Tag: Energy Bills

Surge in energy exit fees since 2021

Bill payers risk being stuck on expensive fixed rate energy tariffs or with poor customer service as exit fees have increased by 345% in the last three years.

Around three million UK households have opted for fixed energy tariffs and the latest Warm This Winter Tariff Watch report shows that the majority have exit fees of more than £100.

The report also reveals 76% of fixed tariffs have annual costs of £1,690 or more meaning they will pay more than the current price cap. The most expensive tariff is a 2 year fixed at £1,712 a year for a typical household – leaving them £84 worse off and with extortionate exit fees of  £300.

More broadly, researchers found that exit fees have dramatically increased from an average of £42.06 in early 2021 to a peak of £187.21 on average today (a 345% increase).

High tariffs and high exit fees mean that some customers will be worse off and unable to switch to a cheaper tariff because fees would wipe out any potential savings from moving supplier. It also acts as a trap for those customers who have had poor customer service and are unable to switch supplier.

In the latest edition of Tariff Watch compiled by Future Energy Associates (FEA) who analysed the best deals on the market for customers warns that households could end up worse off if they fix now, even with the latest forecasts that prices could rise again slightly later this year. 

A spokesperson for the End Fuel Poverty Coalition commented: 

“Exit fees have gone from a minor irritation to a serious concern. Customers who have had poor customer service may now find themselves trapped with their supplier due to these penalties.

“The energy industry is quick to promote the idea that switching will save you money, but the reality is that the small print could leave struggling customers out of pocket.

“Households who are suffering the most are often the ones looking for the most security through a fixed tariff, but we would urge them to only fix if they are absolutely certain it is the right thing to do.

“Checking your bill to get your existing usage numbers and entering these details into price comparison sites is one way of testing the market – but always check that exit fees are under £100.”

Warm This Winter spokesperson Fiona Waters said:

“Yet again energy suppliers are letting customers down with many stuck in fixed rate deals they can’t get out of because of extortionate exit fees and it’s Hobson’s choice for those who want the peace of mind of a fixed rate but will probably end up worse off later in the year.

“It’s just ridiculous and unnecessary that bill payers have to navigate such a complex tariff system where they get ripped off at every level, from rising standing charges to profiteering gas companies, and still face bills that are 60 percent higher than three years ago.

“We need long term solutions from government such as expanding homegrown renewable energy and a mass programme of insulation to bring down bills once and for all.”

Future Energy Associates analyst Dylan Johnson, who helped compile the report, said: 

“While we have seen the return of competitive market conditions we are worried about certain consumer groups being left behind. Our data shows evidence that specific suppliers are raising prices in certain regions to absurd levels.”

ENDS

Relevant to England, Scotland and Wales only. For full details, methodology and sources, the full report is available to download: https://www.endfuelpoverty.org.uk/wp-content/uploads/Tariff_Watch_4_Final.pdf

Energy profits hit £420bn in recent years as standing charges rise

Energy giants have pocketed over £420 billion in profits since the energy crisis started according to a new analysis of company reports. [1]

Researchers examined the declared profits of firms ranging from energy producers (such as Equinor and Shell) through to the firms that control our energy grid (such as National Grid, UK Power Networks and Cadent) as well as suppliers (such as British Gas).

Around £30 billion of these profits (the equivalent of over £1,000 per household) are thought to be made by the firms and business units responsible for electricity and gas transmission and distribution.

These are the “network costs” consumers pay for maintaining the pipes and wires of the energy system and are usually paid for through standing charges on energy bills.

Electricity standing charges have surged in recent years and from 1 April will be 147% higher than in 2021 – powered by fees such as the 14 hidden charges on every bill for network costs.

Gas standing charges have increased by 15% since 2021, but a recent report for the Warm This Winter campaign found that the network costs for gas are charged differently, through both gas unit costs and standing charges.

Researchers found that the estimated price each household contributes on gas network costs has risen from £118.53 a year in 2021 to £163.69 a year from 1 April 2024 (a 38% increase).

From 1 April the costs that households pay for every unit of energy they use will decrease slightly – but are still almost double what they were in 2021. But standing charges will rise. Compared to the previous quarter, electricity standing charges go up 13% and gas standing charges increase 6%.

A spokesperson for the End Fuel Poverty Coalition, commented:

“The energy firms are taking us for April fools.

“As standing charges go up today, households will have to cut back on their energy use just to keep their bills the same. This means households continue to suffer as a few energy firms make billions in profits.

“These numbers may look like fantastic amounts to shareholders, but the reality is that these profits have caused pain and suffering among people living in fuel poverty for the last few years.”

Warm This Winter spokesperson Fiona Waters said:

“The public are beyond frustrated at being a cash machine for companies who use our broken energy system to cream as much profits as they can out of them, while hard working people are up to their eyeballs in energy debt and fat cat bosses splurge their excessive wealth on luxuries.

“This data should put to bed any final opposition to a proper Windfall Tax on energy firms which ministers must use to help people who are still paying 60 percent more than they were on their energy bills three years ago.

“We need to stop pandering to these profiteers and focus on expanding homegrown renewable energy and a mass programme of insulation to bring down energy bills for good.”

ENDS

[1] The data was compiled from publicly available accounts and financial statements, using the best available measure of company profits by a freelance city journalist. These measures differ from company to company due to reporting processes and regulatory requirements in different jurisdictions. In determining which measure of profitability to use, the research has prioritised the measure preferred in the company’s own accounts.

