Author: End Fuel Poverty Coalition

Almost 5,000 excess winter deaths caused by cold homes last winter

The House of Commons Energy Security and Net Zero Committee has heard estimates that there were 4,706 excess winter deaths in 2022/23 caused by living in a cold home in England, Scotland and Wales. [1]

The figures, compiled by the End Fuel Poverty Coalition using official data, were presented to MPs at the Committee’s inquiry into Government preparations for winter.

At the same time, a report card by the Warm This Winter campaign on the Government’s progress against 8 key measures to tackle the energy bills crisis, has revealed that on half of these measures Ministers are making no progress. [2]

The report card shows that on 3 measures rapid progress is needed, but on one measure, the Government has actually gone backwards, by taking steps that will deepen the country’s reliance on expensive fossil fuels.

Meanwhile, mounting evidence suggests that a new class system is emerging in Britain, based on access to energy.

Fewer than 5m of the UK’s 28m households could be classed as being in the “energy elite” and unaffected by the current energy bills crisis. Around 8m have to borrow money to pay their energy bills and over 1m have disconnected for periods this year. [3]

The rest of the population are also subject to high energy bills, which have doubled in the last three years. Among this wider group, people have used up savings and cut back on essentials to keep the lights and heat on. With winter approaching and the cost of living crisis continuing, the ability of people to pay sky high energy costs is severely diminished. [4]

The health implications of living in cold damp homes are severe. In addition to contributing to excess winter deaths, existing medical conditions are made worse and a new pan-European study found that two-thirds of people in fuel poverty experience debilitating depression or anxiety. [5]

The End Fuel Poverty Coalition was among consumer groups giving evidence to the Committee:

A spokesperson for the Coalition also commented:

“The public see tackling the energy bills crisis as the main way the Government can help ease the cost of living crisis, but sadly ministers have been making slow or no progress on the policies needed to keep people warm this winter and the next.

“Thousands of people die every year in cold damp homes and countless more turn to the NHS as existing health conditions worsen due to living in such conditions. Fuel poverty is a public health crisis, but it can only be addressed by economic and engineering solutions.

“Many of the solutions do not need to place extra burden on the Treasury and we expect MPs to ensure ministers and the energy industry do much more to help those most in need this winter.”

Tessa Khan, executive director of Uplift, which is part of the Warm This Winter campaign, added:

“Energy is now barely affordable for a majority of households in the UK, and millions of people are saddled with energy debt or have had to disconnect because they are simply priced out of today’s energy market. 

“While it helped pay our bills last year, this government has done nothing to fix Britain’s broken energy system. There’s been next to no progress on insulating homes or unblocking the barriers to cheaper renewable energy. Instead, we’ve had a lot of hot air over new North Sea drilling, which will do nothing to lower people’s bills. The real solutions are obvious, the government is just failing to act.”

Jonathan Bean, spokesperson for Fuel Poverty Action said: 

“The country will never forgive a government that allows energy firms to profiteer whilst children go hungry and their grandparents are left shivering in their beds. And now Ofgem is planning to allow homes to be broken into again this winter to install prepayment meters – terrorising those struggling to stay warm.”

ENDS

The House of Commons Energy Security & Net Zero Committee Inquiry starts at 1000 on Wednesday 6 September and can be viewed online:

https://committees.parliament.uk/event/19027/formal-meeting-oral-evidence-session/

[1] Excess Winter Deaths (EWDs) for winter 2022/23 data taken from provisional tables from:

  • Office of National Statistics (table 11, England: column J, lines 13-16 = 18,142 EWDs. Wales: column J, lines 37-40 = 1,324 EWDs) 
  • National Records of Scotland (link, table M1, col. N, lines 221-224 = 2,424 EWDs). 
  • Institute of Health Equity methodology suggests that 21.5% of EWDs are caused by living in cold homes. 

Applying the IHE methodology to EWDs, means that the number of EWDs caused by living in cold damp homes are: England 3,906, Scotland 521, Wales 285. Total 4,706. 

All data is flagged as provisional. NI data not available yet. Winter is defined as December, January, February and March.

Comparative number for winter 2021/22 (i.e. excluding NI) is 3,186. Previous years data sourced from ONS and NRS and collated by EFPC and published online.

