Tag: price cap

Call for the abolition of the January price cap change

Campaigners have called on Ofgem to scrap future January energy bill changes as a five percent hike in prices hits households at the worst possible time.

The Warm This Winter campaign has called the increase a step too far for ordinary households in the UK, many of whom face the choice between eating and heating.

A spokesperson for the End Fuel Poverty Coalition commented:

“Struggling households are facing an assault from all sides. Energy bills are going up just as winter bites hard, Christmas debts have to be paid off and the ongoing wider cost of living crisis continues into another year.

“Ofgem needs to abolish this January price hike. The cruel impact of a change in bills at this time of year can’t be underestimated.

“We criticised the policy strongly when it was introduced as we feared this would be the result of it – bills going up at the worst time of year.

“Given the way the price cap is structured, it is unlikely we’ll ever see a decrease at this time of year. Changing the price cap three times a year would be enough to pass on any reductions in wholesale prices to consumers and ensure we would not have a change of bills in the middle of winter.”

Warm This Winter spokesperson Fiona Waters added:

“Without additional support, it will be anything but a happy new year for people trapped in Britain’s broken energy system.

“We need to see the UK Government introduce an Emergency Energy Tariff for vulnerable households and a Help To Repay scheme for those in energy debt.

“Failure to avert this cold homes crisis will lead to pressure on the NHS, a mental health catastrophe and additional winter deaths caused by living in cold damp homes.”

It follows Warm This Winter’s latest research which revealed 16% of adults (8.3m people) live in cold damp homes, exposed to the health complications that come from living in fuel poverty. Of those, vulnerable households and customers on prepayment meters are more likely to live in dangerous, cold damp homes.

The NHS warns that people with damp and mould in their homes are more likely to have respiratory problems, respiratory infections, allergies or asthma.

Unaffordable energy prices are here to stay and even in winter 2024/25, energy bills are expected to be 60% higher than winter 2020/21.

“People have had enough of these sky high energy bills and today’s price cap places yet another huge burden on families who are stretched to the limit, we need an end to this vicious cycle. The UK Government needs to take much more action to help people stay warm this winter and every winter through increased support for home insulation and cheaper renewable energy,” added Fiona Waters.

Ofgem price cap change sets sky high energy bills for winter

People will still feel the pain of high energy bills this winter as a new Ofgem price cap comes into force from 1 October 2023. 

Decreases in the unit costs of energy are offset by higher standing charges, the wider cost of living crisis harming people’s ability to pay high energy bills and a lack of financial support from the Government compared to last winter.

The latest Cornwall Insight predictions are that energy bills will increase from 1 January 2024 and stay high throughout the rest of next year.

A spokesperson for the End Fuel Poverty Coalition, which is part of the Warm This Winter campaign, commented:

“From 1 October, all households in every part of the country will pay more on energy standing charges, more into the profits of energy firms and many are more in debt to their suppliers.

“Average energy bills are still almost double what they were three years ago and Government help for households, which was available last winter, has been axed. This means this winter will feel worse for many households.

“If Members of Parliament on the House of Commons Energy Security Committee can see problems households will face, why can’t the Government? The MPs’ recent report on tackling the energy bills crisis sets out sensible recommendations to help vulnerable households and Ministers need to implement these ideas immediately.”

Paying MORE on standing charges

  • Standing Charges are paid by customers every day they are connected to the grid – and they are a postcode lottery with customers in Merseyside and North Wales paying significantly more than those in London.
  • Compared to winter 2020/21, daily standing charges for gas are up 8% and for electricity up 119%. The cost of every unit of energy used is also significantly higher:
Daily standing charges and unit costs in pence. 

Based on what the average customer paid (on a standard variable tariff, paying by direct debit).

 Ofgem Price Cap from 1 Oct 21 Ofgem Price Cap from 1 Aug 22 EPG Rate from 1 Oct 22 EPG Rate From 1 Jan 2023 EPG Rate From 1 April Ofgem Price Cap from 1 Jul 23 Ofgem Price Cap from 1 Oct 23
GAS UNIT (kwh) 4.07 7.37 9.9 9.84 10.3 7.51 6.89
GAS Standing Charge 26.12 27.22 28.49 28.49 29.11 29.11 29.62
ELECTRICITY UNIT 20.8 28.34 32.36 32.42 33.2 30.11 27.35
ELECTRICITY Standing Charge 24.88 45.34 46.36 46.36 52.97 52.97 53.37
Source: End Fuel Poverty Coalition records of Ofgem and BEIS/DESNZ data
  • Analysis of Ofgem data by the End Fuel Poverty Coalition, suggests that customers on standard credit terms pay substantially more for their energy than those on direct debit – with gas standing charges 18% higher, electricity standing charges 13% higher and unit costs also c.5% higher:
Uplift from direct debit cost to Standard Credit cost for customers on the standard variable tariff. Ofgem Price Cap from 1 Oct 21 Ofgem Price Cap from 1 Aug 22 EPG Rate from 1 Oct 22 EPG Rate From 1 Jan 2023 EPG Rate From 1 April Ofgem Price Cap from 1 Jul 23 Ofgem Price Cap from 1 Oct 23
Gas Unit Uplift 3.44% 5.29% 7.58% 8.74% 0.00% 5.33% 5.22%
Gas Standing Charge Uplift 27.07% 17.56% 17.73% 17.73% 17.97% 17.97% 18.13%
Electricity Unit Uplift 5.34% 5.33% 7.97% 10.55% 0.00% 5.35% 5.27%
Electricity Standing Charge Uplift 18.53% 12.84% 13.03% 13.03% 12.35% 12.35% 12.48%
Source: End Fuel Poverty Coalition records of Ofgem and BEIS/DESNZ data

