E.ON to put gas and electric prices up by 8.7% this Friday (18th January)
The move brings to an end a wave of winter price hikes, averaging at 7.4% or £94, by Britain’s big six energy suppliers
The average household energy bill has rocketed from £522 in 2004 to a record high of £1,352 this year – an £830 or 159% increase
More to come? Britain’s biggest supplier warns that grid upgrades and Government policies could see a further £60 added onto household bills this year taking bills to an unprecedented level of over £1,400 a year
At over £1,400, Britain will be less than £100 short of hitting an ‘affordability ceiling’ beyond which 59% of households will be going without adequate heating and 36% will be forced to turn their heating off entirely.
The winter of discontent continues for consumers as the last of Britain’s big six energy suppliers pushes its prices up this Friday (18th January). E.ON will be hiking its gas and electric prices by 8.7%. As a result, its average dual fuel bill will go up by £110 to £1,370 a year, making it the most expensive supplier on the market for those still paying by cash and cheque. Those who pay by direct debit will fare better with a new annual bill size of £1,261 a year, says Uswitch.com, the independent price comparison and switching service.
The move completes a round of winter price hikes that has taken the average household energy bill to a record high of £1,352 a year. The increases have averaged out at 7.4% or £94, wiping out previous price cuts, averaging 2.7% or £34, made in the first quarter of last year. And in a further blow to cash-strapped consumers, the hikes have collectively added £935 million onto household energy bills, while pushing a further 388,500 households into fuel poverty.
They have also piled further misery onto consumers who have seen the average household energy bill rocket from £522 a year in 2004 to £1,352 a year today – an eye-watering £830 or 159% increase. This has led to an explosion in consumers rationing their energy usage and making drastic cutbacks as they attempt to avoid running up hefty bills. Almost nine in ten households (87%) are expected to be rationing their energy use this winter because of cost, while last winter three quarters of households (75%) – potentially 19.5 million – went without heating at some point to keep their energy costs down.
And the bad news for consumers is that there could still be more to come. Price pledges from suppliers are limited in duration – SSE has guaranteed not to increase its prices again until at least the second half of 2013, while small supplier Co-operative Energy has frozen its prices until April this year. But Britain’s biggest supplier, British Gas, has openly warned that the cost of upgrading the national grid along with Government policies could see bills increasing again this year by a further £60. If this warning proves accurate, then the average annual household energy bill could reach an unprecedented level of over £1,400 this year.
Research suggests that there is an upper limit on energy bills beyond which the majority of consumers will start to suffer – and this limit is £1,500 a year. If bills do hit over £1,400 a year in 2013 then Britain will be less than £100 short of hitting this ‘affordability ceiling’ at which almost six in ten households (59%) will be going without adequate heating and almost four in ten (36%) will be forced to turn their heating off entirely.
Ann Robinson, Director of Consumer Policy at Uswitch.com, says: “Consumers are now facing the cold reality of record-high energy bills this winter. Affordability is a massive concern as households struggle to come to terms with an average energy bill of over £1,300 a year. And this is just an average – many larger households or families could be trying to cope with far more. This is why we have seen an explosion in the numbers rationing their energy use and even choosing to go without heat in an attempt to keep a lid on costs. The thought of further price hikes will chill consumers to the core.
“The fact is that we are now just a heartbeat away from hitting an ‘affordability ceiling’. When the average household energy bill hits £1,500 a year, six in ten households will be going without adequate heating and almost four in ten will be going without heat entirely. The health and welfare implications are huge and this has got to set Government alarm bells ringing.
“It is also a wake-up call for consumers – the high cost of energy means that we have to adapt our behaviour and take a couple of simple but effective steps to protect ourselves. We can all cut our energy bills substantially by making sure our homes are as energy efficient as possible and by making sure we are paying the lowest possible price for the energy we use. There’s just over £200 a year difference between the cheapest and most expensive tariff on the market – this is a simplesaving to make and could help many to bring their bills down to a more manageable level this year.”
|
British Gas
| £1,260 | £1,336 | |
EDF Energy
| £1,202 | £1,132 | |
E.ON
| £1,260 | £1,370 | |
npower
| £1,244 | £1,352 | |
ScottishPower
| £1,349 | £1,368 | |
SSE
| £1,235 | £1,354 | |
Average
| £1,258 | £1,352 |
Source: Uswitch.com
Based on a medium user consuming 3,300 kWh of electricity and 16,500 kWh of gas with bill sizes averaged across all regions.
