Tag: Ofgem

Catastrophic rise in energy prices will not be offset by Government plans

Over 1m more homes in England could be forced into fuel poverty following the latest Government energy cap price rise, despite Government plans announced today.

The End Fuel Poverty Coalition predictions come as Ofgem confirmed that the average cost of heating a home will rise from GBP1,277 a year to GBP1,971 – a 54% increase.

The Government has pledged a series of measures to try and support homes in fuel poverty, but campaigners have warned these do not go far enough to offset the rises in energy prices over the last few years. The Chancellor claimed this would be worth GBP350. However, much of this will be repaid through a “heat now, pay later” scheme.

Even taking into account the Government’s promised support, the latest price cap rise will still be 27% – the biggest rise since records began.

It is estimated by the End Fuel Poverty Coalition that this will plunge an additional 1.1m homes into fuel poverty, taking the total now in fuel poverty to 22% of all households in England (c.12.5m people). The final total may be higher due and closer to 26% of all households, due to the “heat now, pay later” nature of Government support.

Since it was introduced in 2017, energy bills have risen 52%, with rises of almost GBP600 (GBP578) being passed onto consumers in the last year alone.

A spokesperson for the End Fuel Poverty Coalition, commented:

Today’s catastrophic price cap rise will force hundreds of thousands more households into fuel poverty from April.

The Government’s proposals for support will do little but offset or defer part of the most recent rise.

The reality is that fuel poverty has been increasing at an exponential rate and only a full package to support people – especially the most vulnerable – will be sufficient in the short term.

Longer term, the Government must come good on its promises to help transform housing into safe, warm, energy efficient homes.

Juliet Phillips, Senior Policy Advisor at E3G:

The UK’s exposure to volatile gas markets is fuelling a cost-of-living crisis. While today’s announcements take some edge off the burn, further targeted support for the most vulnerable households is urgently needed to prevent catastrophic outcomes.

Furthermore, without a long-term plan to reduce demand for fossil gas, emergency measures can only act as a sticking plaster. We must also start now towards building a greener, fairer and resilient system as the only long-term solution for preventing future gas crises.

Reaction from other members of the Coalition will follow.

Image: Michael JP / Shutterstock

Fuel poverty map of England revealed

A new map of England has laid bare the stark reality of the high number of people living in fuel poverty, with millions of households affected. [1]

The Fuel Poverty Index has created a league table of local authority areas by combining fuel poverty figures with data on measures improving energy efficiency and therefore reducing fuel poverty.

The worst place in England for fuel poverty is Barking & Dagenham, followed by Stoke-on-Trent and Newham. [2]

But it’s not just inner city areas which are badly ranked in the map with Shropshire, Herefordshire and King’s Lynn and West Norfolk all struggling with fuel poverty.

Meanwhile Bracknell Forest, Runnymede and East Hampshire are among the areas least affected by fuel poverty.

The map has been released as the ongoing energy crisis could see fuel poverty becoming endemic in society, according to campaigners.

The latest calculations [3] have revealed that rising wholesale energy prices could see the number of households in the country rise from the current estimate of 4.1m to 5.3m. This would equate to 22% of all households in England classified as being in fuel poverty.

The End Fuel Poverty Coalition recently launched a petition with campaign website Action Storm to call on the government to take immediate action to avert the fuel poverty crisis this winter. [4]

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

The latest rises in wholesale prices means that we face the possibility of more households facing fuel poverty than ever before. And with fuel poverty comes increased risks of suffering the worst effects of respiratory illnesses, such as Covid-19.

Indeed, when combined with the increase in general prices caused by inflation and Brexit supply issues we face the real possibility of fuel poverty becoming endemic in our society.

Local authorities who want to understand more about what they can do have been encouraged to pass the Coalition’s fuel poverty motion [5]. William Baker from Solutions to Tackle Energy Poverty (STEP) said:

Local authorities are responsible for some of the most innovative and far-reaching initiatives to tackle fuel poverty.

However, the UK government must give all local authorities the powers and resources to make sure such initiatives are standard practice across the country.