Paying MORE into profits of energy firms

  • Ofgem has changed the rules on energy firms profits. This means suppliers are likely to earn 2.4% profit on every average customer’s bill from 1 October – up from 1.9% currently.
  • These new arrangements include a fixed component and a percentage component on top of that, rather than the whole value being a larger percentage of the total bill. Experts from the Warm This Winter campaign calculate that customers will only pay less profit to energy firms than before if their bill is above a staggering £4,000 a year.
  • The Warm This Winter Tariff Watch report estimated that energy firms will rake in almost £2bn in profits over the next 12 months. In addition to the record profits already announced in 2023. 

Many people are MORE in debt to their energy firms

  • Figures from Ofgem revealed that almost 1.2m customers disconnected from their energy supply in the first three months of 2023, while the average household energy debt for homes not on a payment plan is £1,214 on electricity bills and £965 on gas bills. Figures from the Money Advice Trust suggest that this “bad debt” is just the tip of the iceberg.
  • Customers on prepayment meters are especially hard hit by energy debt levels, with data secured under freedom of information requests by 38 Degrees showing that PPM customers are £1bn in debt on their meters, making them more likely to disconnect as their top up amounts are deducted to pay off their debts.
  • Citizens Advice data found that in the first 6 months of 2023, 7.8 million people have had to borrow money to cover their energy bills and 1.2 million children live in households which have had to go without heating, hot water and electricity. The charity has issued a warning that if the Government doesn’t step in, these numbers will rise this winter.
  • The Money Pensions Advice Service also found that nearly one in five buy now, pay later (BNPL) customers have used this payment method for essentials. Case study evidence from the Fuel Bank Foundation reveals that energy customers are also turning to high-interest payday loans to cover their energy costs.

Price cap history chart (source: End Fuel Poverty Coalition records using Ofgem, BEIS / DESNZ and Cornwall Insight data)

Cap change date Average annual household bill change (GBP) Average annual household energy bill (GBP) % change from last period YOY change Change from Pre-Energy Bill Crisis Change from Pre-Ukraine Invasion
01-Oct-20 -120 1042 -10.33% -11.62%    
             
01-Apr-21 96 1138 9.21%      
01-Oct-21 139 1277 12.21% 22.55% 22.55%  
             
01-Apr-22 693 1971 54.35%      
01-Oct-22* 129 2100 6.54% 64.45% 101.54% 64.45%
             
01-Apr-23* 400 2500 26.84%      
01-Jul-23 -426 2074 -17.04% 5.23% 99.04% 62.41%
01-Oct-23 -151 1,923 -7.28% -8.43% 84.55% 50.59%
01-Jan-24** 9.24 1,932 0.48% -7.99% 85.44% 51.31%
01-Apr-24 -64.55 1,868 -3.34% -25.29% 79.24% 46.26%
01-Jul-24 -45.6 1,822 -2.44% -12.15% 74.86% 42.69%
01-Oct-24 52.05 1,874 2.86% -2.54% 79.86% 46.76%

* Figures from 1 Oct 2022 include EPG and EBSS. Figures from 1 Apr 2023 include EPG. 

** Figures from 1 January 2024, the figures use a new “average household” usage calculation. Using the old estimates indicate even more significant increases throughout 2024.

Figures in italics taken from Cornwall Insight and are predictions.

Price cap sees energy costs double in three years

The latest Ofgem price cap announcement has set energy prices for 29m households for October, November and December 2023. 

In the detail of the figures it shows that, when compared to winter 2020/21, the cost of every unit of energy used is around double what it was. Daily standing charges for gas are up 8% and for electricity up 119%.

Compared to last winter, unit costs are down 30% for gas and 15% for electricity, but daily standing charges are up 4% for gas and 15% for electricity, while the Energy Bills Support Scheme has been withdrawn (which was worth about 16% of an average bill).

Ofgem has also confirmed that energy firms can increase the amount of profit they make through the price cap by c.£2 a year for every average customer on the standard variable tariff.

A spokesperson for the End Fuel Poverty Coalition, commented:

“When you look at the details of this price cap, the reality is that every unit of energy a customer uses costs double what it did a few years ago. The daily standing charges customers pay have also increased – doubling in the case of electricity.

“The Energy Bills Support Scheme has also been taken away this winter, while energy firms have been allowed to increase the profits they make per customer and vulnerable households have been left wondering what will happen this winter and beyond.

“Meanwhile the cost of living crisis continues to hit households hard and everyone now has less ability to pay these high energy prices. Energy debt levels continue to surge and reports from several charities and think tanks in recent days have set out just how dangerous this winter will be – especially for the most vulnerable.”

Tessa Khan, Director of Uplift, which is part of the Warm This Winter campaign, commented:

“The government seems to think the energy crisis has gone away, but for millions of households this autumn will be as hard as the last.

“People are still paying double what they were just a few years ago, and for some households their bills will be more than they were last year because of the lack of government support and rising standing charges. Levels of energy debt are also soaring.

“People will rightly ask what this government has done over the past year and a half to fix Britain’s broken energy system and lower bills for good.

“Instead of bowing to the wishes of profiteering oil and gas giants for more drilling, which won’t lower our bills, it needs to help people save money with more support for insulation and get on with ramping up cheaper renewables. That’s the only way we’re going to see permanently lower energy bills.”

