.

The problem is, some bills don't follow this logic and are massively overestimated, as if providers are making the figures up as they go along. What's more, overpay and you'll often have to wait until the end of the year to claim the cash back, whereas underpay and the difference has to be made up straight away.

Do note; QUARTERLY direct debits are different. There you pay depending on what you've used, but the price is then higher.

Fight back NOW

The most important thing is to always do a meter reading. If you don't, it's tough to argue what a reasonable charge is. Assuming you do that, if you're heavily in credit, ask for your money back.

Then it's a question of starting to negotiate and demand an explanation as to why your debit's been pumped so high. Better still send a quick letter explaining it should be lowered.

For a full step-by-step guide to this, including free template letters to send to your provider, see the "Unfair Energy Direct Debit" guide in the 'useful links' section. It also explains how to take a case to the Ombudsman if all else fails.

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Don't wait for price cuts

1) Compare and switch - never switched? Then now is not the time to be complacent as you are likely to be paying a premium on your energy bills. Getting the right deal for you - dependent on where you live, your actual energy usage and how you like to pay - is key to saving those pounds. If you use a price comparison service, check that it is accredited under the Consumer Focus Confidence Code, impartial and upfront about how it earns its money.

2) Pay the easy way - if you pay by cash or cheque you could be paying £94 a year on average more for your energy than paying by direct debit. Not only is direct debit easy, but many suppliers offer a discount for paying this way.

3) Switch two for one - dual fuel (buying gas and electricity from one supplier) can save time and money. Not only do you benefit from dealing with just one bill and one supplier, but dual fuel plans can also offer a discount.

4) Go online - customers on standard plans are paying on average £168 more than new online customers. This is an easy saving to make - don't be put off by it being called an ‘online' plan as some suppliers will only expect you to register online and then manage your account in the same way as before.

5) Keep on top of energy bills - make sure you give regular meter readings to ensure you are being billed accurately and review your energy bills at least once a year to ensure you are still on the cheapest deal.

6) Insulate, insulate, insulate - don't spend hard earned cash heating up the street and not your home. Make sure your loft is insulated to a depth of at least 10 inches.

7) Shed some light on savings - contact your supplier or the Energy Saving Trust to find out whether you would be eligible for a grant or financial help towards making your home more energy efficient.

8) Switch it off - before you go to bed make sure you turn off all appliances such as TVs, computers and DVD players at the socket. Fit energy efficient light bulbs and make sure you turn lights off when not using a room.

9) Turn it down - most of us have the heating on way too hot. Turn it down by just one degree and you could save up to 10% on bills.

10) Cut out the draughts - check your windows and doors are sealed against draughts before the winter chill turns your home into an icebox.
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Wednesday 3 December 2008

The 10 big energy myths

Myth 1: solar power is too expensive to be of much use

In reality, today's bulky and expensive solar panels capture only 10% or so of the sun's energy, but rapid innovation in the US means that the next generation of panels will be much thinner, capture far more of the energy in the sun's light and cost a fraction of what they do today. They may not even be made of silicon. First Solar, the largest manufacturer of thin panels, claims that its products will generate electricity in sunny countries as cheaply as large power stations by 2012.

Myth 2: wind power is too unreliable

Actually, during some periods earlier this year the wind provided almost 40% of Spanish power. Parts of northern Germany generate more electricity from wind than they actually need. Northern Scotland, blessed with some of the best wind speeds in Europe, could easily generate 10% or even 15% of the UK's electricity needs at a cost that would comfortably match today's fossil fuel prices.

Myth 3: marine energy is a dead-end

The thin channel of water between the north-east tip of Scotland and Orkney contains some of the most concentrated tidal power in the world. The energy from the peak flows may well be greater than the electricity needs of London. Similarly, the waves off the Atlantic coasts of Spain and Portugal are strong, consistent and able to provide a substantial fraction of the region's power. Designing and building machines that can survive the harsh conditions of fast-flowing ocean waters has been challenging and the past decades have seen repeated disappointments here and abroad. This year we have seen the installation of the first tidal turbine to be successfully connected to the UK electricity grid in Strangford Lough, Northern Ireland, and the first group of large-scale wave power generators 5km off the coast of Portugal, constructed by a Scottish company.

Myth 4: nuclear power is cheaper than other low-carbon sources of electricity

If we believe that the world energy and environmental crises are as severe as is said, nuclear power stations must be considered as a possible option. But although the disposal of waste and the proliferation of nuclear weapons are profoundly important issues, the most severe problem may be the high and unpredictable cost of nuclear plants.

Myth 5: electric cars are slow and ugly

We tend to think that electric cars are all like the G Wiz vehicle, with a limited range, poor acceleration and an unprepossessing appearance. Actually, we are already very close to developing electric cars that match the performance of petrol vehicles. The Tesla electric sports car, sold in America but designed by Lotus in Norfolk, amazes all those who experience its awesome acceleration. With a price tag of more than $100,000, late 2008 probably wasn't a good time to launch a luxury electric car, but the Tesla has demonstrated to everybody that electric cars can be exciting and desirable. The crucial advance in electric car technology has been in batteries: the latest lithium batteries - similar to the ones in your laptop - can provide large amounts of power for acceleration and a long enough range for almost all journeys.

Myth 6: biofuels are always destructive to the environment

Making some of our motor fuel from food has been an almost unmitigated disaster. It has caused hunger and increased the rate of forest loss, as farmers have sought extra land on which to grow their crops. However the failure of the first generation of biofuels should not mean that we should reject the use of biological materials forever. Within a few years we will be able to turn agricultural wastes into liquid fuels by splitting cellulose, the most abundant molecule in plants and trees, into simple hydrocarbons. Chemists have struggled to find a way of breaking down this tough compound cheaply, but huge amounts of new capital have flowed into US companies that are working on making a petrol substitute from low-value agricultural wastes.

Myth 7: climate change means we need more organic agriculture

The uncomfortable reality is that we already struggle to feed six billion people. Population numbers will rise to more than nine billion by 2050. Although food production is increasing slowly, the growth rate in agricultural productivity is likely to decline below population increases within a few years. The richer half of the world's population will also be eating more meat. Since animals need large amounts of land for every unit of meat they produce, this further threatens food production for the poor. So we need to ensure that as much food as possible is produced on the limited resources of good farmland.

Myth 8: zero carbon homes are the best way of dealing with greenhouse gas emissions from buildings

Buildings are responsible for about half the world's emissions; domestic housing is the most important single source of greenhouse gases. The UK's insistence that all new homes are "zero carbon" by 2016 sounds like a good idea, but there are two problems. In most countries, only about 1% of the housing stock is newly built each year. Tighter building regulations have no effect on the remaining 99%. Second, making a building genuinely zero carbon is extremely expensive. The few prototype UK homes that have recently reached this standard have cost twice as much as conventional houses.

Myth 9: the most efficient power stations are big

Large, modern gas-fired power stations can turn about 60% of the energy in fuel into electricity. The rest is lost as waste heat.

Even though 5-10% of the electricity will be lost in transmission to the user, efficiency has still been far better than small-scale local generation of power. This is changing fast.


Myth 10: all proposed solutions to climate change need to be hi-tech

The advanced economies are obsessed with finding hi-tech solutions to reducing greenhouse gas emissions. Many of these are expensive and may create as many problems as they solve. Nuclear power is a good example. But it may be cheaper and more effective to look for simple solutions that reduce emissions, or even extract existing carbon dioxide from the air. There are many viable proposals to do this cheaply around the world, which also often help feed the world's poorest people. One outstanding example is to use a substance known as biochar to sequester carbon and increase food yields at the same time.

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