Ruth London from Fuel Poverty Action, which is currently Crowdfunding to continue its grassroots campaign to tackle fuel poverty, said:

It cannot be those who have least already who end up paying the price for the UK’s dependence on gas. Total UK wealth increased by £900bn [6] over the pandemic yet people will die from cold this winter. We need a transformed pricing system and sustainable energy, housing and heating so all can keep warm and dry.

Caroline Abrahams, Charity Director at Age UK [7], said: 

This map reveals stark inequalities in rates of fuel poverty across England. Many areas in the North are particularly affected, as well as Stoke-on-Trent, Birmingham, and London. The problem is that too many older people are living in energy inefficient cold homes, guaranteeing that they will be facing sky high bills.

Keeping warm through the winter is an annual challenge for older people on low fixed incomes. It’s vital that they keep the heating on as the cold can make many pre-existing health conditions worse. To avoid the knock-on impact on the NHS, older people who are worried about making ends meet must have the confidence to keep their heating turned up when the temperatures drop, so they can stay well.

The Government must provide support for households who are struggling the most. Longer term, we need to see greater investment in energy efficiency programmes, which will help lower bills, reduce anxiety for those in cold homes and protect people against any future surges in fuel costs.

Peter Smith, Director of Policy and Advocacy at National Energy Action, said:

This toxic cocktail of challenges will leave millions of households struggling to cope with less income and higher costs. For many it will be an impossible task.

We need immediate support for those on lowest incomes, we need to clear levels of household energy debt fast, we need to give more protection to the fuel poor from future price rises and we need to reduce people’s exposure to high prices by making homes more efficient.

The Centre for Sustainable Energy (CSE) has published energy saving advice and top tips for people worried their energy supplier is about to go bust or thinking of switching as prices soar. Ian Preston, Head of Household Energy at the CSE, said:

Keeping healthily warm is a basic human right and it’s wrong that so many people are struggling with cold homes when living in a developed country like the UK. Cold homes cause misery, ill-health and social exclusion.

Many government and industry support programmes, like furlough, are due to end soon and the energy advice sector will face a tsunami of demand from people needing support. We need urgent action from the government to maintain support for people in vulnerable circumstances.

Paul Dixon, from Action with Communities in Rural England (ACRE), commented:

The energy crisis will plunge many more rural households into fuel poverty this winter.

Rural homes are some of the most difficult to keep warm. Whilst immediate measures must be found to alleviate financial pressures facing the most vulnerable, there must be a longer-term commitment from government to insulating homes and supporting communities to generate their own local renewable energy solutions.

Christine Nicholls, Community Development Officer for Community Action Northumberland, added:

The timing of this increase will hit vulnerable families hard, families already struggling with the impact of the pandemic.

Guy Stenson, Director of Housing Operations – Customer Experience at Stonewater, said:

We recently appointed a fuel poverty specialist to provide advice and alleviate the pressures faced by our customers, tackling the energy crisis will require working with Government, partners and the wider sector to develop more rapid solutions.

To address the immediate challenge we are offering flexible rent payment arrangements and working closely with our voluntary sector partners and charity partner, Longleigh Foundation, to support those most in need.

ENDS

[1] For sources, calculations and methodology, please visit: 

https://www.endfuelpoverty.org.uk/english-fuel-poverty-index-2021/.

[2] The ten local authorities worst affected by fuel poverty, according to the End Fuel Poverty Coalition Index:

– Barking and Dagenham

– Stoke-on-Trent

– Newham

– Waltham Forest

​- Kingston upon Hull

– Sandwell

– Wolverhampton

– Birmingham

– Manchester

– Norwich

The ten local authorities least affected by fuel poverty, according to the End Fuel Poverty Coalition Index:

– Bracknell Forest

– Runnymede

– East Hampshire

– Torridge

– South Hams

– Hart

– Wokingham

– Fareham

– Surrey Heath

– Spelthorne

[3] For detailed calculations and methodology statement visit: https://www.endfuelpoverty.org.uk/price-cap-methodology/

[4] Petition: https://actionstorm.org/petitions/fuel-poverty-crisis 

[5] Motion: https://www.endfuelpoverty.org.uk/end-fuel-poverty-councillor-pledge/end-fuel-poverty-council-motion/ 

[6] Report in: https://www.theguardian.com/business/2021/jul/12/uk-wealth-gap-widens-in-pandemic-as-richest-get-50000-windfall 

[7] Age UK’s Advice Line is available 8am-7pm 365 days a year and can be reached on 0800 678 1602. Age UK provides information guides on staying warm this winter and reducing energy bills as well as a factsheet on the help available to consumers to meet their energy costs. The organisation also provides a free benefits calculator which helps older people to find out what benefits they could be owed.