[2] The Warm This Winter Report Card, summary below.

Help for people THIS WINTER

Provide more financial support for those most in need 

Is the government fixing it? NO PROGRESS

Tackle the growing energy debt mountain

Is the government fixing it? NO PROGRESS

Stop forcing people onto more expensive pre-payment meters

Is the government fixing it? NO PROGRESS

An affordable ‘social tariff’ for people priced out of the market

Is the government fixing it? NO PROGRESS


Lowering energy bills FOR GOOD

Reduce bills for good with a nationwide insulation drive

Is the government fixing it? RAPID PROGRESS NEEDED

Lower electricity costs by developing more renewable energy 

Is the government fixing it? RAPID PROGRESS NEEDED

Reduce the UK’s reliance on expensive gas imports

Is the government fixing it? GOING BACKWARDS

Claw back excessive profits 

Is the government fixing it? RAPID PROGRESS NEEDED

The full report card and source data is available: https://www.endfuelpoverty.org.uk/about-fuel-poverty/september-2023-fuel-poverty-stock-take/

[3] 28.2m ONS household data. 16% of the population have been able to maintain usual spending so far, and expect to be able to continue to do so (YouGov, July 2023), which is also supported by Grant Thornton figures on projected household expenditure in 2021/22 (suggested that 14% of households are financially immune from cuts). 

8m figure from Citizens Advice. 1m figure from Ofgem based on Q1 2023.

[4] “Used up savings” (Bank of England, as reported by Press Association, 29 June 2023), “cut back on essentials” (YouGov, July 2023).

[5] Latest health resources and evidence cited on the End Fuel Poverty Coalition website. Two thirds of people in cold damp homes suffer from anxiety or depression according to a Europe-wide study by the Wellbased group of academics [pdf].

Energy bills a voter priority as new Secretary of State appointed

Key swing voters say policies to tackle the cost of living crisis are critical to their voting intentions in the next election, but neither major party has the confidence of voters on the issue.

As a new Secretary of State for Energy Security and Net Zero has been appointed, the report finds that the cost of living crisis is the number two issue determining how people will vote at the next election, with 50% of all voters choosing it as a priority issue, just behind the NHS.

The figures from YouGov on behalf of the Stop the Squeeze campaign reveal that bringing down the cost of energy for households is the number one solution to the crisis people would like to see.

Overall, 58% of voters would like to see policies enacted to bring down the cost of energy bills – by far the most popular option to tackle the cost of living crisis, with cutting VAT the second favourite on 28%. The report authors found that this option performs consistently well among all types of voter demographics and across voters of all parties.

Sam Tims, senior economist at the New Economics Foundation (NEF) said: “Ahead of the next election voters’ priorities are clear: they want politicians to offer up bold solutions to tackle the cost of living crisis. Energy bills, housing costs and wages will be at the forefront of people’s minds.

“There is a golden opportunity for any political party that can offer voters both a short term-plan to support people through the cost of living crisis and the long-term change we need to improve living standards for good.”

The Prime Minister has reshuffled his top team ahead of the next General Election with Claire Coutinho replacing Grant Shapps as Energy Secretary. A spokesperson for the End Fuel Poverty Coalition, commented:

“Claire Coutinho’s inbox is already groaning under the weight of vital decisions which need to be made to reform Britain’s broken energy system.

“Energy bills remain at record levels with every unit of energy costing double what it did in winter 2020/21, with daily standing charges also increasing and customers in record levels of energy debt.

“As well as securing financial support to help people stay warm this winter, the new ministerial team will need to amend the Energy Bill to ban the forced transfer of households onto prepayment meters and improve the energy efficiency of rented properties.

“Previous ministers appeared to abandon plans to consult on tariff reform to help the households most in need and who most rely on energy to keep themselves safe. The new Secretary of State has an opportunity to recommit the Government to a social tariff and make meaningful long term change to people’s energy bills.

“The Secretary of State also needs to speed up reforms to the electricity market to ensure customers quickly enjoy the advantages of more affordable renewable energy, and so that their electricity rates are no longer subject to the unpredictable cost fluctuations of fossil fuels.

“There is also the opportunity for ministers to turn the current crisis into an opportunity to engage households in a large-scale retrofitting programme. They must also look at addressing UK energy security and independence by weaning the UK off its dependence on oil and gas and ending subsidies for fossil fuels, using this money to support a fair transition onto cleaner heat.”

