David Hunter: Tariffs are on a one-way, upward path but there are measures we can all take

SCOTTISH & Southern Energy (SSE) has fired the starting gun for domestic energy price rises this winter. The bad news for consumers is that the other big suppliers are almost certain to follow suit.

So are these price increases justified? In 2008, when oil and other commodities traded at record levels, SSE (and others) put gas bills up by almost 50 per cent. The "year ahead" gas price then fell by 60 per cent - however the cuts in bills made since by the company will be more than wiped out by the new planned rise.

The problem is that although wholesale gas is much dearer than earlier this year, it is still little more than half the 2008 peaks.

But it is only fair to point out that SSE's gas prices have been cheaper than most recently and their profit margins have been falling.

Most of the suppliers have been slow to cut prices when the markets fall, but quick to put up bills when costs start to rise. While it is fair to criticise suppliers for their pricing in 2010, we have to brace ourselves for the long-term reality: heating and lighting our homes is going to cost much more in the years to come.

Our infrastructure - power stations, pipes and wires - is crumbling. More than 40 per cent of our power plants will close within ten years and must be more than replaced as we move towards electric vehicles and renewable energy that will require both back-up generation and a reinforced national grid.

It will cost 200bn to keep the lights on and meet greenhouse gas targets by 2020, and guess who pays? The hard-pressed consumer. All very depressing - so what can we do? For our home bills, the answer is to shop around. Online tariffs are cheaper - look at two price-comparison websites if you can. Pay by direct debit, and take electricity and gas from the same supplier. We should also consider energy-saving measures like efficient lightbulbs, energy monitors and roof insulation.

For Scottish businesses, the crucial message is to take charge of your bill. Don't let the supplier roll your prices forward on high margins because you don't act. Look at energy-efficiency measures, but also take advice from experts. Specialists use their expertise to get better prices, but make sure they are acting in your best interests - understand what the hidden charges may be.

Energy prices are on a one-way path, but our choices as consumers can make a huge difference in softening the blow.

l David Hunter is energy analyst at M&C Energy Group.