Jess Ralston from ECIU commented:

“Unfortunately we’re not out of the woods yet as gas prices are expected to stay at least 2x higher than pre-crisis levels in the longer term, and while lots of Europe has moved away from gas altogether we’re still reliant on it. Last year the IMF said that this reliance is why we were hit harder than other countries.

“Those in the most inefficient homes could pay around £720 more on bills over the next year than those in energy efficient ones. We could have spent the last year insulating houses to shield them from future gas price spikes, and building more British renewables so we need to buy less expensive gas on the open market. Instead there seems to have been a focus on the North Sea, which won’t bring down bills.

“The Government’s flagship insulation scheme has flatlined this year, so getting it back up and running could help people in time for this winter and fulfilling pledges to tighten energy efficiency regulations for private renters and lifting the ban on onshore wind could help in time for next winter. Using less gas is the key to lower bills and energy security.”

National Energy Action (NEA) have warned that 6.3 million households could be trapped in fuel poverty this winter. It is somewhat less than last year, but far ahead of the 4.5 million in October 2021. Chief executive Adam Scorer commented:

“The price cap does not protect those who simply cannot afford the cost of keeping warm. The UK Government can still act – by directly reducing energy bills via targeted energy discounts or a more targeted Energy Price Guarantee for low-income and vulnerable households.

“It knows how to do it. It has millions of pounds unspent from previous schemes. It is aware that failing to act will consign millions to another winter of despair and suffering.”

The End Fuel Poverty Coalition recently wrote [pdf] to the Speaker of the House of Commons and the chair of the Commons Energy Security & Net Zero Committee to highlight the five occasions in 2023 when leading members of the Government, including the Prime Minister, promised to consult on the introduction of a social tariff.

In the recent policy paper, “Delivering a Better Retail Energy Market”, there is no mention of social tariffs or the introduction of discounted tariffs for the most vulnerable.

While there are some references to vulnerability and tariff innovation in the recently published consultation “Towards a more innovative energy retail market”, there is no mention about how the retail market needs to be reformed to provide vulnerable households with access to the energy they need and additional protections they may need in a market-led approach to energy supply.

The End Fuel Poverty Coalition has urged MPs to hold the Government to account and ensure that the introduction of a form of “social tariff” from April 2024 (or alternative consumer protection for vulnerable customers, such as “energy for all,” the National Energy Guarantee or a Energy Costs Support Scheme), will be considered by the Government as a matter of urgency.

The End Fuel Poverty Coalition spokesperson continued:

“Ministers had promised to consult on tariff reform to help the households most in need and who most rely on energy to keep themselves safe. Sadly, they have abandoned plans for a social tariff consultation.

“The Government seems to be running out of enthusiasm to help people get through the energy bills crisis, and it is also now running out of time to act to keep people warm this winter.”

Notes:

Data available: End Fuel Poverty Coalition unit cost increases

Customers to see energy bills soar from 1 April

Despite the Ofgem price cap falling today, customers will see energy bills rise by 43% for the average household from 1 April 2023.

Under the Government’s Energy Price Guarantee, the level of support for all households will fall at the same time that the Energy Bills Support Scheme also comes to an end.

Over 70 charities and campaign groups have now called on the Government to scrap the energy bills hike, paid for by the estimated £11bn underspend in the Energy Price Guarantee budget.

The Ofgem energy price cap was £4,279 in January but it will drop to £3,280 in April because of falling wholesale prices. Under the Government support packages, the average household bill has been £2,100 but this will rise to £3,000 from 1 April.

And contained in the small print of the Ofgem announcement is further bad news for some consumers.

A spokesperson for the End Fuel Poverty Coalition, explained:

Not only will people’s bills actually go up from 1 April, but the Ofgem announcement today contains a sting in the tail for some households who do not pay by direct debit.

Households on pre-payment meters will continue to pay more for their energy with those on standard credit and Economy 7 tariffs also being hit. [1]

In addition, we have seen some regions pay significantly more for their electricity than others [2] and standing charges will increase for everyone by almost 10% [3] caused by the complex nature of Britain’s broken energy system.

This means some people will still pay even more, even if they use less energy.The Government must act to ensure that bills don’t go up, while also setting out a path to reform the energy market.

As prices soar, Greenpeace has also warned typical UK home could miss out on savings of £1,800 every year on their energy bills by the end of this decade unless the government ramps up plans to roll out insulation, and heat pumps. [4]

To help the public understand more about their potential savings, the charity has launched an Affordable Energy Calculator in partnership with Cambridge Econometrics at https://affordableenergycalculator.org/.

Georgia Whitaker, Climate Campaigner for Greenpeace UK, said:

Britain’s homes waste more heat than any in Western Europe. We can’t afford to carry on wasting energy like this in a cost of living crisis. Greener homes would keep communities warm and healthy and save us all money.

We need the government to support home improvements like insulation and heat pumps to lower bills, boost the economy, and help the UK reach our climate goals. Heating our homes really shouldn’t cost the earth.

Our Affordable Energy Calculator shows how much individuals and communities across the UK could save if the Government commits to invest in our homes in the upcoming Energy Bill.

Ruth London from Fuel Poverty Action, commented:

Public anger is intense and support is growing for a whole new system, Energy For All.

This would mean no standing charges, a free band of essential energy so that no one freezes to death with excess energy use charged at a premium.

This would be funded by windfall profits and end to fossil fuel subsidies with accelerated energy efficiency and renewables expansion to reduce cost of the proposals.