ENDS

Download the full report as a pdf here: https://uploads-ssl.webflow.com/63357e2a3f369bd320e28ebe/64ef655fbbd961fcdb5441cd_The%20Bottom%20Line%20polling%20report%20FINAL.pdf

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

Trading firm fine highlights role of markets in energy bills

The energy regulator has handed out its first fine to an energy market trading firm under new rules.

Morgan Stanley has been fined £5.4m by Ofgem for breaching rules that require firms to record messages linked to energy trading. The records are expected to be kept due to transparency rules that help protect consumers against market manipulation and insider trading.

But Ofgem found that between January 2018 and March 2020, energy traders discussed business over WhatsApp on private phones which went against the rules. Ofgem bosses said that this represented a “significant compromise of the integrity and transparency of wholesale energy markets.”

Wholesale energy markets underpin the nation’s energy bills and so anything which impacts on these prices is of concern to all households and businesses. Under the current system, units of energy are traded on financial markets – or churned to use the industry language – by firms such as Morgan Stanley.

The latest available Ofgem data (June 2023) shows that every unit of gas is churned on the markets 13 times and every unit of electricity is traded three times.

Churn shows how often a unit of energy is traded before it is delivered to end consumers – it is calculated by dividing the total volumes traded by the total amount of energy delivered.

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

“It’s welcome that Ofgem has taken action against this type of behaviour. But action on this particular case should remind us about wider concerns about the role of energy market trading.

“Every act of trading energy on the markets usually results in profit for the traders and ultimately adds to our bills. Units of energy can be traded several times before reaching our energy suppliers.

“We need to continue to ensure we have as much transparency as possible about all the firms who contribute to Britain’s broken energy system.”

What will Ofgem’s winter price cap show?

On Friday 25th August at 0700, Ofgem will announce the energy price cap which will apply to household bills from 1 October 2023.

In a major change, the values which the regulator uses to calculate the “average bill” will change (known as TDCVs, typical domestic consumption values). Due to better energy efficiency and rising energy costs, average energy consumption has fallen.

But this means that in order to compare this winter to last, households will need to look at unit costs and standing charges.

The End Fuel Poverty Coalition has compiled average unit costs and standing charges for direct debit customers over previous years to enable a true comparison with the data Ofgem will publish.

The figures below are based on price cap prices in effect on 16 August, forecasts are that these will vary slightly from 1 October and the figures will be updated after the Ofgem announcement.

Looking back to before the energy bills crisis started in winter 2020/21:

  • Gas unit costs are up 115% and daily standing charges are up 6% in comparison to winter 2020/21
  • Electric unit costs are up 141% and daily standing charges increased 117%

Compared to winter before Russia invaded Ukraine in winter 2021/22:

  • Every unit of gas is 85% higher today than in winter 21/22 and the gas standing charge is 11% higher.
  • Every unit of electricity is 45% higher today than winter 21/22 and electricity standing charge is 113% higher.

For winter last year, the prices are compared with the Energy Price Guarantee rate which was in effect.

Energy UNIT costs have come down from last winter (-24% for gas and -7% for electricity). However, STANDING CHARGES have increased from last winter (+2% for gas and +14% for electricity).

In addition, the Government’s Energy Bills Support Scheme has ended. This kept the average bill 16% below the Energy Price Guarantee rate. Therefore, people will not feel any reduction in unit costs as the EBSS money has been taken away from them this winter.

Of course, households are also battling record prices for all other essentials and facing record household energy debt levels.

The prepayment meter (PPM) premium which added around 10% to these people’s bills will be eradicated for some customers and PPM users will be paying roughly the same as DD customers. But for those on standard credit, the price premium continues and these customers will pay about 10% more than DD and PPM customers this winter.

A spokesperson for the End Fuel Poverty Coalition commented:

“Even after next week’s Ofgem announcement, energy unit costs will still have more than doubled since winter 2020/21 with standing charges also rising. For electricity, the situation is even worse thanks to Britain’s broken energy system which fails to pass on the cheaper cost of renewables to the customers and daily electricity standing charges have doubled.