Table 1: GROUP RESULTS FOR FIRMS PROFITING FROM ENERGY CRISIS

COMPANY (profit type) Financial Year (FY) ending in 2020 FY ending in 2021 FY ending in 2022 FY ending in 2023 FY ending in 2024 [interims where available] TOTAL SINCE ENERGY BILLS CRISIS
SSE (Group – Pretax profit adjusted) £1,023,400,000 £1,064,900,000 £1,164,000,000 £2,183,600,000 £565,200,000 £6,001,100,000
Cadent (Group – Operating profit) £924,000,000 £901,000,000 £685,000,000 £945,000,000.00 £2,510,000,000
Electricity North West (Pre tax profit) £87,000,000 £145,600,000 £64,800,000 £26,000,000 £195,000,000 £518,400,000
Northern Powergrid (Net income / earnings) £158,790,000 £195,130,000 £304,150,000 £136,670,000 £794,740,000
National Gas Transmission (Operating profit) £475,000,000 £484,000,000 £512,000,000 £619,000,000 £2,090,000,000
UK Power Networks (EBITDA) £1,270,200,000 £1,294,300,000 £1,328,900,000 £1,410,400,000 £5,303,800,000
Northern Gas Networks (Group Operating Profit) £213,246,000.00 £157,642,000.00 £151,142,000 £210,687,000 £361,829,000
SGN (Operating profits) £600,600,000 £526,500,000 £364,300,000 £439,500,000 £1,930,900,000
Ovo Energy (Operating profits) -£238,000,000 £367,000,000 -£1,582,000,000 -£1,453,000,000
Octopus Energy (Operating profits) -£47,910,000 -£117,400,000 -£188,400,000 £243,300,000 -£110,410,000
Shell (Profit/Adjusted Earnings) £3,828,340,000 £15,238,310,000 £31,497,300,000 £22,317,500,000 £11,628,800,000 £84,510,250,000
BP (Underlying Replacement Cost Profit (URCP)) -£4,495,100,000 £10,123,850,000 £21,845,870,000 £10,930,440,000 £38,405,060,000
Equinor (Adjusted Earnings) £3,111,020,000 £26,453,940,000 £59,202,600,000 £28,613,800,000 £117,381,360,000
Centrica (Adjusted Operating Profit) £447,000,000 £948,000,000 £3,308,000,000 £2,752,000,000 £7,455,000,000
National Grid (Statutory Pre-Tax Profit) £1,754,000,000 £2,083,000,000 £3,441,000,000 £3,590,000,000 £1,371,000,000 £10,156,000,000
EDF (EBITDA) £13,909,640,000 £15,484,300,000 -£4,287,960,000 £34,314,000,000 £13,851,160,000 £73,271,140,000
EON (EBITDA) £5,938,300,000 £6,784,540,000 £6,930,740,000 £8,058,200,000 £27,711,780,000
Iberdrola (EBITDA) £8,608,772,000 £10,324,902,000 £11,376,166,000 £12,398,620,000 £42,708,460,000
Drax (Group – pre tax profit) -£235,000,000 £122,000,000 £78,000,000 £796,000,000 £761,000,000
Wales & West (pre tax profit) -£24,400,000 £25,900,000 -£176,900,000 £263,100,000 £87,700,000
TOTAL PROFIT £420,395,109,000.00

Table 2: RESULTS FOR FIRMS OR BUSINESS UNITS INVOLVED IN GAS AND ELECTRICITY DISTRIBUTION AND TRANSMISSION (i.e. network costs)

COMPANY Type FY ending in 2020 FY ending in 2021 FY ending in 2022 FY ending in 2023 FY ending in 2024 [interims where available] TOTAL SINCE ENERGY BILLS CRISIS
SSE E Transmission £218,100,000.00 £220,900,000.00 £380,500,000.00 £372,700,000.00 £215,600,000.00 £1,407,800,000.00
SSE E Distribution £356,300,000.00 £267,300,000.00 £351,800,000.00 £382,400,000.00 £120,100,000.00 £1,477,900,000.00
Cadent G Transmission & Distribution £924,000,000.00 £901,000,000.00 £685,000,000.00 £945,000,000.00 £2,510,000,000.00
Electricity North West E Distribution £87,000,000.00 £145,600,000.00 £64,800,000.00 £26,000,000.00 £195,000,000.00 £518,400,000.00
Northern Powergrid E Distribution £158,790,000.00 £195,130,000.00 £304,150,000.00 £136,670,000.00 £794,740,000.00
National Gas G Transmission & Distribution £475,000,000.00 £484,000,000.00 £512,000,000.00 £619,000,000.00 £2,090,000,000.00
UK Power Networks E Distribution £1,270,200,000.00 £1,294,300,000.00 £1,328,900,000.00 £1,410,400,000.00 £5,303,800,000.00
Northern Gas Networks G Transmission & Distribution £213,246,000.00 £157,642,000.00 £151,142,000.00 £210,687,000.00 £361,829,000.00
SGN G Transmission & Distribution £543,000,000.00 £509,000,000.00 £339,000,000.00 £452,000,000.00 £256,000,000.00 £2,099,000,000.00
National Grid E Transmission £1,316,000,000.00 £1,027,000,000.00 £1,055,000,000.00 £993,000,000.00 £838,000,000.00 £5,229,000,000.00
National Grid G Transmission & Distribution £347,000,000.00 £337,000,000.00 £637,000,000.00 £715,000,000.00 £2,036,000,000.00
National Grid E Distribution £909,000,000.00 £1,069,000,000.00 £472,000,000.00 £2,450,000,000.00
National Grid E Systems £443,000,000.00 £443,000,000.00
SP Energy Networks E Distribution £860,000,000.00 £905,408,000.00 £940,238,000.00 £1,059,348,000.00 £3,764,994,000.00
Wales & West G Distribution -£24,400,000.00 £25,900,000.00 -£176,900,000.00 £263,100,000.00 £87,700,000.00
TOTAL PROFIT £30,486,463,000.00
Cost per household £1,051.26

Data as at 26 March 2024.

The data was compiled by freelance business journalist David Craik. David’s experience has included writing business and city news and features for national newspapers and magazines such as The Daily Mirror, Sunday Times, Wall Street Journal, Scotsman and Daily Express. Much of his content focuses on company financial results and reports in the energy sector and on personal finance issues including wealth management, property, investing and managing household budgets and bills. If any firm wishes to correct the records below, please email info@endfuelpoverty.org.uk.

