With the next rise in the energy price cap set to be announced by Ofgem later this month and Martin Lewis warning that rising energy bills could cause a crisis on the same scale as the pandemic, everyone's looking for ways to save on their bills. The average yearly cost of household energy bills could rise to £4,266 from January 2023 according to experts from Cornwall Insight.
Some Twitter users have explained that they pay their energy bills quarterly, based on meter readings - rather than via monthly direct debit. One said: "I have never paid my energy bills by direct debit and I never will. I pay quarterly, it's always worked for me... I pay for what I use."
Campaigner Jack Monroe went as far as telling people to calculate their own monthly bill and setting up a standing order to pay it - and some people are planning on not paying their bills at all. But these methods come with the risk of your energy company taking action against you.
READ MORE: Martin Lewis posts 'tragic' update on energy bills that will cripple households
In theory, switching from direct debit to quarterly bills would mean that if you decrease your energy usage, you'd see a decrease in your bills the next quarter - rather than waiting to find out if you were in credit or debt at the end of 12 months of direct debit. However, there's a massive risk to this - as the rise in the price cap is set for October, you could see your quarterly bills skyrocket after this unless you're scrupulous with your energy use.
We wanted to find out whether switching from direct debit to quarterly bills would save you money or land you in trouble in the winter. We asked Ofgem, Citizens Advice and Money Saving Expert - this is what they had to say:
What have Ofgem, Which? and Money Saving Expert said?
Ofgem
Government energy regulator Ofgem doesn't directly recommend cancelling your direct debit but pointed out that paying it won't always stop you from making a saving. A spokesperson said: "Protecting consumers is our top priority and suppliers must ensure that direct debit payments are based on the best and most current information available to them.
"This includes information about the quantity of gas or electricity the supplier estimates has been or will be supplied. As regulator, we ensure suppliers set the rate fairly and take account of expected consumption, and we monitor this closely.
"Direct debits are usually charged in such a way that customers build up an appropriate credit during the warmer summer months when usage is lower so the amount they pay is evened out over the colder winter period where usage is higher. It’s therefore possible for direct debits to increase ahead of a tariff change even when a customer’s use has remained constant.
"But consumers can ask for credit balances to be returned at any time and can contact their suppliers to change how their direct debit is spread.
"We recently completed a robust market review on debit debits to ensure they were being charged properly and fairly and took enforcement action as a result."
Which?
Which? points out that most energy companies offer a discount for paying with direct debit and says that it'll usually be the cheapest option. However, the watchdog also cited examples of people who were overcharged for their direct debit.
One of their case studies, Roy Alexander, signed up to a direct debit with EDF - initially being charged £68 a month, which he admitted was "too low," he was then bumped up to a rate of £252 a month.
After making a complaint to EDF, they reassessed his bill and set his rate at £150 a month. Which? said: "It goes to show that it really is worth submitting frequent meter readings to document your energy usage, and querying anything in your billing that doesn't look right."
Money Saving Expert
Money Saving Expert said in May that paying with direct debit is about 6% cheaper than other ways of paying. The consumer website indicated that you could save £100 a year by paying with direct debit but that you have to take steps to make sure you're paying a fair rate.
These steps include giving regular meter readings, and possibly even changing to a smart meter. Although the website recommends switching to a cheaper energy tariff, it points out that you're unlikely to find one at the moment.
They also stated an obvious truth that some people might forget - if your direct debit rate gets set too low, you'll end up owing your supplier. Obviously if it's set too high across the full 12 months, you'll only see the savings you've made at the end of the year, but a lower rate doesn't necessarily mean you'll pay less overall.
The site also points out that according to Ofgem, suppliers have to work with you to organise a payment plan if you're in debt from direct debit payments. Some providers offer an energy hardship fund for account holders who can prove that they have low income and a specific reason for their arrears building up.
Will switching to quarterly bills lower my upfront costs?
In short - if you believe the experts, switching from direct debit to quarterly bills isn't a guaranteed way to save on energy. You might see lower costs in the summer months when you're using less energy, but it leaves you open to skyrocketing bills in the winter.
Which? and Money Saving Expert both pointed out that direct debit should be cheaper. However, both said you should make sure you're not overpaying.
Effectively, if you combine all the experts' advice, you get an indication that direct debit is the way to go - but only if you're certain you're being charged the right amount.
Which appliances should I switch off to use less energy?
If you want to save on energy costs - either immediately, by switching to quarterly payments, or in the long run via direct debit - there are some appliances that use more energy than others. Switching them off, while not ideal in terms of lifestyle, could help to save on your bills.
Energy Saving Trust reported that some of the biggest users of electricity were wet appliances (washing machines, dishwashers and tumble dryers), cold appliances (fridges and freezers), consumer electronics, lighting and cooking.
Of course, you can turn off the lights during the day but you can't exactly switch off your fridge or stop cooking. However, it's possible to invest in an energy-efficient fridge and use electric cookers, microwaves, air fryers and pressure cookers - which, if you have them, cost less to use per year.
Kitchen specialist Magnet looked into which appliances cost the most to run per year and found dishwashers, fridge freezers and tumble dryers were the worst - especially because dishwashers and tumble dryers are on for fewer hours than a lot of other appliances.
What else can I do to decrease my bills?
Which? has a list of ways to save on bills, including adding insulation and replacing lightbulbs. There's also the warm home discount from October to March.
Money Saving Expert has a good guide to saving money if you're struggling with bills. Its recommendations include talking to your supplier about debt repayment plans, payment breaks and access to hardship funds.
You can also read our guide to what payments you can receive in Wales to help with the cost of living.
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