“Looking at a year on year comparison, any declines in wholesale costs are almost cancelled out by the end of the Government’s Energy Bills Support Scheme which means bills stay at similar levels to last year while people have less ability to pay these stubbornly high prices.

“This coming winter will not feel any better than last.”

Notes

Data applies to England, Scotland and Wales only. GB averages. Where an Energy Price Guarantee Rate superseded an Ofgem Price Cap rate, this has been taken into account. Figures for winter 2022/23 do not include the Energy Bills Support Scheme.

Updated text on 24 August 2023. New evidence from the Environmental Change Institute at the University of Oxford have revealed errors in Ofgem’s data sets for the winter 2020/21 unit costs so these prices have been revised. It means that both electricity and gas unit costs have more than doubled. Full data is available on request.

Energy suppliers could bank £1.74bn profit in next 12 months

Household energy suppliers could rack up £1.74bn in profits over the next 12 months from customers’ energy bills.

Over the previous six years, suppliers have seen the amount of profit they are allowed to make every year on the average customer on the variable tariff surge from £27 in spring 2017 to a high of £130 in early 2023. The figure currently sits at £60 per customer. [1]

With energy bills expected to remain close to current levels, the energy firms are set to continue to profit from so-called EBIT and headroom allowances in the price cap. [2]

The figures and predictions exclude any profits which firms may also make through Ofgem decisions relating to Covid and Ukraine allowances, which contributed to the recently announced high profits for British Gas and Scottish Power.

The figures come from the first Warm This Winter Tariff Watch report, produced in partnership with Future Energy Associates (FEA). The study has revealed the secret data behind Britain’s broken energy system. Campaigners plan to run the report quarterly as the energy crisis continues.

While energy prices are subject to change and customers should exercise extreme caution when thinking about switching and fixing, FEA experts forecast that there are some deals worth looking at for some households. 

For example, from 1 July, some one year fixed price tariffs with a low exit fee (below £80) and unit charges of 6.5 p/kwh for gas (gas standing charge 29 p/day) and 30p/kwh for electric (electric standing charge 52 p/day) might be worth some high-use energy users considering switching to. [3]

The FEA experts predict that the current best variable deal could be with two different suppliers, Home Energy for gas and Fuse Energy for electricity which would save £93 a year for direct debit households when compared to the Ofgem Price Cap. [4]

Throughout the first few months of 2023 there were just 5 fixed tariffs available to small sections of the market. So far in July alone, this number has doubled, with 10 fixed tariffs newly available on the market.

In April 2023 there were 26 energy suppliers offering customers tariffs, which increased to 29 in July 2023.

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

“This report shines a light on the murky depths of Britain’s broken energy system. Without fundamental overhaul of the energy grid and energy tariffs, households will continue to lose out while suppliers will profit.

“Energy supplier profits predicted for the next 12 months could easily cover the cost of a ‘help to repay’ energy debt scheme and leave quarter of a billion pounds left over.

“But in addition to network reform and immediate support, we also need to see urgent and sustained action to reduce our reliance on high levels of energy consumption, such as improving the energy efficiency of homes, driving an increase in cheap renewables and a move away from the fossil fuel profiteers of the past.”

Tessa Khan, Director of Uplift, said:

“The government seems to think the energy crisis has gone away, but for millions of households this winter will be as hard as the last. For energy companies to be pocketing this money, when bills are still twice what they were and so many people are being pushed into energy debt, is completely unacceptable.

“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 looking after the bottom line of the big energy companies, 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.”

Dylan Johnson from Future Energy Associates added:

“Our report reveals that the retail energy market is experiencing swift changes: falling wholesale prices are influencing retail costs, more fixed tariffs are available, and new suppliers are entering with innovative tariffs. Yet, questions persist over the speed of these changes, supplier profiteering, and regulator’s role in promoting competitiveness. The emergence of competitive single-fuel deals, while exciting, may pose risks to households less vigilant of tariff prices.”