Customers set for £1.3bn bill for energy debt charges

Households will be paying energy firms a combined £1.3bn in annual charges to help suppliers recover bad debt from 1 April.

A new report from the Warm This Winter campaign also casts doubt on the effectiveness of the charges in actually helping customers struggling with their bills. [1]

Energy firms were already able to charge £842m a year on bills for bad debt allowances, but from 1 April 2024 Ofgem has ruled that an additional £735m can be charged (or £28 per household per year). The amounts are offset by a £275m adjustment to the bad debt charges incurred after the Covid pandemic. 

The combined impact of these charges varies depending on the bill type with prepayment meter customers paying the least at £25.17 per household per year. Direct debit customers pay £38.96 a year on these charges while standard credit customers are hit hardest paying £129.71.

The report also reveals that “debt-related costs” consist of three main elements: bad debt write offs, debt related administrative costs and working capital. It appears unclear if these write offs will come off customers’ accounts, or if they are written off on supplier income statements while the debt is sold to debt collection agencies.

In addition, the debt related administrative costs and working capital include recouping the costs of the moratorium on involuntary prepayment meter installations. The moratorium was brought in after it was found energy firms were breaking into vulnerable people’s homes to force them onto a prepayment meter.

Firms can also claim for the administrative costs to suppliers from dealing with customers in debt, despite other allowances in the price cap enabling them to cover operating costs. The allowances also allow firms to claim for the day-to-day costs of customer arrears and using the money to cover the period between an energy firm incurring costs and receiving customer payments.

The news has been met with concern from consumers, with new polling from Opinium finding that over half (55%) of the public oppose energy firms using money raised through the additional £28 per household being spent on debt administrative costs. [2]

The public felt that around half (48%) of the money raised from the £28 debt charge should be spent writing off household energy debt of the customer accounts of those most in need.

Fiona  Waters, spokesperson for the Warm This Winter campaign commented:

“Energy bill payers are quite rightly up in arms about these additional costs which look like they do nothing to reduce the debt of ordinary people but instead help energy companies pursue those who simply can’t pay.

“It’s yet another outrageous rip off caused by our broken energy system, where ordinary people are expected to foot the bill all the time whilst energy giants bank billions and their bosses live in the lap of luxury.

“We need long term solutions such as expanding homegrown renewable energy and a mass programme of insulation to bring down energy bills for good so UK families no longer find themselves in debt through no fault of their own and are hounded for payments.”

A spokesperson for the End Fuel Poverty Coalition, said:

“The recovery of energy debt led to the forced prepayment meters scandal in 2023 and customers are still paying the price for energy firms’ poor practices.

“Rather than hit hard pressed households with higher standing charges, we need to see a longer-term approach to solving the energy debt mountain, such as an industry wide Help To Repay scheme.

“If Ofgem persists in implementing this charge, the very least they can do is ensure it is used to write off debts from customer accounts and isn’t spent on hiring debt collection agencies.”

Policy expert and report author Richard Winstone, added:

“Ofgem produced over 350 pages of documentation to reach a conclusion that will cost the public hundreds of millions of pounds extra this year with no clear benefit for consumers. They pack their documents with complicated jargon and formulae, yet they could not find room for a simple explanation as to how this money will actually benefit those struggling with their energy bills. 

“Throwing money at suppliers and hoping they do the right thing is what has led to record profit levels from the likes of British Gas at a time when customer service standards are at their lowest for a decade and customer debt is at its highest. Ofgem either needs to stop increasing the cost to consumers or start creating regulation that ensures suppliers use the additional funds for specific, consumer-benefitting, purposes.”

Jan Shortt, General Secretary of the National Pensioners Convention, commented:

“As always, it is the customer that pays, not the shareholders or energy industry who are currently making the biggest profits for years. Sustainable and affordable energy sources are a must and the regulator should consider how it can protect customers from this unacceptable level of levy when everyone is still struggling with high energy bills.”

ENDS

[1] “An overview of the additional debt related costs”, Richard Winstone / Warm This Winter, March 2024. Full report available to download. 

[2] Public opinion polling from Opinium who interviewed 2,000 people between 15 and 19 March 2024. Results were weighted to be representative of the UK population.

55% oppose using the money to cover admin costs, 25% support, 20% don’t know.

48% figure is based on respondents choosing a range of percentages to be used to write off debt. The figure includes the responses from 16% who felt none of the money should be used in this way, 16% felt all of the money raised should be used in this way. 

Reaction to Spring 2024 Budget

The latest financial statement from the Chancellor failed to meet in full any of the recommendations set out by the End Fuel Poverty Coalition in its budget submission.

While the energy firms Windfall Tax and the Household Support Fund were both extended for limited periods, other support measures end on the 31 March.

The budget also contained no new funding for energy efficiency support.

A spokesperson for the End Fuel Poverty Coalition commented:

“What we needed from the Chancellor was a long term plan for warm homes and cheaper energy, but instead the government has condemned families to another winter in cold homes and has failed to fund reform to Britain’s broken energy system.

“The government is pulling the plug on support for households in fuel poverty. The Energy Price Guarantee and the cost of living payments now join the Energy Bills Support Scheme on a bonfire of policies that were helping people with surging energy bills. The Household Support Fund will be extended, but only for another 6 months – ending before next winter sets in. 

“But as this support is axed, the price households pay for their energy is still 60% higher than in 2021 and levels of energy debt are soaring. Meanwhile the wider cost of living crisis means people simply can’t afford to keep the lights on.

“While the extension of the Windfall Tax is a recognition that the energy crisis is not over, economists estimate that it has actually shaved £18bn off the cost of extracting fossil fuels over next three years by increasing energy firms’ tax relief allowances. This loophole must be closed.”