ENDS
[1] Standard credit +6.2%, Economy 7 +4.1%, PPM +1.4% (source Ofgem letter p3)
[2] For example, electricity in North Wales & Mersey is 6.7% more expensive than in the East Midlands (Ofgem default tariff cap level document, based on direct debit payment and standard average use on single point meter).
[3] Based on dual fuel, direct debit increase 9.7%, Standard Credit 9.4% and PPM 7.8% (Ofgem default tariff cap spreadsheet table 1b, column BO compared to BP)
[4] This figure was calculated using the most common dwelling type (owner-occupied, three bedroom, semi-detached) in England and Wales, according to ONS data*, with the most common characteristics (eg condensing gas boiler central heating) for that type of dwelling. This type of dwelling would see a £1,832 reduction per year, or 64.7%. The number is not a mathematical average of all UK homes. Other dwelling types show similar savings in percentage terms, so a one bedroom council flat would see a £606 reduction (59.5%) and a four bedroom detached house would see a reduction of £3,579 (64.9%).

 

 

Fuel poverty set to hit 11m households as protesters gather in Westminster

New estimates by the End Fuel Poverty Coalition reveal that the axing of the Energy Price Guarantee could lead to almost 11m UK households in fuel poverty from April 2023.

Based on the latest estimates on energy prices from Cornwall Insight, figures will rise from 7m households now to 10.7m (a rise from 24.5% to 37.6% of households) from April 2023.

While numbers will then fall slightly, it will still leave 10.1m households in fuel poverty in winter 2023/24.

The figures come as protestors gather in London to ask MPs to back plans for a universal basic energy allowance.

This energy allowance, which would meet basic needs for heating, cooking and lighting, is the core component of the Energy For All petition which will be handed into Downing Street today with more than 600,000 signatures.

MPs can also now back an Early Day Motion supporting the Energy For All plans. Ruth London of Fuel Poverty Action said:

Even the Energy Price Guarantee, which was billed as the government’s two-year solution to the price crisis, will not last two years but will end in April.The outlook is frankly terrifying.

It is now all the more essential – and more possible – to win a totally new pricing framework like Energy For All.  Finally there is now support for this inside Parliament.”

A spokesperson for the End Fuel Poverty Coalition, commented:

The government may have brought some stability to the markets, but it has come at the cost of huge instability in households’ finances.

The new Chancellor must work quickly, and with consumer groups and charities, to design a new package of support and energy market reforms that will help those in fuel poverty now and post April.

But while the political focus on energy bills may now have shifted to next April, millions of the most vulnerable will be living in cold and damp homes this winter and will need further financial and non-financial support.

The Warm This Winter campaign has called for GBP14bn of additional financial support as well as non-financial help for households this winter.

Chief among the non-financial asks is an immediate suspension of all forced transfers of households onto more expensive pre-payment meters (PPMs), whether by court warrant or remotely via smart meters.

These demands come alongside calls for more investment in energy efficiency and a move towards a renewable energy future, and away from oil and gas.

Cara Jenkinson, Cities Manager at Ashden, which is part of the Warm This Winter campaign, added:

Poor quality homes that leak energy are currently causing the NHS £1.4bn a year as well as misery for people in damp, cold homes.

To solve fuel poverty for good, we need a rapid scale-up of home retrofit focused on the areas that need it most, with an investment in the construction skills needed so that work isn’t stalled by a lack of workers.

Tessa Khan, director of Uplift, said:

On top of everything else, this government’s plan to fix the UK’s energy system is also in disarray.

We need a government prepared to tackle the crisis at its root, which means moving the UK off volatile fossil fuels with a national insulation programme to cut waste, and a massive acceleration in renewable energy, which is now nine times cheaper than gas.

This is the only way to permanently lower energy bills.

The government needs to stop adding to our problems and fix the ones on their desk. This must begin today with providing more targeted help for those who are going to be hit hardest.

Ross Matthewman, Head of Policy and Public Affairs of the Chartered Institute of Environmental Health said:

The decision to end the price cap freeze after six months rather than the proposed two years will have a devastating effect on households struggling with their energy bills. While insufficient, the two-year energy price cap freeze provided some reprieve to households, who now face grave uncertainty on what support on household energy bills exist beyond April.

We urgently call on the UK government to get a grip, reinstate the two-year energy price cap freeze as well as intervene more broadly to support households struggling with their energy bills.

While we welcomed the government’s Energy Bills Support Scheme, it is apparent that £400 spread over six months is simply not going to be enough to tackle the spiralling cost of energy crisis, with more significant intervention needed.

Not only are we are calling on the government to double the amount of financial support provided to households to protect households this winter, but we are also urging them to introduce a raft of energy efficiency measures. Such measures can act both as a means of supporting households most in need right now as well as shielding households from spiralling energy bills in the long-term.

Ofgem to face legal challenge as price hike news sinks in

As news about the October Ofgem 80% price hike sinks in, and estimates from Cornwall Insight suggest it could reach £5,387 from 1 January 2023, further End Fuel Poverty Coalition members have reacted to the news.

The Good Law Project has confirmed that, as a result of the announcement, it will sue Ofgem over its decision. Jo Maugham, Director of Good Law Project said:

The announcement today will devastate families. Just who and what is Ofgem for? Do not be fooled. This is a choice. And the choice they’ve made is to let low-income consumers and small businesses bear the brunt of this crisis.

We believe Ofgem can – and should do more. We intend to put the question before the High Court, and will ask for a fast-tracked timeline to reflect the urgency of this crisis.