Another injustice highlighted in the Warm This Winter Tariff Watch report are regional variations in the cost of energy. The figures shine a light on those areas of the country who are losing out because of regional inequalities at the hands of suppliers and Distribution Network Operators (DNOs). On the standard variable tariff:

  • Electricity: The average standing charge is 56.85 p/day (pence per day), and the average unit rate is 32.1 p/kwh (pence per kilowatt hour). Manweb, which covers Merseyside, North Wales and parts of Cheshire, has the highest standing charge for electricity at 65.8 p/day, while London has the lowest at 41.9 p/day. Seeboard (South East) had the highest unit rate at 33.2 p/kWh, and Yorkshire the lowest at 31.1 p/kWh.
  • Gas: The average standing charge is 33.5 p/day, and the average unit rate fell by 27.7%. For gas, Scottish Power and Scottish Hydro have the highest standing charges of at 33.9 p/day (£124/year). For unit rates, Swalec (South Wales) is the most expensive region with average unit rates of 7.73p/kWh and East Midlands is the cheapest gas region with unit rates of 7.34p/kWh.

Further data on the impact of standing charges will be published in future Warm This Winter Tariff Watch reports, but overall electricity standing charges remained unchanged from April to July. There was evidence of some early moves from the likes of Fuse Energy to compete on electrical standing charges, but others such as Outfox the Market raised standing charges.

For the gas standing charges, there were no changes from April to July in any of the regions, it remained constant at 29.11 p/day. This is significant as households in July, August and September will still be paying record high standing charges.

Bethan Sayed from Climate Cymru commented:

“Regional variations in energy prices are one of the most unjust parts of Britain’s broken energy system and this report shows wild variations in cost from region to region. These figures shine a clear light on those areas of the country who are losing out. It is time for Ofgem to step in and investigate these discrepancies and provide more transparency on why these differences exist.”

ENDS

Notes to editors

This press release refers to England, Scotland and Wales only. For full details, methodology and sources, download the full report online: https://www.endfuelpoverty.org.uk/wp-content/uploads/FINAL-tariff_watch_final.pdf

[1] Ofgem have allowed profits (Earnings Before Interest and Taxes [EBIT] and the Headroom Allowance Percentage [HAP]) to increase because it’s a percentage of the total bill, which includes wholesale prices. In Q1 2023 (Jan, Feb, Mar), this was up to £130 annually per medium use customer household dual-fuel bill on a single rate, versus £27 in Q2 2017 (Apr, May, June) for the same customer.  Profits have come down as wholesale prices have come down, in Q2 2023, this same customer was paying £98 – still an increase from 2017 of 263%. Other costs are already accounted for in the price cap rising. Values are from Ofgem’s historical cap levels data. All firms offering the Standard Variable Tariff (SVT) were permitted to make this level of profit from customers. Those energy firms that collapsed or posted losses will have done so due to wider customer acquisition coupled with risky hedging strategies or operating issues which negated the profit permitted under the SVT regime.

[2] Cornwall Insight energy bill predictions. Ofgem data shows the number of households on the standard variable tariff. Figure derived from the profit figure in [1] being extrapolated across all 29 million households. This is the level of profit permitted by the Ofgem licence conditions. Energy firms may make more money than this off fixed term tariffs and recent Ofgem allowances for Covid true up and Ukraine Wholesale Cost Adjustments. Equally, firms may declare less profit in annual reports, due to over-running costs in other areas or accounting measures. While energy bills are set to fall back slightly, equally Ofgem are looking to increase the permitted profit margin further, to as much as 2.4% from later in 2023.

[3] From 1 July, a tariff with an annual cost of less than £1,946 (gas unit rate 6.5 p/kwh, gas standing charge 29 p/day, electric unit rate 30p/kwh, electric standing charge 52 p/day) AND which has an exit fee of less than £80 might be worth switching to. This is for households that pay for their fuel through a direct debit and have average energy consumption. Other customers are advised to stay on variable tariffs for now. Advice provided in this press release should not be seen as formal financial advice. Energy prices are volatile and subject to significant changes at short notice. Ofgem updates its price cap calculations every quarter. Future Energy Associates advise that households who suspect they may be on overly expensive energy tariffs should explore alternative options on price comparison websites, consult with their energy suppliers, or seek guidance from consumer advocacy groups, such as Citizen’s Advice to determine the most suitable steps for them.

[4] Best tariff prices correct as of 25 July 2023. The energy market is constantly changing and customers should always check for the best deal based on their actual usage. The information on suppliers is solely a reflection on tariff prices and takes no other factors into account (e.g. customer service levels, support for vulnerable households etc). Households should always think before they fix.

