Energy giants who profit from our pain

As households struggle, the utility firms benefit.

Britain's utility providers are making bumper profits as households continue to struggle with rising bills.

Latest figures from Ofgem, the energy regulator, show that gas and electricity providers have trebled their profit margins in the past three months. These energy giants are now making £120 per customer, now that the average dual fuel bill stands at £1,420.

In October, the average profit margin per customer was just £45.

Meanwhile, figures from Ofwat, the water regulator, have shown that Southern Water has trebled its profits in the space of a year. Last year it announced it was increasing prices by 5.3pc for its customers.

Unsurprisingly, these rising bills are causing problems for consumers. The National Debtline said it received a record number of calls for help from householders unable to afford their water bills last year. Since 2007, calls for help with water debts have gone up 251pc.

In recent years, consumers have seen the cost of utility bills rise far faster than inflation. Currently the average household spends £1,800 a year on water and energy the highest this has ever been. These escalating costs have led to accusations that utility firms are profiting from consumers' misery.

Ann Robinson, director of consumer policy at uSwitch.com, said: "Ofwat's announcement follows a wave of energy price hikes and will leave many households struggling to stay afloat.

"Consumers will now have to find over £100 more a year to meet the cost of these essential utility bills. With incomes remaining stagnant, this will be another squeeze on family finances and will no doubt cause sacrifice and hardship for many."

"Energy prices and profits just keep rising and rising," said Mark Todd, director of price comparison site Energyhelpline.com. "These bills have more than doubled over the last 10 years. Many consumers calling our switching line tell us that, in the current market, the companies are the big winners and they feel like the big losers. "

But is there anything you can do to reduce your annual spend?

When it comes to your energy bills, you needn't go cold to cut costs.

"If you switch to the cheapest deal, companies are likely to make only a few pounds' profit from you rather than hundreds of pounds," said Mr Todd.

The first thing to do is make sure you're on the cheapest price plan if you haven't switched your tariff in the past 12 months or so, you're probably paying more than you need.

It should soon get easier to spot the cheaper deals. British Gas has become the first utility provider to include on statements details of how much customers can save in pounds and pence by switching to a cheaper tariff. These calculations will be based on an individual's own energy usage.

Savings can be substantial. According to Moneysupermarket.com, the typical household will pay £1,302 a year on a standard tariff, compared with. £1,150 on the cheapest online tariff (First Utility's iSave v14). This will reduce your annual bill by £152.

Fixed tariffs also look attractive at present. This same household would be charged £1,170 a year on First Utility's iSave Fixed rate.

Despite the savings to be made, more than half of households have never switched supplier.

The easiest way to switch is to use a comparison website such as Moneysupermarket.com, Confused.com or Energyhelpline.com.

If you are not on the internet, you needn't miss out on the cheapest deals. One comparison site, uSwitch, has launched a postal service: customers send in their bills, and an adviser calls back to talk through the options. To find out more, call 0800 093 0607.

Customers may also make savings by joining a new scheme the Cheap Energy Club launched by Moneysavingexpert's Martin Lewis. This website monitor users' energy tariffs, and will inform you when you could switch to a cheaper deal.

Whatever deal you are on, you can save money by paying by direct debit. Typically this reduces your bill by 10pc cutting £100 off the average bill. But remember to update your meter readings regularly so that you are not paying more than necessary and building a significant surplus on your account.

It isn't quite so easy to cut your water bill, as you are unable to switch providers. However, many households may be able to save by installing a water meter. Most people's bills are "rate based", which means your bills depend on the size of your house rather than the amount of water used. As a rule of thumb, if you have more bedrooms than occupants, a meter is likely to be cheaper.

Small families and pensioners in big homes are likely to be better off having a meter installed. If you aren't sure whether you will benefit, you can input your usage into the online calculator at the Consumer Council for Water ( ccwater.org.uk ) or uSwitch ( uswitch.com/water ).

Ofwat said households tend to waste less water once a meter is installed. It estimates that water consumption falls by an average of 20pc. There is no charge for having a meter fitted and should you find your bills increase, you can switch back within 12 months without charge.