Repowering interim CEO, Felix Wight, commented on the price hike:

Today’s news is devastating for millions. But let’s be clear – this is not an energy crisis- it is a fossil fuel crisis, and a political crisis.

Successive governments have failed to respond to the clear majorities calling for decisive action on climate change, and we have been taken down a strategic cul-de-sac where we have lost control of our energy costs.

Many of us have seen this coming, spoken up, and been ignored. We now find ourselves in a hostage situation with fossil fuel producers, with the government considering paying up to £100Bn in ransom.

Putting the burden on individuals to take the hit for the government’s own failure to plan is callous and risks a breakdown in the fabric of our society and economy.

The community energy movement offers a clear alternative- a bottom-up approach to making our 28 million homes more comfortable and affordable, the opportunity for everyone to benefit from home-grown renewable energy, and a model that re-invests in people and communities.

We know it works because those communities who have been able to set up their own energy infrastructure are benefiting right now from fossil-free power that helps protect them from this desperate scramble for natural gas at any price.

Spending just a fraction of the £100Bn fossil fuel subsidy to support community owned energy would start a genuine transformation in our energy landscape and put power where it belongs- in the hands of households across the country.

The time has come to face down the politicians and companies that have lost our trust, and start building an energy system that works for everyone.

Caroline Abrahams, Charity Director at Age UK, said:

Although the ballpark figure for the new price cap had been trailed in advance there will be many older people for whom today’s announcement is completely new and a huge shock. Millions of pensioners will now be coming to terms with the reality of what it means for them: the prospect of trying somehow to get through the autumn and winter with prices soaring and yet with very little flex in their fixed incomes. It’s a truly frightening prospect and one that most could not have prepared for, and never expected to face at this point in their lives. I think a lot of older people will be utterly bewildered that it has come to this and will also feel badly let down, and I can’t say I blame them.

The new Prime Minister must make their first act providing additional support for the millions of households in our country whom rising inflation is set to overwhelm, among them many pensioners. We are fast approaching a national emergency which will leave a significant proportion of the population unable to afford even a basic standard of living. Every day older people are telling us how scared they are; they need urgent reassurance from the Government that they will not abandon them.

It’s later than the Government thinks: we understand that there is essentially a transition underway between one Prime Minister and the next, but every day the economic forecasts seem to worsen and yet there is no clear word from the centre about how they will respond. Unfortunately, this is increasing the sense of insecurity many older people feel.

That’s why the new Government must act quickly to give older people hope and confidence. In the meantime, it would be extremely helpful if both candidates made it clear that they will stand by those with most to fear from soaring inflation, among them many pensioners, over the difficult months to come.”

Adam Scorer, National Energy Action (NEA) chief executive, added:

The scale of harm caused by these price rises needs to sink in. A warm home this winter will be pipedream for millions as they are priced-out of a decent and healthy quality of life.

We’ve all seen the estimates from Cornwall Insight for the past months. Government has had ample time to prepare an intervention to match the challenge. We know who gets hit hardest, what impact it will have and how to get money into the pockets or off the bills of the most vulnerable.

Without bold action to support the most vulnerable and those on the lowest incomes, this will effectively prise their fingers from the cliff edge and push them over the precipice.

The government needs to immediately upgrade the household support package it first announced back in May. Households need money in their pockets to weather this storm or we are going to see millions in dangerously cold homes, suffering in misery with unimaginable debt and ill health.

Even with a mild winter, millions are facing a big freeze. Action is needed now to prevent the bleakest of winters.

A new Warm This Winter campaign, backed by the End Fuel Poverty Coalition, has also launched a petition to call for urgent Government action.

Price cap confirmation like a dagger to the hearts of millions

End Fuel Poverty Coalition members have reacted to news that Ofgem has confirmed the price cap will increase from £1,971 to £3,549 from 1 October 2022. In winter 2021/22 the cap was set at £1,277.

For pre-payment meter customers, the rise will be even more punishing with the average annual bill for these 4.5 million customers due to go up to £3,608.

In response, a new campaign backed by the End Fuel Poverty Coalition, Warm This Winter, has launched a petition to call for urgent Government action.

A spokesperson for the End Fuel Poverty Coalition commented:

Today’s Ofgem price hike is like a dagger to the hearts of millions of people up and down the country.

Sarah MacFadyen, Head of Policy & External Affairs at Asthma + Lung UK, said:

Ofgem’s latest energy cap price hike risks pricing people with lung conditions out of breathing. Winter is already the deadliest season for people with lung conditions, and the cost of living increase will only make this worse and put seismic pressure on the NHS at a time where people, especially those with lung conditions, need it more than ever.

Cold air is a top trigger for people living with lung conditions like asthma and COPD, leaving people fighting for breath. Cold weather can also contribute to mould and damp – a trigger for around 2.5 million people with asthma in the UK. The best way for people with lung conditions to stay well is to ensure they take their medication and keep their houses warm, but rising costs could leave people choosing to skip their medication or turn off their heating.

As a charity we’re already seeing a 150% spike in calls to our helpline for support with financial and welfare benefits advice, and we’re worried that as energy prices rise we’re going to see a sharp decline in the country’s lung health this winter. With the triple threat of freezing homes, colds and flu, and expected COVID-19 peaks, we’re running the risk of yet another major healthcare crisis. As part of the End Fuel Poverty Coalition, we’re calling on the UK government to provide more financial support for people with long-term health conditions and on low incomes, so they can afford to keep their homes warm this winter.