Jonathan Bean, from Fuel Poverty Action added:

“Removing the loopholes in windfall taxes on huge energy firm profits would fund essential energy for all.“

Warm This Winter spokesperson Fiona Waters said:

“Today’s budget is a waste of energy that will still leave millions out in the cold.

“There’s some cold comfort in the extension of the Housing Support Fund but it will barely make a dent in the huge debt ordinary people have now built up as they struggle to pay sky high bills that are still 60% more than three years ago.

“Families, pensioners, children and the poor are freezing as energy companies make a billion pounds in profit each and every week.”

Will Walker from Warm This Winter campaign members Ashden, commented on X that the budget was “barren” and that:

“Unfortunately, what we’ve seen over the last decade from Government is dither, delay and division on net zero. This has undermined business and investor confidence, weakened supply chains and added to UK energy bills.”

Joanna Elson CBE, chief executive of Independent Age, said:

“Today’s Budget was a missed opportunity to help those in later life already living in financial hardship and address the incoming pensioner poverty surge. Cutting National Insurance won’t help the more than 2 million older people living in poverty, or the many more living with precarious finances struggling to make ends meet. Transformative change is needed to improve their lives.

“While the lower energy price cap and the increased State Pension are welcome, there is still a long way to go for older people in financial insecurity to be able to afford even the basics. Bills are still astronomically high, and our helpline hears daily from older people rationing themselves to just one meal a day and washing in cold water to save energy.

“The cost-of-living payments have ended and older people in financial hardship are already at breaking point. While the temporary extension of the Household Support Fund is welcome, long-term solutions are needed to protect them from high household costs. The UK Government needs to introduce a single energy social tariff and water social tariff. This would help shield people of all ages living on a low income, including older people, from high and unmanageable costs.

“Today, the UK Government reiterated its commitment to uprate Pension Credit, but it must now implement a strategic and targeted plan to get this money into eligible pockets. As the latest figures show that up to 880,000 households missed out, an uptake strategy is urgently needed to target those who need financial support but aren’t aware it exists or don’t know they are eligible.

“Pensioner poverty has been steadily rising since 2012. Sadly, nothing announced today will reverse this alarming trend. That’s why we need a cross-party review to establish an adequate minimum level of income needed to avoid poverty in later life. Until that happens, we risk seeing more older people fall into financial hardship.”

Image credit: Warm This Winter / © Jess Hurd

Energy bills crisis has cost the average household £2,300 each

The average household has spent £2,300 more on energy bills since April 2021 than they would have done had prices remained stable. [1]

The data takes into account the Government support schemes that were set up to help households and means that, across the whole country, the additional spend by households on energy over the last three years totals more than £68bn.

The new figures calculated by the End Fuel Poverty Coalition come as Ofgem has lowered the price cap by around 12% for domestic energy bills.

However, the new cap level means that gas and electricity costs remain 60% higher than in 2021 when the energy bills crisis began. [2] 

Meanwhile, households are still struggling in record levels of debt, with over 3 million households owing money to their energy firm.

New research by YouGov for the Stop The Squeeze campaign found that 61% of respondents – including 70% of Conservative voters – chose energy bill support as one of the interventions they would most like to see. [3]

Energy bill support was found to be more than twice as popular as cuts to taxes on wages (29%) and has gained in popularity among voters since the last time the research was conducted in July 2023.

However, the Government is set to end both the Energy Price Guarantee and the Household Support Fund on 31 March 2024. 

The Energy Price Guarantee currently protects households from fluctuating global energy markets and could also be used to introduce an Emergency Energy Tariff to help those struggling the most with the high cost of energy.

The Household Support Fund provides local authorities with additional resources to help communities most hit by high energy bills, with 26 million grants given by councils to households struggling to afford the essentials. The End Fuel Poverty Coalition was recently among 120 organisations that signed a letter to the Chancellor calling for the Fund to be extended by at least another year.

Simon Francis, coordinator of the End Fuel Poverty Coalition, commented:

“Even after this latest change to the price cap, energy prices remain 60% higher than they were before the energy bills crisis began.  

“Three years of staggering energy bills have placed an unbearable strain on household finances up and down the country. Household energy debt is at record levels, millions of people are living in cold damp homes and children are suffering in mouldy conditions.  

“Everybody can see what is happening in Britain’s broken energy system and it is time for politicians to unite to enact the measures needed to end fuel poverty. This includes cross-party consensus on a long-term plan to help all households upgrade their homes and short-term financial support for households most in need.”

Megan Davies from Stop the Squeeze said:

“The fact that the public appetite for energy bill support is rising, not falling, should be a wake up call to the government that the cost of living crisis is far from over.

“Any fall in the price cap is of course welcome, but it is no substitute for the structural reform to the energy market that is needed to guarantee more affordable clean power into the future.

“This Budget could be the government’s last opportunity before the election to listen to the public and show they are serious about taking action on energy bills.”

Warm This Winter campaign spokesperson Fiona Waters commented:

“It’s clear Britain’s energy system is broken with a few firms making obscene profits while ordinary people suffer and household energy debt at record levels. What’s worse, millions, including the elderly and children, are living in unhealthy cold damp mouldy homes. 

“People are tired of this constant cycle and want action. What politicians should be focussed on is bringing down energy bills through a proper programme of insulating homes and investing in cheap and abundantly available renewable energy.”

ENDS

[1] £2,300 and £68bn figures calculated as below. Price cap at 30 March 2021 was £1,042 for the average household. All figures based on Ofgem data. Average household energy bill levels include the relevant Energy Price Guarantee and Energy Bills Support Scheme payments where appropriate (the £52bn net cost of those measures are also borne by the taxpayer). Cap data is based on the prevailing typical domestic consumption values at the time – as set by Ofgem.

