How To Save Energy Bills For Tenants
8 Feb 2021
Some tips on how to save on energy bills that every renter should be aware of, both before and during their tenancy, to avoid unwanted charges.
Did you know that hundreds of pounds could be saved from your energy bills a year with some simple tips? Unfortunately, most people can only complain about their huge energy bills and then continue paying them instead of finding out ways to cut them down.
Even if you are just a tenant and don't always have full control of your home, there are so many things you can do to get a lower bill. A lot of corners can be cut, and they can start even before your tenancy. Before leading into actual saving-money tips, you must understand first what's on your energy bills and how they can result in a large amount of money.
- How To Calculate Your Energy Bills
- How to Pay Your Energy Bills?
- How Much Does A kWh Cost?
- What Uses The most Electricity and Gas
- How To Save Energy Bills For Tenants
An energy bill may look complicated and confusing at first, but it actually is only made up of two distinct parts:
Standing charge: this is the fixed amount that providers charge you each day no matter how much electricity or gas you use that day. It covers the cost of maintaining the service, including transporting gas and electricity to your premises. At the end of the billing period, the provider will multiply this standing charge with the number of days in the period.
Unit rate: this determines the actual amount of money you pay for the gas and electricity you use in the period. To make things more streamlined, both gas and electricity is measured by kWh while the unit rate is pence per kWh. It can be a fixed or variable rate, depending on the tariff you're on. At the end of the billing period, the provider will monitor how many kWh of gas and electricity you've used, and multiply it by the unit rate.
At the bottom of your energy bills, you can also see the taxation portion, which shows the VAT rate you're obligated to pay (5% for residential customers)1. This rate is added to the total figures above to yield the final amount you have to pay.
Complicated energy bills are not the only thing that has made customers feel disengaged with the energy industry. For tenants who have to pay their own bills the first time or want to switch, finding out about payment methods is usually trickier than they might think. So what options do tenants have?
Monthly Direct Debit
This is probably the best way to ensure you always pay your electricity and gas bills on time every month. As one of the most common methods to make recurring payments in the UK, Direct Debit allows tenants to authorise providers to collect payments from their bank accounts when they are due. You can use this method for gym memberships, magazine subscriptions, council taxes, energy bills, and even some one-off payments2.
Instead of looking at a huge bill landing at the end of a quarter or a year, you now only have to deal with a smaller, more manageable amount of money every month. It gives tenants a better idea of how much energy they are actually using in the previous month. If they want to save some money by cutting down energy they use, a monthly payment also presents a better opportunity to do so.
Since utility providers are the one who initialises the process to take out money from your account, it's totally automatic and doesn't require tenants to do anything (except the one-time Direct Debit mandate that gives them the permission to do so)3. As long as your account has enough money in it, you will never miss a bill again.
Monthly Direct Debit is not just the safest and easiest way to keep on top of energy bills for tenants. Providers also benefit from this automatic method as it gives them the convenience and guarantee of frequent payments. This is why most of them encourage customers to use Direct Debit by giving big discounts.
Quarterly Direct Debit
This method is almost the same as the month Direct Debit. The only difference here is that you have only to pay every three months to cover your energy usage for that quarter. Providers usually still provide discounts for it, but not as generous as you may get from monthly payments.
In short, this type of energy meter requires users to top-up with credit before using it, just like what you can do with prepaid SIM cards. These prepayment meters can be used with a token, a key, or a smartcard. Most people try to avoid this 'pay as you go' wherever possible (it's probably the most expensive way to pay for your energy usage), but it's still a popular method among rented properties. Some landlords prefer this as prepayment meters can make sure that tenants can never underpay their bills and create a debt. As of 2019, there are still about 4.3 million people that have a prepayment meter in the UK, according to Ofgem4.
Traditional Payments (Paying When You Get Your Bill)
If you're not familiar with Direct Debit and its setup process, you can still make those payments on receipts of the bills. Most providers allow their customers to pay over the phone, by cheque, through your bank account, or even with cash at a bank or post office5.
These are the "old ways" that people have always used to pay their energy bills before newer methods like Direct Debit take their place. They still work well, especially for the elderly who find it not easy to use online banking or set up Direct Debit. The main downside is these manual methods are harder to track, take up more time to get done, and don't make you eligible for discounts from utility providers.
Both electricity and gas consumption in the UK is measured in kWh - the unit energy providers use to calculate your bills. There isn't a fixed-rated for this. The money you have to pay for each kWh of gas or electricity your appliances have consumed depends on your provider, the plan you're on, and the region in which you're living. UK Power estimated the average cost of gas is 3.80p/kWh (gas) and 14.37p/kWh (electricity)6.
It's hard to guess which gas appliances in your house are the main culprit behind your huge gas bills. Water heating and space heating is what uses up most natural gas in households. A smaller part of your gas bills come from other appliances like ovens, stoves, and clothes dryers. New builds in the UK are phasing out gas due to its environmental-unfriendly nature.
While electric appliances easily outnumber gas ones in a typical house, they share the same principle when it comes to energy consumption. Heating and cooling devices also need a lot of input power to operate, and the presence of appliances that are usually on multiple hours a day will also result in a bigger energy bill.
