Rising utility bills are putting as strain on household finances as the cost of gas and electricity soars. Pundits are predicting that fuel bills for 2008 could be two-thirds higher than a year ago.

In the last two weeks both  British Gas and EDF have imposed price hikes – EDF 22% for gas and 17% for electricity and British Gas  35% for gas and 9% for electricity.

The news that UK consumers are being "fleeced" by foreign-owned utility companies which are using high tariffs in Britain to subsidise prices in their home countries will infuriate customers already being hit by higher mortgage costs and petrol prices.

Compared with EDF’s double-figure increase in the UK, back at home in France, EDF -  which is part owned by the French Government - has been ordered  to cap its increases on electricity to just 2% and gas to 5%.

The average electricity bill for British customers of French-owned energy giant EDF is now £441, while  EDF’s French customers pay only £396.

The cost of household fuel is already a major contributor to inflation. Last month Mervyn King, the Governor of the Bank of England, wrote to Alistair Darling, the Chancellor of the Exchequer, saying that the dramatic increases in the prices of food, road fuel and gas and electricity alone account for 1.1 percentage points of the 1.2 percentage points increase in the rate of inflation, and that we could see inflation surge more than 4% during the rest of the year.

"Fuel poverty" is now a major issue and not just confined to poorer pensioners as families struggle to pay their household bills.

So, what can consumers do to limit the impact of fuel price increases?

The first thing you can do is compare prices by using a comparison service such as uSwitch, which will help you to find the cheapest tariffs for your area.

It may surprise you that different providers charge different amounts in each supply areas, so you need to compare prices in your area – and not take a recommendation from someone on the other side of the country.

For instance here are EDF’s regional prices:

 EDF REGIONAL PRICE VARIATIONS

Another way you may be able to save money is to opt for a fixed or capped price plan. Much like a fixed-rate mortgage, these plans allow you to budget without the nasty shocks of  price increases during the course of the plan. However, you usually pay a premium price for hedging against future rises.

Ann Robinson, director of consumer policy at energy comparison service uSwitch, says: “The outlook is grim. Online energy plans remain a good option for those who want to pay a lower price now and are happy to take their chances on the market in the future. However, fixed or capped price plans could be a lifeline for those who are more vulnerable to price rises."

Ironically you may already be too late. E.on and Scottish Power have suspended capped-rate deals as demand surges, and the only fixed-rate deals currently available are new post-increase tariffs, where the prices are capped at a much higher rate. These are British Gas's Fixed Price 2011 deal and EDF Energy's Price Protection 2009 offer.

Chris Eagle, commercial manager at Energy Choices, says: "If you haven’t already, fixing your energy tariff will protect you from round two of the predicted price hikes, which are expected to hit consumers in December or January.

"However, it is quite likely that the other main energy suppliers will announce their own fixed- rate tariffs at newly increased rates. Inevitably, some will be cheaper than others and, although it’s a gamble, it’s advisable to wait for their launch."

Easy ways to save on your fuel bills

• Pay by direct debit

Paying quarterly bills by cheque is the most expensive way to pay. You can make massive savings by paying monthly by direct debit – or, if you insist on paying your bill in arrears, you can still save money if you pay your quarterly bill by direct debit.

• Opt for an online tariff

In other words, paperless billing, where you enter your own meter readings and receive your bill by email. E.on’s Energy Online Extra Saver offers discounts of up to £111 if you pay in this way.

• Opt for a fixed or capped dual fuel tariff  if you can get one

But be wary if there is a termination fee.

Savings that require a bit more effort

• Cut down use

You are probably using less fuel now than in the depths of winter so now is a good time to review energy saving measures, such as:

1. Install loft insulation if you don’t have it,
2. Use energy saving bulbs,
3. switch off appliances when not in use, and
4. Avoid leaving appliances on standby.

• Use Economy 7

This gives you a cheaper rate if you run your appliances during periods of low demand at night, usually between 1am and around 8am (the time varies by supplier and region and whether it is British Summer Time). However, you need to use roughly 20% of your energy consumption at night to be making a saving - running your washing machine, dishwasher and heating hot water - and preferably more.

You should really aim to use at least 50% of your energy during the cheaper hours. Some Economy 7 will charge you nearly double the standard rate for any energy you use during the day, which will easily cancel out savings at night.

For the dedicated green fuel saver

• Invest in energy-saving devices

You could install energy-saving devices, such as solar panels or a wind turbine on your roof, double glazing or a condensing boiler. All these will, however, cost you money, and it will take you some time to recoup the cost in terms of fuel saved. But installing them could add value to your home when you come to sell.

A survey published last year by the Royal Institution of Chartered Surveyors found that installing eight energy-saving measures in a large terraced house, including loft insulation, cavity wall insulation, condensing boiler, full heat controls, a solar water heater and double glazing, would cost £23,547. This would reduce fuel bills by £ 486 a year – although possibly more now since the rise in fuel prices – and would take 48 years to recoup.

Solar panels to heat water would alone cost £5,000 to install, but would reduce average bills by only £24 a year and would take about 208 years to pay back. The cost of double glazing would take 124 years to recoup in terms of lower fuel bills. RICS said the average tenure of a house is 16 years.

For more details on ways to make your home more energy efficient, visit http://www.energysavingtrust.org.uk/.

• Be wary of green tariffs to save money; but do sign up to save the planet

If you opt for a green tariff, you still get electricity from the National Grid, but the energy supplier matches your household’s energy consumption with energy produced with that derived from renewable sources.

You may find that you are charged more for this offsetting process, particularly if the deal is that the energy company guarantees to exceed rather than match the amount of energy you use that it puts into the National Grid from renewables.

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