Cap change date Average household energy bill (GBP) Amount above GBP1,042 per household weighted for the number of months in price cap period (e.g. annual amount above cap halved for periods starting 1-Apr-21, but then quartered for periods from 1-Apr-23) All households
01-Oct-20 £    1,042 Baseline   
01-Apr-21 £    1,138 £                                48  
01-Oct-21 £    1,277 £                              118  
01-Apr-22 £    1,971 £                              465  
01-Oct-22 £    2,100 £                              529  
01-Apr-23 £    2,500 £                              365  
01-Jul-23 £    2,074 £                              258  
01-Oct-23 £    1,834 £                              198  
01-Jan-24 £    1,928 £                              222  
01-Apr-24 £    1,690 £                              162  
TOTAL   £                           2,363 £  68,527,000,000

[2] End Fuel Poverty Coalition records based on Ofgem price cap announcements and (in italics) Cornwall Insight predictions (last checked 16 Feb 2024)

Cap change date Increase (GBP) Average household energy bill (GBP) % increase from last period YOY change Change from Pre-Energy Bill Crisis Change from Pre-Ukraine Invasion
Pre-cap   1067        
01-Oct-17 -19 1048 -1.78      
01-Apr-18 41 1089 3.91      
01-Oct-18 47 1136 4.31 8.40%    
01-Apr-19 117 1254 10.39      
01-Oct-19 -75 1179 -5.98 3.79%    
01-Apr-20 -17 1162 -1.44%      
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 -240 1,834 -11.57% -12.67% 76.01% 43.62%
01-Jan-24 94 1,928 5.13% -8.19% 85.03% 50.98%
01-Apr-24 -238 1,690 -12.34% -32.40% 62.19% 32.34%
01-Jul-24 -193 1,497 -11.42% -27.82% 43.67% 17.23%
01-Oct-24 44 1,541 2.94% -15.98% 47.89% 20.67%

 

[3] YouGov Plc. Total sample size was 2,186 adults. Fieldwork was undertaken between 15th – 16th February 2024. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

 

Revealed: The charges keeping electricity bills high

Freezing households are being hit by 14 obscure energy charges that are keeping electricity bills expensive.

The figures are revealed in the latest Warm This Winter Tariff Watch Report by researchers at Future Energy Associates which examines the electricity network costs which are added to customers’ standing charges and bills. [1]

Among the 14 charges which get passed onto bills through the Ofgem price cap, customers are hit by costs such as the ‘Non-Locational demand residual banded charge’, ‘Available Supply Capacity Charges’, ‘Electricity Systems Operator Internal Allowances’ and ‘Ancillary Services costs.’ [2]

Also hidden in the charges are so-called “Line Losses” which set out the amount of energy lost while transmitting electricity around the network. These losses are added to consumers’ bills as a set amount, rather than reflecting the actual wastage incurred.

The combined impact of some of these costs and charges has meant Electricity Standing Charges have surged 119% since winter 2020/21 and account for £194 a year for every household. 

Separately, the report reveals rules which allow Distribution Network Operators (DNOs) who maintain and upgrade the grid to keep money charged to consumers but not spent.

The DNOs forecast budgets in advance and overestimation of these costs can mean that DNOs underspend and could potentially profit under a complex system called the “totex incentive mechanism” (TIM). This splits the benefit of any underspend between customers and the DNO. 

Between 2015 and 2022, DNOs spent £933 million less than they forecasted, but those that did underspend will have only given around half of that money back to consumers. [3]

The new findings also reveal that energy firms have underspent on plans to upgrade the electricity network. While these firms have overspent on short-term costs, the lack of investment in the grid is one of the reasons that electricity prices remain high despite Britain’s successful renewables industry. [4] 

The Warm This Winter Tariff Watch report also paints a poor picture for consumers looking to switch around for the best energy deal. While there are more tariffs on the market, the researchers could only find a handful of deals worth switching to and these all came with complex conditions or caveats.

Two groups which continue to lose out are those who pay on standard credit terms and are subject to a 6.2% premium and those on Economy 7 tariffs. 

One EDF overnight tariff, aimed at EV owners, offers an average nighttime electricity unit rate of just 8.00 pence per kWh across all DNO regions. In stark contrast, the Standard Variable tariff, serving as an Economy 7 equivalent from the same firm, imposes a significantly higher night-time unit rate of 16.63 pence per kWh.

A spokesperson for the End Fuel Poverty Coalition, commented:

“The complex world of electricity pricing should now be firmly in the sights of regulators and ministers.

“There must be a review into how we have arrived at so many covert charges and Ofgem must improve the transparency in the calculation of how our standing charges are arrived at.

“Of particular concern is the system whereby we are paying upfront for vital infrastructure upgrades which could help bring down electricity bills, but which are seemingly not delivered.

“We need a full audit of what has been charged, what has been spent and what could be returned to the bill payer.”

Fiona Waters of the Warm This Winter campaign, which commissioned the report added:

“The findings of the latest Tariff Watch Report reveal a disgraceful picture.

“Hardup households are being punished multiple times by energy giants. Our energy bills are still forecasted to remain well above 2021 levels for the rest of the year and the vital grid infrastructure upgrades needed to bring electricity costs down are potentially not being delivered.

“Perversely, the failure to upgrade and maintain the grid then results in line losses, which consumers also have to pay for via their bills.”

Dylan Johnson, Director at Future Energy Associates commented: 

“Ofgem must improve transparency around Distribution Use of System (DuOS) charges. There’s a clear need for a centralised repository on their website, detailing these costs, and the formulas used for their calculation. 

“Additionally, Ofgem should revisit their methodology for Line Losses, especially as we transition to a more decentralised energy system. 

“For instance, in areas like Cornwall during sunny hours, Line Loss calculations must reflect the reduced losses when electricity is generated and consumed locally. This change is crucial for a fair and efficient energy system.”