Graham Duxbury, Groundwork’s UK Chief Executive, said:

As a charity that supports people living in fuel poverty, we are alarmed at the volume of requests for help that are coming through. With more price rises due over the winter, we are deeply concerned that those most vulnerable won’t have access to help they desperately need.

The latest forecasts make it clearer still that urgent action is needed to help people cope with this worsening crisis which will lead to unprecedented hardship. 

Energy companies, charities and independent experts all agree that the measures in place are not enough. As well as more emergency financial support and a long-term commitment to improving the energy efficiency of our homes we also need more – and better coordinated – advice. Groundwork’s Green Doctor service is one of many trying to help people through practical advice and emotional support, but these services are too often reliant on short-term funding with complex rules.

What we need is simpler, more stable funding models so that we can help those worst off to make best use of the help they’re getting and preserve as much warmth as they can this winter, but also help those who are being pitched into fuel poverty for the first time.

Ruth London from Fuel Poverty Action, added:

These astronomical price rises are completely unnecessary. Energy costs no more to produce than it did last year. People will go without food to pay these bills, while the energy generators and suppliers make a killing: our money goes straight into wealthy shareholders pockets, and into further investment in expensive, polluting, and climate-wrecking oil and gas. The government is adding to this heist by increasing the millions of pounds they daily pay in subsidies to fossil fuel giants while offering only sticking plasters to UK residents.

They must urgently insulate homes, switch to cleaner, cheaper renewable sources of energy, and reverse the gross injustices of the present pricing framework, including high prepayment prices, high standing charges, and more.

Fuel Poverty Action is advocating Energy For All – a completely new pricing system, where every household will receive, free enough energy to cover basic needs. It will be paid for by higher prices for profligate energy used, windfall taxes, and an end to fossil fuel subsidies. Our petition, with over 408,000 signatures will be delivered on 19 September.

Ofgem has not been protecting customers, and with the Good Law Project we are challenging their priorities. Without radical change, many more thousands will die this winter in cold homes.

Following reports that rural areas will be heavily affected by the rising price cap, Richard Quallington, Executive Director of Action with Communities in Rural England said:

The fact rural parts of the country are some of the worst affected is no surprise to us. Much of the housing stock in the countryside is older and more difficult to heat and many households still depend on heating oil which is not subject to the price cap.

This, combined with typically lower rural incomes and the cost of travelling to access jobs and services is creating the perfect storm in the countryside.

The challenge for policy makers is twofold. They need to find ways of getting more financial support to the people who most need it, and this requires more creative localised responses in rural communities. And there also needs to be a longer-term plan for improving the energy efficiency of homes which is suited to the fabric of older buildings. The needs of rural communities cannot be overlooked.

Ross Matthewman, Head of Policy and Campaigns at the Chartered Institute of Environmental Health, said:

Following reports that Ofgem is to announce yet another crippling increase in energy bills, we urgently call on the UK government to intervene to protect millions of households being plunged into fuel poverty this winter.

While we welcomed the government’s Energy Bills Support Scheme, it is apparent that £400 spread over six months is simply not going to be enough to tackle the spiralling cost of energy crisis, with more significant intervention needed.

Not only are we are calling on the government to double the amount of financial support provided to households to protect households this winter but urging them to introduce a raft of energy efficiency measures. Such measures can act both as a means of supporting households most in need right now as well as shielding households from spiralling energy bills in the long-term. Energy efficiency measures also  play a key role in fighting climate change and reducing carbon emissions.

The End Fuel Poverty Coalition spokesperson concluded:

As a result of the decision, parents will be unable to feed their children, the sick and elderly will be condemned to worsening health, disabled people will go without vital medical equipment and households will be forced into poverty for the first time in generations.

All the solutions lie at the Westminster Government’s door, yet it is silent in the face of this looming disaster.

We need emergency financial support, especially for the most in need. But we also need reform to Britain’s broken energy system as well as increased support for energy efficiency measures and homegrown renewables.

Further reaction and revised predictions on the levels of people expected to be in fuel poverty will be published by the Coalition in due course.

The Warm This Winter petition can be signed online: https://www.warmthiswinter.org.uk/#petition

Decision on January price increase branded inhumane

Ofgem have confirmed that it will introduce a quarterly price cap increase on the energy bills of millions of people.

A spokesperson for the End Fuel Poverty Coalition commented:

Households will face a two-stage cost of living crisis this winter, thanks to Ofgem’s confirmation that energy bills will go up in October and again in January.

From October, millions of families across the country will face the real prospect of skipping meals to pay for energy, older people will shut themselves into one room to save on heating and disabled people will be unable to afford to charge vital equipment, such as electric wheelchairs.

Then in January, they will be asked to pay even more for their energy.

Ultimately, this decision will force more people into fuel poverty in the middle of winter, causing additional stress on the NHS and it may ultimately lead to increased levels of excess winter deaths this year. It is simply inhumane.

It’s clear that the Government and the Conservative Party leadership hopefuls just don’t get the scale of the problem facing the country, nor the public anger at rising bills. They are running out of time to act.

Only a full programme of emergency financial support, a rapid expansion of energy efficiency programmes and a commitment to bringing more cheap renewable energy on stream will help people stay warm this winter and into the future.

The decision comes after a week of massive increases in profits for energy firms, but with Centrica warning that its profits in its British Gas consumer division were hit by it having to ‘hedge‘ buying of energy due to the previous six monthly nature of the price cap regime.

