After a hectic summer, full of research reports, consultations and announcements, catch up on the state of Britain’s broken energy system with the summary below and read the Warm This Winter report card [pdf] on how the Government is facing up to the challenges.
The End Fuel Poverty Coalition continues to be a proud supporter of the campaign to keep the country Warm This Winter.
Energy bills
- Energy bills remain at record levels according to the Ofgem Price Cap. Every unit of energy a customer uses will still cost double what it did in winter 2020/21. The daily standing charges customers pay have also increased – doubling in the case of electricity.
- Other changes to the price cap mean that for an estimated 7m households, energy bills will be higher this winter than last, according to the Resolution Foundation.
- The Daily Mail took a deep dive into the standing charge postcode lottery and regional energy variations, revealing how aspects of the energy bill can be 57% more in some areas of the country than others.
- Meanwhile 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 18.13% higher, electricity standing charges 12.48% higher and unit costs also 5-8% higher.
Energy debt
- 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.
Prepayment meters
- Over 20,000 members of the public responded to the prepayment meters consultation, thanks to 38 Degrees’ efforts (The Times covered this) and the End Fuel Poverty Consultation response said that the Government had shown a dereliction of duty toward the vulnerable households at risk of forced PPM transfers.
- Ofgem are still to publish a final decision on the consultation and confirm when forced transfers to PPMs will restart, although the fears are that courts will start pilot programmes before the investigations are complete and before licence conditions of suppliers have been reformed. Meanwhile, the Telegraph revealed record numbers of smart meters were switched to PPM mode.
Energy Bills Support Scheme
- Figures published by Age UK show that the Energy Bills Support Scheme (EBSS) Alternative Fund, designed to give a crucial £400 to households that receive their energy supply indirectly via a landlord, site owner, or other intermediary, has completely flopped, having failed to reach almost 4 in 5 of all those eligible.
- The main EBSS is also lagging behind with data showing that there were 20m missed payments and 50.6m unclaimed PPM vouchers. This adds up to more than £70m in support that did not get through. [EFPC analysis of DESNZ data, unpublished]
Energy production
- The Government led a major drive to keep the country hooked on fossil fuels. But figures show this would only give us an extra year of domestic gas, which would of course be charged to customers at global market prices.
- Drax has been found to be gaming the grid to keep profits high – and with it our energy bills, which may have been hiked by £639 million (or £22 per household). Bloomberg had the story first.
- Morgan Stanley were fined £4.5m by Ofgem for irregularities with their record keeping on energy trading as data reveals that a unit of gas is traded 13 times on energy markets before it reaches the end user (and every unit of electricity traded three times).
Profits
- British Gas announced record breaking profits (almost £1bn in 6 months), but they weren’t the only ones. Eon (€839 million in 6 months for its UK arm) and Scottish Power retail profits £576m in 6 months) proved that changes to the Ofgem price cap were good for energy firms – more than canceling out any previous losses at the firms. At EDF, profits lept to €2.3 billion in the first half of 2023, while many of its business customers did not get the support they were entitled to.
- And the look ahead for energy suppliers’ profits are good for them, if not for bill payers. Warm This Winter’s first Tariff Watch report found that energy suppliers’ profits on domestic energy bills could reach almost £2bn in the next 12 months and Ofgem confirmed that suppliers’ profits will increase by £2 per customer per year from October.
- For energy producers, the Windfall Tax is set to expire in March 2028, although moves by the industry could see a “price floor trigger” which would end the tax prematurely.
Winter deaths & health concerns
- On the weather front, the Met Office confirmed that this winter is likely to be an El Niño winter, which means it is likely to be colder and drier than usual. End Fuel Poverty Coalition records suggest that when the average winter temperature drops below 3.6 degrees Celsius, the number of excess winter deaths caused by cold damp homes increases significantly.
- In winter 2022/23, the estimated number of excess winter deaths caused by living in a cold damp home was 4,706, which is up from 3,186 in winter 2021/22 (a 48% increase. England, Scotland & Wales only).
- Two thirds of people in cold damp homes suffer from anxiety or depression according to a Europe wide study by Energy Cities [65%, pdf].
- The MND (motor neurone disease) Association report that some families with the highest levels of care have described how they spend up to £900 a month on electricity alone and are reducing their use of vital equipment.
And finally…
The Prime Minister scored an own goal by admitting that energy bills are to blame for economic woes and appointed a new energy secretary with a bursting inbox.