ENDS

[1] This press release refers to England, Scotland and Wales only. For full details, methodology and sources, the full report is available to download: https://www.endfuelpoverty.org.uk/wp-content/uploads/Tariff_Watch-3-FINAL.pdf

[2] Full list of charges:

  1. Non-Locational demand residual banded charge – all domestic users contribute to the fixed costs of maintaining the transmission network.
  2. Transmission Network Use of System Non-Half-Hourly demand tariff – cost of using the transmission network to supply electricity and factors in the cost of infrastructure investment and the need to ensure network reliability and capacity for future demands. Paid by consumers on unit rates.
  3. Distribution Use of System Consumption Charges – charges are based on the electricity consumption of an organisation, with rates varying according to the time of use.
  4. Meter Point Administration Number Standing Charges – a fixed daily charge applied per Meter Point Administration Number (MPAN), covering the fixed costs of electricity distribution.
  5. Available Supply Capacity Charges – These are levied based on the assigned Available Supply Capacity (ASC) of an organisation, with higher capacities incurring greater charges.
  6. Reactive Power Charges – Applied for the reactive power used by an organisation, which is essential for maintaining voltage levels within the distribution network.
  7. SOLR Fixed charge – to cover costs associated with collapsed energy firms
  8. Excess SOLR Fixed charge – to cover costs associated with collapsed energy firms
  9. Eligible Bad Debt Fixed Charge Adder – an additional charge to cover the costs associated with uncollectible debts.
  10. Balancing Use of Systems Balancing Mechanism – when there is a variance between scheduled energy generation and actual demand, the Balancing Mechanism activates to maintain grid stability.
  11. Ancillary Services costs – this covers a range of services, including frequency response, demand flexibility service, reactive power and reserve services. 
  12. Electricity Systems Operator Internal Allowances – Internal costs (allowed revenue) are calculated in the Price Control Financial Model.
  13. Balancing Use of Systems Energy Trading Costs – these are costs for trading done with generators outside of the balancing mechanism e.g. forward trading via bilateral agreements.
  14. Line Losses – the amount of energy lost while transmitting electricity around the network.

[3] Electricity North West, National Grid Electricity Distribution and UK Power Networks are the worst offenders. These three companies taken together have a combined underspend of more than £1.1bn.

The reason this is more than the 933m total is that some DNOs – especially Scottish Power Networks – have overspent. Scottish Power Energy Networks (operates MANWEB and South Scotland) does have some of the highest standing charges in the UK. 

DNO allowance and expenditure cumulative 2015-16 to 2021-22:

DNO Operator (sharing rate) DNO Region Allowance Expenditure Difference
£m £m £m %
Electricity North West (58%) North West          2,085         1,917 -168 -8%
Northern Power Grid (56%) North East          1,472         1,515     43 3%
Yorkshire         1,953         1,921 -32 -2%
National Grid Electricity Distribution (70%) Midlands         2,318         2,329       11 0%
East Midlands         2,346         2,312 -34 -1%
South Wales         1,228         1,163 -65 -5%
South West         1,890         1,831 -59 -3%
UK Power Networks (53%) London         2,007         1,741 -267 -13%
South East         1,941         1,657 -284 -15%
East Anglia         2,889         2,622 -268 -9%
Scottish Power Energy Networks (54%) South Scotland         1,747         1,792       45 3%
MANWEB         1,952         2,037       85 4%
Scottish and Southern Electricity Networks (56%) North Scotland         1,492         1,519       26 2%
Southern         2,635         2,670       34 1%
Total GB       27,957       27,023 -933 -3%

[4] Underspend has generally been in longer term investment in networks i.e. network reinforcement and replacing equipment and totals c.GBP2.5bn. Conversely over-spend has generally been in shorter term operational activities and totals c.GBP1.5bn.

4,950 excess winter deaths caused by cold homes last winter

Following publication of new official data, the End Fuel Poverty Coalition has estimated that 4,950 excess winter deaths in the UK were caused by living in cold homes during winter 2022/23. [1]

Historic records also indicate that when the mean winter temperature in the UK drops below four degrees centigrade, the level of excess winter deaths sky-rockets. The average temperature last winter was 4.3 degrees. [2]

While December 2023 was exceptionally warm, average daily temperatures for the UK in January are forecast to dip as low as -1.6 degrees and fell to -14 in some parts of the UK last night. [3]

The Government continues to rely on Warm Homes Discounts, Cold Weather Payments and Winter Fuel Payments as the measures of support to households, however these are limited in eligibility and impact.

This winter the Government refused demands to support households through an Emergency Energy Tariff and a help to repay scheme for those in energy debt.

But the Government’s approach is an increasingly dangerous strategy with the effects of climate change taking hold. 

The Met Office official guidance is that El Niño winters are more likely to be colder in the UK and scientists predict that these El Niño winters could become more common as global temperatures increase. With 2023 being declared as the hottest year on record, campaigners have urged politicians to grasp the seriousness of the situation.

A spokesperson for End Fuel Poverty Coalition, commented

“Figures from the Warm This Winter campaign show that 8.3m adults are living in cold damp homes this winter and, as temperatures drop, these conditions go from being uncomfortable to downright dangerous.

“But while households struggle, Ministers are sitting on their hands and leaving matters of life and death to chance.

“Instead of taking action on energy bills, they have allowed energy firms to restart using the courts to force households onto prepayment meters and have now ruled out reform to energy tariffs to help those most in need. 

“They would rather play politics with a ridiculous Oil & Gas Licensing Bill that will do nothing to improve energy security or lower bills than take meaningful action to help households struggling right now.”

Jan Shortt, General Secretary of the National Pensioners’ Convention, which is part of the Warm This Winter campaign, said: 

“We are very concerned at the level of disinterest shown by the government in the welfare of older people at a time when the temperature is dropping well below freezing. 

“It fell as low as -14 degrees this week and even in towns and cities it does not get much warmer until later in the day. This presents a real dilemma for older people struggling with the cost of energy and other inflated bills – we know many are already afraid to turn the heating on at all. 