Prime Minister admits energy bills are causing businesses to fold

Rishi Sunak admitted on LBC radio that businesses are being forced to shut down because of high energy bills, but campaigners say government failings are leading to persistently high costs.

The UK’s high dependency on gas for heating and generating electricity has meant that the UK has some of the highest energy costs in Europe. Government support for businesses and households helped reduce bills last winter, but support for both has been reduced significantly, with funding for businesses slashed from £18bn for a six month scheme to £5.5bn for the 12 months to March 2024. 

Campaigners from Warm this Winter, which is urging the government to provide more support for energy bills and a coherent plan to move the UK away from volatile fossil fuels through a national rollout of home insulation and affordable renewables, point to bumper-profit making energy firms operating in a system designed by ministers. Despite falling wholesale prices, energy bills this winter are expected to still be nearly twice what they were in 2021.

A spokesperson for the End Fuel Poverty Coalition said:

“Finally the PM has woken up to the fact that energy bills are causing households to struggle and businesses to close – including those in his own constituency.

“But energy firms are allowed to make huge profits from our misery because of his own Government’s refusal to fix Britain’s broken energy system.

“It’s not a question of either Government policies or energy bills wrecking the country, they are one and the same thing! The PM should be standing up for small businesses and households who are facing mounting energy debts, even before winter starts.”

The government’s recent announcement of 100 new oil and gas drilling licences has come under heavy criticism, in part because it will do nothing to lower UK energy bills. The regulator issuing these licences says it will only make a difference to gas production ‘around the edges’, and any increase in UK production will take years to come online and even then will be sold at market rate either to the UK or overseas.

Tessa Khan, executive director of Uplift, added:

“Rishi Sunak is blaming energy bills for businesses in the UK going under, yet his government is doing nothing to bring them down.

“His plan to increase North Sea oil and gas production will do precisely nothing to cut UK energy bills. All it will do is increase the already obscene profits of huge, international oil and gas companies. Whatever they manage to take out of the North Sea, and it won’t happen for years, they will sell to the highest bidder, whether that’s overseas or here in the UK. The only way to lower bills permanently is by helping people save energy and a massive increase in cheaper, homegrown renewable energy.

“The Prime Minister seems to think that unaffordable energy bills are a laughing matter that can be batted away. Millions of households and businesses are struggling today with high energy costs and this winter will be even worse because, while bills are dropping slightly, prices are still nearly double what they were, energy debt levels are soaring and the government has all but withdrawn its help.

“People will rightly ask what has the government actually been doing for the past year and half to fix the UK’s broken energy system?”

Government show ‘dereliction of responsibility’ on prepayment meters

Government ministers have been accused of failing vulnerable households as thousands of members of the public have overwhelmed an official consultation on prepayment meters (PPMs). [1]

Campaign group 38 Degrees helped over 20,000 people submit individual responses to Ofgem’s consultation on new PPM rules, which propose allowing energy firms to resume forcibly installing prepayment meters, while introducing protections for a select group of customers – households with members over 85 or under 5.

95% of these respondents told the regulator it should protect all households from forced prepayment meter installations.

The forced PPMs scandal rocked the energy industry after investigations by the i paper and The Times revealed the extent energy firms were using the courts to gain warrants to people’s homes to force vulnerable people onto PPMs. 

Expert reports cited in the End Fuel Poverty Coalition’s official response to the Ofgem consultation highlight the health problems potentially caused by people’s PPMs switching off and leaving them in cold damp homes. [2]

Despite bans being imposed on courts from issuing PPM warrants and a voluntary ban on energy firms from forcing people onto these meters, examples have emerged that firms are still threatening the use of court warrants and forced entry.

The Government has rejected backbench amendments to the Energy Bill which would give it the power to ban the forced transfer of households onto prepayment meters (PPMs). Further debate on the Bill will now not take place until the autumn after running out of Parliamentary time.

A spokesperson for the End Fuel Poverty Coalition, commented:

“A legally enforceable ban on the forced transfer of homes onto a PPM is the solution to this abuse of power.

“Yet the Government continues to refuse to amend the Energy Bill to provide the protections vulnerable households need.