Best buy plans (big six suppliers only):
|
EDF Energy
| Blue +Price Promise June 2014 | £1,182 | |
npower
| Energy Online August 2014 | £1,184 | |
British Gas
| Online Variable Feb 2014 | £1,193 | |
ScottishPower
| Online Fixed Price Energy September 2014 | £1,195 | |
E.ON
| E.ON Energy Discount (with online reward) | £1,209 | |
SSE
| Discounted Energy April 2015 (with paperless billing) | £1,238 | | | Average | £1,200 |
Source: Uswitch.com
Based on a medium user consuming 3,300 kWh of electricity and 16,500 kWh of gas with bill sizes averaged across all regions.
EON announcement 10th December, 2012.
Based on a medium usage customer using 3,300 kWh of electricity and 16,500 kWh of gas on a standard Dual Fuel bill, paying quarterly by cash or cheque with bill sizes averaged across all regions and the big six suppliers.
http://www.centrica.com/index.asp?pageid=29&newsid=2588 British Gas pricing announcement 12th October, 2012. In the section ‘Why prices are rising’ it says: “There are other costs behind energy bills, and these are also increasing. Britain’s national grid requires a major upgrade, which is being funded through energy bills, and the costs of the Government’s policies that will ensure a clean, energy-efficient Britain, are also rising. Together, these have added around £50 to the cost of supplying the average customer’s home this year, and are expected to add nearly £60 to the cost of supplying the average customer’s home next year.”
Research carried out in September 2011 with the Uswitch.com Consumer Opinion Panel amongst 2,295 adults with bill paying responsibility for gas and electricity in their household. The £1,500 affordability tipping point is determined in two ways. Firstly, this is the point at which more than half of consumers (59%) believe energy will become unaffordable. Secondly, £1,500 is also the point at which there is a marked difference in consumer behaviour.
Based on a medium usage customer using 3,300 kWh of electricity and 16,500 kWh of gas on an E.ON standard Dual Fuel bill, paying quarterly by cash or cheque with bill sizes averaged across all regions. Direct debit bill size calculated that same, but based on customers paying by monthly direct debit.
See table above in main body of press release.
Uswitch.com estimates 10 million standard plan customers based on 26 million households and Ofgem statistics showing that 7 million customers are on price guarantee plans, 3.5 million are on online tariffs, 3.8 million electricity customers and 2.6 million gas customers are on PPMs. The average increase for a customer on a standard plan, based on a medium user profile using 3,300kWh of electricity and 16,500kWh of gas paying on receipt of bill (averaged across all big six suppliers), is £94. Taking this increase over 10 million standard plan customers totals £935 million added to consumer bills.
Fuel Poverty Advisory Group estimated that for every 1% rise in energy prices a further 45,000 – 60,000 households are pushed into fuel poverty (Chapter 7: FPAG 9th Annual Report). Taking a mid-point of 52,500 from the FPAG’s estimate, price rises this winter will push 388,500 households into fuel poverty.
Research was conducted with the Uswitch.com Consumer Opinion Panel in September 2012 amongst 1,532 adults with bill paying responsibility for their household energy. In response to: ‘Are you planning to cut back on the amount of energy you use to make your bills cheaper?’ 66.1% said ‘I am already doing this’ and 20.4% said ‘Yes, I am planning to’. This adds up to 86.5%.
Research conducted with the Uswitch.com Opinion Panel amongst 1,225 respondents in January 2012. In response to: ‘Have you gone without heating this winter to keep energy costs down?’ 47.7% said ‘occasionally’, 25.3% said ‘never’, 24.4% said ‘regularly’ and 2.6% said ‘always’. This adds up to 74.7% who went without heating at some point.
Based on a medium user customer using 3,300 kWh of electricity and 16,500 kWh of gas – E.ON’s standard cash and cheque price from 18th January, 2013 is £1,370 a year on average while First Utility’s iSave v14 plan costs £1,150 a year on average – a saving of £220 a year.
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