“Add to this the decision by Ofgem and the government to allow the force-fitting of energy prepayment meters to resume, while energy providers continue to enjoy inflated profits, smacks of abandonment of those struggling to pay their bills without any relief on the horizon.”

Greenpeace UK’s climate campaigner, Georgia Whitaker, said: 

“This is a national scandal. The UK has the least insulated homes in Western Europe. We’ve known this for years. Yet every year thousands of people are dying as a result. And our government is doing practically nothing to fix the problem. 

“Insulating homes at speed and scale right across the UK would drastically reduce these unavoidable deaths, as well as helping to tackle the cost of living and climate crises by lowering bills and slashing household emissions. But until that happens, this shameful government negligence will continue to cost people their lives, and without climate leadership the government will be punished at the ballot box.”

UPDATE: In February 2024, the ONS launched a consultation on the methodology associated with this calculation and also set out new figures for excess deaths in a particular period (rather than excess winter mortality levels as set out in the figures above). Even after these new measures are introduced, the old data which is set out above is not technically incorrect, however the metrics used for calculating the figure may be less accurate than the new measures.

ENDS

[1] 2022/23 Data: ONS (for England & Wales) table 10, updated on 17 January 2024 combined with NRS and NISRA data then applying IHE methodology to estimate the number of Excess Winter Deaths caused by living in cold homes. Previous End Fuel Poverty Coalition estimates put the figure at 4,706 Excess Winter Deaths caused by cold homes.

[2] ​​Excess winter deaths caused by cold damp homes and average winter temperatures (End Fuel Poverty Coalition records)

Winter Number of excess winter deaths caused by cold homes  Mean winter temp (C) 
2010/2011 6,232 2.4
2011/2012 5,608 4.5
2012/2013 7,321 3.3
2013/2014 4,206 5.2
2014/2015     10,475 3.9
2015/2016 6,035 5.5
2016/2017 8,211 5
2017/2018     11,997 3.6
2018/2019 5,665 5.2
2019/2020 2,439 5.3
2020/2021     14,502 3.5
2021/2022 3,229 5.2
2022/2023 4,950 4.3

[3] December 2023 stats – 5.8 degrees mean: https://www.metoffice.gov.uk/research/climate/maps-and-data/summaries/index

January 2024 stats: 

https://www.netweather.tv/charts-and-data/average-uk-temperature (accessed 16 January 2024 at 1400)

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.

Millions spending winter in cold damp homes

New figures reveal that 16% of UK adults (8.3m people) live in cold damp homes, exposed to the health complications that come from living in fuel poverty. [1]

This includes over 1.7 million of the UK’s most vulnerable, according to the latest data from the Warm This Winter campaign.

As well as the most vulnerable being more affected – such as those aged over 75, living with an under 6 year old, or having a preexisting health condition or disability – there are stark differences based on the type of energy bill households have and where they live.

A third of smart meter customers who have a prepayment meter setting (32%) say they live in a cold damp home with 27% of those on traditional PPMs saying the same. Almost a quarter (22%) of standard credit customers are in cold damp homes, yet just 11% of direct debit customers live in such conditions. [2]

Households in London are most likely to be living in cold damp homes, with a quarter (23%) of the capital exposed to such conditions. Londoners are closely followed by people in Yorkshire & Humber (22%), the West Midlands (18%) and the North West (17%) as having the most exposure to dangerous living conditions. 

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

Damp and mould can also affect the immune system while living in such conditions can also increase the risk of heart disease, heart attacks or strokes.

Cold homes can cause and worsen respiratory conditions, cardiovascular diseases, poor mental health, dementia and hypothermia as well as cause and slow recovery from injury.

Petitions with over 800,000 signatures have been handed into the Prime Minister calling for more action to bring down bills now, end energy debt and to help end the cold damp homes crisis now facing the country. [3]

Fiona Waters, spokesperson for the Warm This Winter campaign, commented:

“It is no wonder that the public are now signing petitions in droves and pointing the finger of blame for the crisis on Ministers who have failed to act to protect the public from this crisis.

“Instead of help in the form of an Emergency Energy Tariff for vulnerable households and a Help To Repay scheme for those in energy debt, the public will instead be faced with increasing energy bills on 1 January 2024.” 

A spokesperson for the End Fuel Poverty Coalition, commented:

“The Government needs to get a grip on the cold damp homes crisis now facing the country, with people spending the festive period in Dickensian conditions and unable to stay warm this winter. 

“Without immediate action, the cost of this crisis will be felt by increased demand on the already overstretched NHS. 

“Ultimately, a failure to protect people from living in cold damp homes will cost lives.”

Dr Isobel Braithwaite, a health and housing researcher at UCL, said: 

“This data shows a shockingly high prevalence of cold and damp homes in the UK, which poses a grave risk to the public’s health. These conditions are severely harming the health of the most vulnerable in society: from young children; people with heart and lung conditions; to older people, and this situation is unconscionable in 2023.

“These impacts are being driven by political choices, and action is urgently needed to address the causes of this health crisis, both to protect vulnerable households with the campaign’s proposed emergency measures, as well as longer-term action with home retrofit schemes.”

Kay Ballard from Debt Justice who was part of the petition hand in said: 

“Lack of government support and energy company profiteering means that this Christmas I have a choice between going into debt or living in a cold damp home. It is an impossible choice and only government action can solve the crisis.”

Raymond Bradley a 38 Degrees Supporter who was part of the petition hand in said:

“I feel let down by this Government. Each year I am colder, struggling more and with less support. I am blind and the devices I use to help me get through life daily take a lot of electricity to charge. My partner has health issues that means we HAVE to be warm and we’re choosing between heating, charging the devices that help me live my life and eating. It’s no way to live. All I ask from Rishi Sunak and his Government is to fix this broken energy system.”