“Sadly, Ministers are showing a dereliction of responsibility toward the vulnerable. Instead of protecting them, they are keen to allow energy firms to restart forcing households onto prepayment meters and risk leaving them in cold damp homes this winter.”

MPs from across several political parties have offered Ministers the opportunity to amend the Energy Bill to ban forced PPMs. The latest attempt will be at the Report Stage where Wera Hobhouse, MP for Bath, has tabled a fresh amendment.

Ian Preston, director of household energy services at the Centre for Sustainable Energy, said: 

“Over the last seven years our energy advisors consistently see shocking examples of poor customer service and awful treatment of vulnerable customers from energy suppliers. 

“The regulator needs to make better standards a licence condition rather than relying on principles which suppliers like Scottish Power seem to lack entirely.”

Among the members of the public who have responded to the consultation, Christine Davies, of Carmarthen, Wales commented:

“I live in dread, personally, of having to transfer to a prepayment meter at some point. I am disabled with multiple chronic illnesses and struggle to pay my bills. I am afraid of putting my heating on for too long and for as much as I need it.”

Peter Wilson, of Wallasey, Merseyside added:

“Ofgem’s brief is to protect all consumers; it is outrageous that prepayment meters can be forced on any customer as they inevitably affect the poorer members of the community, which is like kicking people when they are down.

“I have a mobility issue, and when I had a prepayment meter it was a serious worry to me that I was limited to the amount of money on the card and I did once run out over a Christmas period when my close family members were away.”

Anne McLaughlin, MP for Glasgow North East chairs the All Party Parliamentary Group on Prepayment Meters and commented:

“The energy firms have lost all respect for Ofgem and they’re running circles around them. If they do breach Ofgem rules, they’re happy to take a slap on the wrist and pay the fines.

“The 18th April Voluntary Code of Conduct to prevent the forced installation of prepayment meters doesn’t go far enough, so we need the power to properly regulate energy firms and safeguard vulnerable prepayment meter customers handed to the Secretary of State for Energy Security & Net Zero. 

“The Energy Bill gives us a unique opportunity to do this in legislation, and I’m urging the UK Government to back any amendment that will allow this to happen.”

The End Fuel Poverty Coalition spokesperson, added:

“Profit-making energy firms claim they need to force people onto prepayment meters to help deal with rising energy debt levels. However, there is a better way to deal with this.

“Plans put forward by a range of charities, including the Money Advice Trust, would establish a Help to Repay scheme for energy debt which is a sustainable way to help households.”

More than 44,000 people have also signed a 38 Degrees petition, calling on Ofgem to ensure no one is forced onto a prepayment meter against their will.

ENDS

[1] https://www.endfuelpoverty.org.uk/about-fuel-poverty/ 

[2] End Fuel Poverty Coalition consultation response available online: 230713 EFPC Ofgem June PPM Consultation

Minister Amanda Solloway invited to discuss energy bills support

Members of the End Fuel Poverty Coalition have invited Amanda Solloway MP, the Minister for Energy Consumers and Affordability, to meet and discuss plans to keep everyone warm this winter.

The letter to the Minister says:

“We all know that this winter will be as challenging as the last for many households, with energy bills remaining around double what they were in winter 2020/21.

“While last winter’s unprecedented levels of Government support did indeed help households, we know that millions still spent the winter in cold, damp homes.

“And this winter, people’s ability to pay high energy bills has been further diminished by the increased cost of living (while inflation may be falling, the high prices will remain with us).”

The letter sets out some immediate financial and non-financial support the Government could provide households. A wider package of recommendations are being developed by Coalition members as part of the Warm This Winter campaign and will be launched later in summer 2023.

The immediate actions the Coalition suggests are:

  • Directing the money returned to Government through unused Energy Bills Support Scheme payments and vouchers to be given to local authorities to use in the Household Support Funds (or equivalents in Scotland and Wales).
  • Introducing a ban on the forced transfer of households onto prepayment meters (PPMs) when the Energy Bill returns to the Commons at Report Stage.
  • Using funds raised through an extension to the Windfall Tax to help introduce a “Help to Repay” scheme which is backed by a range of charities. 

Additional proposals and recommendations are being developed by Coalition members as part of the Warm This Winter campaign and will be published shortly.