Reactions to devastating Ofgem price cap increase

With Ofgem announcing that the energy bill price cap is set to increase from 1 October, charities, trade unions, campaigners and politicians have been reacting to the news.

Described as “devastating” by the End Fuel Poverty Coalition and National Energy Action, the latest analysis of the Ofgem data shows the significance of the energy price increase:

Media and politicians across the political divide have been responding to the concerns of the End Fuel Poverty Coalition.

Classic FM said that the timing of the price hike “may seem cruel”, while the Guardian Editorial on Saturday wrote:

If ministers display the same tin ear that they did towards Marcus Rashford over children’s food poverty in this new crisis over fuel poverty, they will get what they deserve. They cannot say they have not been warned. The choice is theirs.

Meanwhile more Coalition members have also reacted to the news. Christine Nicholls from Community Action Northumberland commented:

It is now more important than ever we support people with switching to better tariffs, the timing of this increase will hit vulnerable families hard, families already struggling with the impact of the pandemic.

Tamara Sandoul, Policy and Campaigns Manager at the Chartered Institute of Environmental Health, said:

A price rise in energy bills this Autumn – right before the coldest months of the year – is likely to have devastating consequences. Living in a cold home can contribute to a range of serious health conditions, especially in vulnerable groups. We know that when people can’t afford to heat their home, they underheat it in order to make ends meet, resulting in ill health and additional costs and pressure on the NHS at the busiest time of the year.

Ofgem’s decision is expected to result in nearly half a million extra households living in fuel poverty. This would mean a serious step back for the Government’s targets of reducing fuel poverty. The move could also exacerbate the levels of homelessness. Many people living in the private rented sector have been struggling to meet the costs of their housing throughout the pandemic. Now that furlough and other Covid-related support is coming to an end, the cost of increased energy bills could push some tenants into arrears, debt and homelessness.

Read more about the story in:

Organisations condemn unprecedented Ofgem price hike

Ofgem has confirmed the worst price hike in energy costs in the history of the price cap.

According to End Fuel Poverty Coalition estimates, the £139 rise (equating to 12.2%) will result in an additional 488,000 households in fuel poverty.

Over 4m people are already estimated to be behind on their household bills and the price cap rise will take effect this autumn at the same time as the furlough scheme and the Universal Credit uplift end.

A spokesperson for the End Fuel Poverty Coalition said:
This unprecedented hike in energy bills comes at the worst possible time for millions of households across the country.
It is difficult to put into words just how devastating this news will be for people.
Especially hard hit will be vulnerable customers and those on pre-pay meters who are unable to switch suppliers and will be facing a winter in abject fuel poverty.
Switching advice and the price cap may provide some protection from the worst excesses of the energy market, but this will be no comfort to those now facing the stark choice between heating and eating.
The Government must take immediate action to provide emergency support for those who suffer due to the decision and speed up plans to improve the energy efficiency of the nations’ homes.

The Big Issue has recently warned of increasing levels of homelessness, caused in part by fuel poverty. Jacky Peacock from Advice for Renters, commented:

Recent research by the Joseph Rowntree Foundation found that 400,000 private renters already face eviction for Covid related rent arrears and up to a million are worried about being evicted in the next three months .  The hike in fuel costs could be the final nail in the tenancy coffin for these tenants, with homelessness escalating at a cost of billions to the public purse.

William Baker from Solutions to Tackle Energy Poverty (STEP) commented:

The massive rise in fuel bills caused by the price cap hike will affect most those hit hardest by the impacts of Covid and lockdown. It’s essential that the Government does not cut the £20 increase in Universal Credit this September and accelerates plans to improve home energy standards so that low income consumers waste less money on heating leaky homes.

Fuel poverty can make respiratory illnesses worse – meaning conditions such as Covid may be exacerbated by living in cold damp homes.