Ross Matthewman, Head of Policy and Campaigns for the Chartered Institute of Environmental Health, said:

Ofgem’s decision to introduce a quarterly price cap confirming household energy bills for millions of people will increase substantially in the depths of Winter is a further blow to those already struggling amidst this cost-of-living crisis.

Industry experts estimate that the typical households would be faced with energy bills of £3,358 from October, then £3,615 from January 2023. This is up from average energy bills of £1,400 a year in October 2021.

Ofgem’s principal duty is to protect the interests of existing and future consumers. Following today’s announcement which will plunge millions into fuel poverty, it is clear that it is failing in its duty to consumers.

UNISON head of energy Matt Lay said:

The government must stop pretending it’s done enough. Support for consumers has so far been pitiful. Other European governments have been both swifter and bolder to lessen the blows from big bills.

All but the richest consumers face a terrifying prospect this winter. Many simply don’t have the means to pay. Swift and radical government action is needed to cap the horrific price hikes predicted. Otherwise, there will be a crisis of unimaginable proportions.

£3,000 energy bill could leave 8.5 million UK households in fuel poverty 

The End Fuel Poverty Coalition has issued a warning today that the energy crisis could leave 8.5 million UK households unable to heat and power their homes.

The group, which represents over 50 organisations, claims that cold homes cost lives and that more frail and older people could die next winter without further action from the Chancellor in his Economic Statement in March.

The campaigners are pleading with the Government to cut bills for the most vulnerable households comes as wholesale prices soar due to Russian invasion of Ukraine – with stark predictions that energy bills across Great Britain could increase to £3,000 per annum. 

Adam Scorer, Chief Executive of fuel poverty charity National Energy Action (NEA), commented: 

When energy bills hit £2,000 a year there will be over 6 million UK households in fuel poverty.

Analysts suggest the war in Ukraine could drive average bills to £3,000 per year.

This could leave 8.5 million UK households in fuel poverty, denied a warm safe home.

This is a disaster and inevitably, will lead to more needless winter deaths.

Government must address the scale of the problem and use the upcoming Economic Statement in March to cut energy bills much further for the poorest. It must act now, to protect the most vulnerable, and to save lives.

Age UK, the leading charity for older people, highlight how cold homes threaten the frailest in society and the crisis should prompt a re-think about the adequacy of the UK Government’s support package for those on the lowest incomes.

Age UK’s Charity Director, Caroline Abrahams, comments:  

Energy price rises have pushed older people’s budgets to breaking point, with many going without heating for weeks over the winter. The impact on their health and wellbeing is likely to be devastating, just as it seemed we and the NHS were getting some respite after two years of a pandemic.

The support the Government have announced is nowhere near enough. How are those on the lowest incomes, who already struggle to afford the essentials, going to find an extra £350 to cover their energy bills, on top of all the other increases in the cost of living?

We are really concerned about those using prepayment meters – typically a more expensive way to pay for your energy – and how many will ration and disconnect from their supply.

With further increases expected in the autumn, and uncertainty intensified by the invasion of Ukraine, the Chancellor must do more to help and ensure that those on low and modest incomes can afford to stay warm without worrying sick about their bills.

 The charities say the impacts of cold homes on the most vulnerable people are well known to the UK Government but without more support, the situation will prompt more needless deaths next winter. 

A spokesperson for the End Fuel Poverty Coalition, concluded: 

Ending fuel poverty is a public health necessity and a national security priority. Based on World Health Organisation modelling, an estimated 80 frail and elderly people die prematurely every day across the UK each winter.

Unless more support can be provided, the scale of these tragic needless deaths will grow and cause even further devastation to other poorer households.

We need urgent help for households in fuel poverty now combined with a long-term plan to improve energy efficiency of our homes and a sustainable, renewable-led, energy mix.

Notes to editors

Alongside similar unprecedented increases in Northern Ireland, the GB price cap is now being raised from 1st April, a jump of an additional £700 per year to leave the ‘average’ domestic energy bills at £2000, leaving a further 2 million households in fuel poverty. Due to reductions in household incomes, surging energy prices and relatively modest improvements in energy efficiency levels, charities estimate that the number of households in fuel poverty across the UK will increase to 6.3-6.5 million households in total in April, an increase of more than 50% in just over six months. This projection is based on the 10% definition of fuel poverty which gives a realistic picture of the scale of fuel poverty in periods of more volatile energy prices. On 24th February Investec Bank Ltd estimated the price cap on energy prices could spike another 50% in October to more than £3,000 per household following huge gains in the wholesale natural gas and electricity markets.  

Last month the UK Government released new fuel poverty statistics. These statistics do not capture the recently announced huge hikes in energy bills. However despite a long lag in the Government data for England; these new statistics highlighted a lack of progress to meet the UK Government’s statutory fuel poverty commitments with warnings it will take over 60 years for the Government to meet its statutory fuel poverty commitments. 

As well as addressing the worrying lack of sufficient emergency support for the energy crisis, the charities highlight in 2019 the Conservative party manifesto made a welcome commitment to help lower energy bills by investing £9.2bn in the energy efficiency of homes, schools and hospitals in England, including £2.5bn for the Home Upgrade Grant Scheme (HUG). HUG is vital as it targets low-income households in the least efficient, private tenure homes which are the most expensive to heat. But to date, less than half of the Government’s 2019 manifesto pledge has been committed. The UK Government also consulted last summer on welcome plans to extend and expand the Energy Company Obligation (ECO), Warm Home Discount (WHD) and Minimum Energy Efficiency Standards in the Private Rented Sector (PRS). They say these proposals were warmly welcomed by key stakeholders, but there has now been a long delay to implement these policies and further hiatus will continue to badly damage the health, wealth and well-being of the poorest households.    