A spokesperson for the End Fuel Poverty Coalition commented:

“Many of our members have heard the Minister speak passionately about fuel poverty in recent weeks. We would welcome the opportunity to discuss our wider proposals to provide support for households this winter – and beyond – with the Minister.”

The full letter can be read online: https://www.endfuelpoverty.org.uk/wp-content/uploads/230713-Amanda-Solloway-EFPC-Letter.pdf 

Energy bills could soar for customers on fixed tariffs

While most households saw a slight reduction in energy bills from 1 July, new data reveals that for hundreds of thousands of households, bills will be much higher than the Ofgem Price Cap.

Charts obtained by the Warm This Winter campaign from analysts at Future Energy Associates (FEA), show that households on 274 different tariffs fixed the price of their energy bills at a level above the new Ofgem Price Cap. [1]

The Ofgem Price Cap sets the average household’s energy bills at £2,074, but households on these specific tariffs will only be protected by the Government’s Energy Price Guarantee (EPG) which rose from £2,500 to £3,000 for the average household from 1 July.

Customers on these tariffs will see bills soar by an average of £500 a year. Without the EPG protection, customers on some deals could be paying almost 2.5 times the Ofgem price cap level. [2]

FEA estimate that around 1.5 million energy customers will be affected.

Households affected are customers of a range of firms such as Scottish Power, EDF, Octopus, London Power, M&S Energy, Co-operative Energy, British Gas, Utility Warehouse, Ebico Living, SSE and So Energy. [3]

While households on 52 of the tariffs affected can leave with no penalty, others may be charged to exit their deal early. These exit fees can range from £50 to £400.

A spokesperson for the End Fuel Poverty Coalition, commented:

“This news will send shockwaves through hundreds of thousands of households who thought they were doing the right thing by fixing their energy tariffs.

“It turns out they’ve been taken for a ride by energy firms who may now be charging them more for their energy than people on the Ofgem-fixed standard variable tariff.

“Energy firms must work immediately to end this discrepancy and bring all tariffs into line with the Ofgem price cap or waive exit fees for these customers. If energy firms won’t act, the Government must reduce the Energy Price Guarantee to be in line with the Ofgem Price Cap.”

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

“The murky world of fixed tariffs is just another failing part of Britain’s broken energy system, and shows just how difficult it is going to be for consumers looking to lower their energy bills.

“In the near term, we need Ofgem to investigate how companies have been able to lock customers into extortionate deals. But with prices set to stay high across the board for years to come, only the government can solve our dysfunctional energy system by investing in insulation and cheaper renewables.”

The Ofgem Price Cap affects around 29 million customers on standard variable tariffs (SVTs), including around 4 million customers on prepayment meters (PPMs). Despite a slight reduction in bills from 1 July 2023, these customers will have energy bills that are double what they were in 2020 and 60% above what they were before the invasion of Ukraine. This means that customers will continue to pay similar amounts for their energy as last winter, but with people having less ability to pay as the cost of living crisis continues.

However, Ofgem figures show that around 3 million households are on fixed tariffs and not covered by the Ofgem Price Cap. Future Energy Associates estimate that around 1.5 million of these customers are fixed onto one of the 274 tariffs affected, around 700,000 of these households will be able to exit for no penalty.

On 64 of these tariffs, households were paying less than the £2,500 EPG rate, so will not necessarily see their bills increase, but will still be paying more than the Ofgem Price Cap from 1 July.

Households on 210 of the tariffs will see an increase in bills as they were protected from paying more than the Energy Price Guarantee of £2,500 for an average household in recent months, but that protection changes on 1 July to limit bills to an average of £3,000.

ENDS

[1] The full list of tariffs affected can be made available on request.

[2] For example, “Help Beat Cancer Green Flexi SR October 2023 DM1 Online”. Scottish Power, Exit Fee, £300.0, Annual Cost for DDM £5,426.50. Or 2.5 times the Ofgem Price Cap. Tariff information – ScottishPower.

[3] Utility Week reports that Ovo is maintaining a £2,500 cap for customers. GEUK and Ecotricity have been excluded from the list as their tariffs that are affected have additional rules and regulations in place. However, some tariffs that are not included in the analysis could also be affected as regional price variations could tip their average household costs over the Ofgem Price Cap. Energy firms wishing to update this news story with information on their policies can email info@endfuelpoverty.org.uk.