Electrical delivery in the U.K. involves a complex network of generation, distribution and management of very dynamic resources. These systems all work together to seamlessly provide the electricity you need to keep your lights on and your home comfortable. Understanding how these systems and companies interact can help you find the lowest electric price in a somewhat confusing market.
1 Understanding Your Needs
The first thing you’ll need to do is clearly understand your historical electrical needs. Knowing how much electricity you use on average will help your new supplier calculate their overall purchases from distributors. Forecasting this consumption accurately will help you secure the lowest electric price because it allows your supplier to avoid committing to too much or too little power as part of their contract with distributors.
Wide swings in consumption are never a good thing and many distributors will actually charge a fee for missing your predictions. You can figure out what your average consumption was historically from the previous year’s bills and use this to forecast your needs going forward. This number is critical in finding the best electric price as it’s where most of the conversations around cost will start. Having this number handy when speaking to distributors can help you secure a lower price since it shows them you can accurately predict your energy consumption.
2 Understanding the System
Another thing that can help you find the lowest electric price on the market today is understanding as much as you can about how the electricity you going to be using is created and arrives at your home. This power is typically generated by one of several methods include coal or gas fired plants, hydropower or even using wind to produce electricity. Each of these methods has a different cost of production and many distributors give you a choice between them. Choosing a more green option like wind or hydro may raise the price of the power you receive but is also better for the health of the planet.
This power then needs to travel from where it’s produced to where it’s being used. This transmission has a cost and is typically higher if your home is located very far away from the point of generation. Since most of this power is produced in the north, customers living in the southeast will pay a slightly higher price for electricity as a result of these distribution costs.
The final part of the system involves the local distributor selling you the power under contract. They are the company that you’ll be dealing with on a monthly basis and are responsible for predicting, securing and delivering the electric to your home. While all of the other processes for generation and distribution should be transparent to you, they still affect the price that your local distributor will offer you for your electricity. Of all the costs in the creation, delivery and billing of your electricity, this one is the most negotiable. These distributors charge a fee for providing this service and may be willing to adjust their pricing to secure your contract.
3 Understanding the Offer
Once you know how much power your home is likely to need and have an understanding of how this power is created and delivered, it’s time to negotiate a contract. You’ll have a wide range of choices on where to purchase this power, and which local company you’ll use to deliver it. Each of these options will have different costs and understanding what you’ll be agreeing too is critical in making sure you get the best deal possible.
You’ll want to understand the length of the contract and if the price of power can change while the contract is in place. Typically most contracts are negotiated for between six and forty-two months. Having a longer contract will eliminate the need to renegotiate every few years and can be a comfort for some homeowners. This longer period of commitment may increase the price you pay for this electricity since the distributor will be taking a chance on their costs rising during the contract.
Choosing a fixed rate option may cost you a little more initially but could be a better option over the length of the contract, especially if energy prices continue to rise. The type of power you select will also affect the price. Many distributors now allow you to decide where you buy your power from and choosing a renewable source for this generation is a much greener option that is also more expensive. Read more about the big six UK energy companies here
Many people feel that the slight increase in price for this cleaner power is well spent since it has less of an effect on the environment.