Stuart Bretherton from Fuel Poverty Action said: 

“Over 660,000 people have endorsed our demand to ensure everyone’s essential energy needs are met, it’s not radical. There’s more than enough money in energy firm profits and subsidies to guarantee an adequate level of Energy For All to keep everyone warm and safe.”

ENDS

Image of petitioners outside 10 Downing Street © Jess Hurd

[1] Methodology note: Opinium conducted a nationally representative survey among 2,000 UK Adults from the 24th – 28th November 2023. Results were weighted to be nationally representative. Population estimates based on ONS projections of adults aged 18+ for mid-2021 (the latest figures available), i.e. UK 18+ population 53,188,204.

[2]  Small sample sizes were available for district heating (34% in cold damp homes) and off grid (23%) customers.

[3] Petition information

38 degrees  – Over 88,000 signatures asking for support on energy bills this Winter. 

Debt Justice – Over 17,000 signatures demanding the government urgently act by bringing down bills and help families get out of debt.  

Fuel Poverty Action – over 660,000 signatures demanding #EnergyForAll – Everyone has a right to the energy needed for heating, cooking and light

Warm This Winter – Over 41,000 signatures demanding the Treasury introduce an Emergency Energy Tariff to keep people warm this winter. Also hosted on 350.org 

Energy bills up in January as public blame Government for crisis

The public has placed the blame for people living in cold damp homes this winter at the door of the Government.  

In the Chancellor’s autumn statement on Wednesday, the Government refused to accept proposals from charities to provide an Emergency Energy Tariff for the most in need households and also ruled out a ‘help to repay’ scheme for the millions of people in energy debt. 

Polling conducted prior to the Autumn Statement for the Warm This Winter campaign found that well over a third of the public (37%) already attributed significant responsibility for the energy bills crisis to Government policy. 

Hardly any respondents (3%) said that Government policy bore no responsibility for people living in cold damp homes. [1]

Meanwhile, the Office of Budget Responsibility has concluded that the impact of the cost of living crisis and high energy bills means that living standards are forecast to be 3½ per cent lower in 2024-25 than pre-pandemic. Economists claim that this is the largest reduction in living standards since records began in the 1950s.

Fi Waters, spokesperson for the Warm This Winter campaign, commented:

“We’re devastated that the emergency energy tariff that would give hard-pressed families money off their monthly bills has not been adopted by the Chancellor in the Autumn Statement, but we’ve not given up. 

“The Government should be putting the vulnerable, disabled people, the elderly, those with medical conditions and the pregnant first rather than condemning them to living in cold damp homes.”

From 1 January 2024, Ofgem have confirmed that the average household’s energy bill will increase by 5% (or £94 a year) from current prices.

Compared to last year, the unit cost changes show decreases, but these are offset by daily standing charges that have increased by 5% for gas and 14% for electricity. Standing charges are now subject to a review by Ofgem.

When compared to pre-crisis levels, gas unit costs are more than double what they were and electricity costs are up 129%. Standing charges are up 8% for gas and 119% for electricity. [3]

A spokesperson from the End Fuel Poverty Coalition, commented:

“These price hikes come at the worst possible time for households. Bills will go up just as winter bites hard and household finances are hit further by Christmas credit cards, the long January pay period and the ongoing wider cost of living crisis.

“We warned* Ofgem that a January price cap rise was a bad idea when the regulator consulted on this in 2022. Now the chilling effect of the change is being realised, the inhumanity of this policy is clear to see.

“It will be anything but a happy new year for people trapped in Britain’s broken energy system.” 

Fi Waters from Warm This Winter continued:

“The price cap rising again in January is yet another kick in the teeth to ordinary people, particularly as in the last few weeks we’ve seen energy companies lining up to announce hundreds of millions of pounds worth of profits. They are raking it in and laughing all the way to the bank while ordinary people can’t afford to turn their heating on.

“It’s clear our energy system is broken. The relentless roll call of obscene profits and now a hike in energy bills in the new year, is not only hugely unfair, it’s costing lives, damaging health and wasting money as our reliance on fossil fuels is keeping bills sky high.”

Jonathan Bean from Fuel Poverty Action added:

“These inflated prices mean more cold damp homes and more deaths. Ofgem is protecting profits not people.”

ENDS

[1] Methodology note: Opinium conducted a nationally representative survey among 2,000 UK Adults from the 20th – 24th October 2023. Results were weighted to be nationally representative.

The public believe that energy firms have similar levels of responsibility as the Government –  showing similar levels of polling (38% felt firms had significant responsibility / 4% thought they had no responsibility). Just 15% said that external factors such as the war in Ukraine had a significant responsibility for the crisis (13% said these had no impact).

Q:UK24852_Q8. Summary – On a scale of 1 to 5 to what extent do you think the following groups are responsible  for the high numbers of people living in cold damp homes each winter? 1 indicates no responsibility at all and 5 indicates significant responsibility.  
  UK government policy Energy companies House builders Landlords External factors, such as the war in Ukraine
Base: All respondents (Unweighted) 2000 2000 2000 2000 2000
Base: All respondents (Weighted) 2000 2000 2000 2000 2000
1 – No responsibility 3% 4% 5% 4% 13%
70 72 108 76 262
2- 8% 7% 12% 8% 13%
150 135 231 163 270
3- 21% 21% 29% 22% 27%
427 421 582 445 535
4- 23% 22% 22% 23% 19%
452 447 443 469 388
5 – Significant responsibility 37% 38% 20% 33% 15%
732 760 404 661 305
Don’t know 8% 8% 12% 9% 12%
170 165 232 186 241


[*] Letter to Ofgem from End Fuel Poverty Coalition on January price rise proposal https://www.endfuelpoverty.org.uk/wp-content/uploads/220614-Ofgem-FINAL.pdf 

[3] Price Cap changes in unit costs and standing charges available at https://www.endfuelpoverty.org.uk/about-fuel-poverty/ofgem-price-cap/