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Energy hikes force extra 314,000 households into fuel poverty

314,000 households forced into fuel poverty following energy price rises

Electricity Bill

The recent wave of energy price hikes has piled an extra £753 million onto household energy billstipping a further 314,000 households into fuel poverty, according to uSwitch research.

While the average household now faces an annual energy bill of £1,334, the number living in fuel poverty has rocketed to 7.2 million.

Figures from May this year show estimated fuel poverty in the UK in 2010 impacted 4.75m households, down from 5.5m in 2009, but the latest numbers show a complete reversal of this trend.  

Fuel poverty is the number of households which spend over 10% of their income on their energy bills.

Following an independent review proposals were put forward earlier in the year to change this definition to include ‘dual indicators’ to measure the number of people affected (extent) and how badly they are affected (depth).

What has happened?

  • EDF Energy became the latest supplier to put prices up –  by 10.8% or £78 for gas and 10.8% or £53 for electricity on 7th December
  • Price hikes have averaged out at 7% or £90, adding £753 million onto household energy bills and pushing 314,000 into fuel poverty
  • The average household energy bill will be going up from £1,259 to £1,334 by 7th December wiping out the £34 or 2.7% average decrease seen earlier this year
  • The average annual household energy bill has rocketed from £522 in 2004 to a record high of £1,334 by the end of this year – a £812 or 156% increase

The recent price hikes started with SSE’s increase which came into effect on 15th October.

Since then a further four of the Big Six suppliers have unveiled increases of their own. Only one supplier, E.ON, has guaranteed not to increase its prices for the remainder of this year.

Suppliers cut their prices earlier this year by £34 or 2.7% on average, but this will be outstripped by the increases they are pushing through this winter, which will see the average household energy bill soar from £1,259 a year to £1,334.

Once these winter hikes take effect, the average household energy bill will have rocketed by £812 or 156% from £522 in 2004 to a record high of £1,334 by the end of this year.

Almost nine in ten households are expected to ration their energy usage this winter, while the cost of energy is the top household worry for consumers (90%), ahead of the rising cost of food (80%), petrol prices (75%) and mortgage and rent payments (40%).

MPs respond

Caroline Flint

Commenting on uSwitch’s  research, Caroline Flint MP, Labour’s Shadow Secretary of State for Energy and Climate Change said:

“Last week the Prime Minister promised to legislate to force the energy companies to put everyone on the cheapest tariff.

“Within 24 hours, this policy had completely unraveled and the public have been left to pay the price for David Cameron’s incompetence. Millions of people face a winter of misery as energy price hikes plunge them into fuel poverty.

“We need to see real action from the government. The time has come for a complete overhaul of our energy market.

“We need a One Nation government to break the dominance of the energy giants, protect vulnerable customers from being ripped off and create a tough new energy regulator with the power to force energy companies to pass on savings to consumers.”

What we say 

Ann Robinson, Director of Consumer Policy at uSwitch, says: “The figures speak for themselves. Taking this winter’s price hikes into account, the average household energy bill has rocketed by 156% since 2004.

“This is why consumers believe that energy is rapidly becoming unaffordable and why almost nine in ten (87%) will be rationing their energy usage this winter.

“Because energy is such a basic need, you cannot have a winter price hike without casualties. The most visible are the 7 million households who will now be living in fuel poverty, but there will be hidden victims too, many of whom will be gambling with their health or well-being as they turn their heating down or off in response to higher prices.

“The impact of higher energy prices on households is immense. People need to adjust quickly and there are two key steps to this – making sure we pay the lowest possible price for our energy and learning to use less of it by becoming energy efficient.

“With over £300 difference between the cheapest and most expensive energy tariffs on the market, plus low-cost or free insulation offers available, I would urge consumers to take action now.”

Average bill sizes

 

Jan-04

Jan-12

Dec-12

Total increase

British Gas

£543

£1,286

£1,336

£793 or 146%

EDF Energy

£504

£1,241

£1,332

£1,332 or 164%

E.ON

£516

£1,293

£1,260

£744 or 144%

npower

£521

£1,282

£1,352

£831 or 160%

Scottish Power

£524

£1,391

£1,368

£844 or 161%

sse

£525

£1,265

£1,354

£829 or 158%

Average

£522

£1,293

£1,334

£811 or 155%

 

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