Last winter Public Health England (PHE) warned there is a damaging overlap between the health impacts of living in a cold home and Covid-19. Pre-existing chronic medical conditions such as cardiovascular and respiratory conditions, such as chronic obstructive pulmonary disease (COPD), asthma and heart disease are also particularly badly affected by a cold home.  

Overall the Coalition and NEA estimate that based on a five year average, between 8000 to 10,000 people across the United Kingdom die prematurely during the winter due to the impact of cold homes. This is based on World Health Organisation modelling that at least 30% of Excess Winter Deaths are attributable to a cold home.

Image: Shutterstock

Energy bills set to hit highest peak since price cap introduced

Millions of people across Britain are set to be hit with the highest fuel bills since a price cap was introduced, according to a new analysis of data.

With wholesale prices increasing [1], Ofgem is set to announce an increase in fuel bills as early as 6 August. Around 15m people on default tariffs and pre-payment meters will be affected.

The move, estimated by Cornwall Insight analysts to see bills increase by £112 a year, will hit homes from 1 October [2]. Just as furlough comes to an end and the nation heads into winter. Such a rise would mean bills for homes on a standard variable tariff will be £226 higher than in February 2017. [3]

Calculations by the Coalition, provided to The Guardian, estimate that the price rise will force an additional 392,000 households into fuel poverty. [4]

  Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said:

Over 4m people are behind on their household bills and a second Ofgem price cap rise this year will be disastrous for the millions on the brink of fuel poverty.

Any price cap rise will only make matters worse for families struggling to make ends meet. At the same time, people are still reeling from the increases in bills caused by stay at home lockdown measures for the last 18 months.

While people’s attention is diverted by the rush out of lockdown, the reality is that the countdown to winter is on and it is a race against time. Any price rise – however small – will mean the choice between heating or eating becomes even starker later this year.

If that wasn’t bad enough, fuel poverty can make respiratory illnesses worse – meaning conditions such as Covid may be exacerbated by living in cold damp homes.

Short-term energy saving measures and shopping around for cheaper energy can help reduce bills, but the scale of the problem faced by people this year is huge and any increases during the pandemic and the recovery should be avoided.

We’d urge Ofgem and policy makers to think again about the price cap rise, or the Government to step in and provide emergency financial support to those who suffer due to the decision.”

Ruth London from Fuel Poverty Action, commented:

With thousands dying of cold every year the current energy pricing system – complete with price caps – is not fit for purpose.  As prices rise, a carbon tax rebate would help, but won’t solve this.

We need a new pricing framework, where poorer people don’t pay higher rates than the rich.

We need well-insulated housing, renewable energy, and wages and benefits that meet our costs. No special provisions or consumer protection will stop fuel poverty from killing pensioners and wrecking childhoods. The pandemic has taught millions that real change can’t wait.

Matt Copeland, Head of Policy and Public Affairs at National Energy Action said:

The price cap is an important measure to ensure that households are not exposed to excess profits in the energy market. However, if prices rise as is expected, Ofgem and Government must work together to help those worst affected by rising utility debt in order to avoid a devastating winter for people in and on the brink of fuel poverty. This must be combined with a long-term boost to spending to improve energy efficiency of buildings.

Without intervention, more people will remain cold at home during the winter, be more susceptible to respiratory illness, and unfortunately many will die. That is a truly unacceptable outcome, especially as the solutions to avoid it are well known.

Frazer Scott, CEO of Energy Action Scotland, commented:

More than a quarter of Scottish households are living in fuel poverty with many of these households living off the gas grid, dependent on electricity. The anticipated price rises will have a catastrophic effect on struggling households particularly as the job retention scheme ends and the Scottish winter approaches.

Scotland needs a fuel poverty strategy as a matter of urgency to ensure that we are prioritising the homes and families most in need. We must move quickly in order to protect our health service from the additional burden created by cold, damp homes and we must see adequate investment from Scottish Government that will eradicate the national shame that is fuel poverty.

Ben Saltmarsh, Chair of Fuel Poverty Coalition Cymru and Head of NEA Cymru, added:

Hundreds of thousands of households in Wales already struggle to keep warm at home. Far too many must ration essentials, cutting back on heating and electric. If these price rises come to bear, people will find it even harder still.

It is vital that the Welsh Government follows through with the promises that it made in its Fuel Poverty Plan to support the worst-affected first; upgrading the energy efficiency of fuel poor homes, maximising incomes, and working with partners, including the UK Government and Ofgem, to protect Welsh households.

[1] Wholesale prices on Zenergi show a rise of between 19% and 42% (from 2/6/21 to 30/6/21).

[2] Cornwall Insight data from energy analysts forecasts that the price cap on standard and default tariffs will rise in October to around £1,250/yr for a typical dual-fuel household paying by direct debit, up from the current price of £1,138/yr.

[3] End Fuel Poverty Coalition analysis of official Ofgem announcements.

[4] The calculation is based on EFRA Select Committee on Energy Efficiency and Fuel Poverty HC37 2009 and Fuel Poverty Methodology handbook BEIS / BRE, updated September 2016 which estimates that for every 1% rise in energy prices an additional 40,000 homes go into fuel poverty. The rise from 1138 to 1250 is a 9.8% rise so that equates to 392,000 (40,000 * 9.8).