Heating System and Air Conditioning: These systems are among the worst nightmares for those who want to restrict their energy payments. They are power-hungry and usually operate on a 24-hour basis, meaning they can be responsible for up to a third of your electricity bills.
Fridge: A fridge must run 24/7 for most of its lifespan to make sure your food doesn't spoil immediately. Even an average 150-litre fridge can easily cost you £30 of electricity annually, and this will just skyrocket further for bigger capacities with worse energy-ratings.
Electric Oven: This is another energy-hungry device that has gained a lot of popularity these days as an alternative to gas ovens. Unlike toasters or microwaves, this oven creates a lot of wasted heat that does nothing besides going into the environment and heating up the air.
TV: A TV set cost much more electricity than you might think. It has always been assumed that it accounts for half of the electricity consumption of all domestic consumer electronics. While this figure has gone down to a third, this is still a huge amount.
Dishwasher, Lights, Kettles, etc.: These appliances are usually overlooked but can easily become an electricity guzzler if you let them run freely without any limit.
We don't want to create an impression that you should stop using every appliance in your house. It's not a healthy way to bring down your energy bills, especially when they are still useful to your life. You have many better ways to do so from the perspective of a tenant.
Change your supplier
Under consumer protection law, if you're the one who directly pays gas and electricity bills for your property, you have the right to choose a supplier suitable to your needs. Your landlord and letting agent should not prevent you from doing this unless they have a very reasonable reason.
This is not a well-known fact for tenants, however. According to a research from MoneySuperMarket.com, renters in the UK are collectively overpaying £1b on their energy bills just because they don't know they're allowed to switch suppliers, or they have those bills included in rent payments7. Another worrying figure from this research is that almost half of renters (49%) are given no information about the energy provider at the beginning of their tenancy while 12% think their landlords are solely responsible for choosing providers.
Switching your energy supplier should be easy and straightforward to do8. There are plenty of comparison sites that allow you to weigh the differences between different providers, including tariffs and payment methods.
Even if your landlord's name is on the bill and you pay indirectly through them, it's worth talking to your landlord and try to convince them to use the most affordable provider.
Change payment method
Direct Debit has always been the go-to choice if you want to enjoy as many discounts as possible from energy providers. Most of them have moved Direct Debit management online, so customers have another reason to go for this convenient payment method. In 2014, the Department of Energy and Climate Change estimated that with Direct Debit, customers could save around £114 a year compared to paying by cash or cheque9.
Check the support page of your provider to find out how to switch to monthly Direct Debit.
Choose energy-efficient properties
Every rented property needs an Energy Performance Certificate (EPC), which indicates its energy use and typical energy costs10. Each EPA is valid for 10 years and has one rating from A to G (from the highest energy efficiency to the lowest efficiency). This should be a crucial information you want to know before signing a tenancy. This efficiency is really hard to improve without extensive renovation and plays a big role in how much you're going to pay for energy during the whole tenancy.
Always go for energy-efficient properties like Build To Rent developments to avoid unmanageable energy bills that can add up quickly in the long run. Consisting of mostly new builds, Build To Rent properties follow the latest construction regulations and focus on a premium living experience. You can easily find Build To Rent homes with a high EPC rating between A and C that are also furnished with new and power-saving appliances on online portals like www.buildtorent.io.
Other money-saving tips
There are countless things you can do to make sure your gas and electric appliances are used properly:
Unplug standby devices: unplugging your TV, computer, hair straightener, and other devices when they're on in use. Standby modes use little energy, but this amount can add up quickly into your energy bills.
Use energy-saving light bulbs: newer models like LED lights can save a lot of electricity while lasting much longer than regular fluorescent bulbs.
Prefer to use the microwave: cook food in your microwave instead of your electric oven whenever possible. Electric ovens are known for producing a lot of wasted heat.
Wash your clothes at a lower temperature: only use high temperature with thick and badly-stained clothes. Lighter items can be washed at a lower temperature with similar results.
Cut draughts: remove unwanted gaps around windows and doors in your house to save heating cost. You can do this by putting draught-proofing strips along the edges or blocking the chimney if you don't use your fireplace.
A lot of tips are useful when you choose a new appliance or when you already own one. Each small amount is significant in the long run, and together, they will help you cut down a big chunk in your energy bills.
There are also things you can consider even before moving in, which is choosing an energy-efficient home like what Build To Rent offers. They bring peace of mind to residents by making sure the premises have the highest efficiency ratings and help tenants avoid unnecessary energy use that they must pay later.
- British Gas, How billing works↩
- GoCardless, What is Direct Debit? A guide for payers↩
- DFC, What is a Direct Debit mandate?↩
- Uswhich, What is a prepayment meter?↩
- SSE, How to pay your energy bill↩
- UK Power, Compare energy prices per kWh↩
- MoneySuperMarket, More than £1 billion at risk as renters languish on expensive energy deals↩
- Ofgem, How to switch energy supplier if you’re a tenant↩
- BBC, MPs: Cash payers are being 'ripped off' by energy firms↩
- UK Government, Energy Performance Certificates↩