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

The energy advice sector will face a tsunami of demand from people needing support once furlough ends, benefits reduce and bills go up. This price increase on energy bills is hitting at the worst possible time; just before winter, when millions of people are already struggling to pay their bills and people are spending more time at home than ever due to the pandemic.

Cold homes cause misery, ill-health and social exclusion. Many government and industry support programmes are due to end soon and people will struggle to survive. A warm home is a basic human right and it’s going to be a really tough winter unless we see action to maintain support for people in vulnerable circumstances.

Caroline Abrahams, Charity Director at Age UK, added:

The level at which energy prices are capped is of enormous importance to older people, because we know they are less likely to switch providers for a better deal – especially if they are not online, which is the case for about half of the 75+ population. For all those who are therefore effectively stuck on their existing tariffs, the best protection they have against unfair and unaffordable fuel bills is a robust energy price cap. Unfortunately, the fact that the cap is going up significantly this year will set them up for a miserable and anxious winter.
We know that many older people resist turning their heating up high enough to stay warm during cold spells, for fear of the cost. Sadly, today’s announcement is likely to mean even more older people find themselves in this horrible position and energy suppliers must identify and support those that will struggle in the cold months to come.

National Energy Action has developed a briefing setting out the support and solutions the government can implement. Peter Smith from NEA said:

This is a devastating increase. Millions of household budgets are already stretched to the limit and this massive increase could not be coming at a worse time. As well as a significant rise in general inflation – driving up spending on other essentials such as food – the new cap level takes effect in October when millions of people will see a reduction in their incomes, as furlough winds down and the uplifts to Universal Credit are likely to be withdrawn. This toxic combination of higher prices, reduced incomes and leaky, inefficient housing, will lead to a further surge in utility debt and badly damage physical and mental health this winter.

There is far more Ofgem and the UK Government can do to help to protect the most vulnerable consumers this winter. For years Ofgem and [the UK] Government have insisted the way to avoid increases to bills is to switch. Many fixed deals have however come to an end and for some customers switching is impossible due to levels of debt or because pre-pay customers have far fewer options to switch supplier or tariff. There may be limited scope to mute the impact of soaring wholesale prices within the cap, but Ofgem can and must provide deeper protection for the most vulnerable customers. The UK Government can also directly help reduce energy arrears as well as maintaining investment to reduce needless energy waste in our homes.

Ruth London, co-director of Fuel Poverty Action, concluded:

The massive increase in price-capped energy bills will be a body blow to millions, and advice to shop around for cheaper deals does not add up as a solution: If everyone affected switched, the deals would disappear, to cover suppliers’ costs and profits. Finding a better deal is laborious and suppliers rely on catching out those who are not only cash poor, but time poor. Placing the onus on victims to individually find an escape from the price hike is a false solution. Change needs to go beyond redistributing poverty.

We need a new pricing framework, where poorer people don’t pay higher rates than the rich. We need well-insulated housing, renewable energy, new heating systems, and wages and benefits that meet our costs. Fuel Poverty Action believes the government should investigate a totally new pricing system where everyone is guaranteed, free of cost, the basic energy we need for our homes and our health, while more cost falls on those who are heating mansions or joy-riding into space.

 

Energy bills set to hit highest peak since price cap introduced

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

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

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

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

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

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

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

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

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

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

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

Ruth London from Fuel Poverty Action, commented:

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

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

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

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

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

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

Frazer Scott, CEO of Energy Action Scotland, commented:

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

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

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

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

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

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

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

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

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

Ofgem announces hike in fuel bills for millions

The End Fuel Poverty Coalition, a broad coalition of anti-poverty, environmental, health and housing campaigners, charities, local authorities, trade unions and consumer organisations, has criticised the decision to increase fuel bills for an estimated 11m people:

At the last count, 3.7 million households were already classified as living in fuel poverty and more than 2.1 million more were behind on their fuel bills.

Any price cap rise will only make matters worse for families struggling to make ends meet at the same time as bills are rocketing due to stay at home lockdown measures and the closure of schools.

While the price cap rises may seem small to officials, for ordinary people any increase will mean the choice between heating or eating becomes even starker.

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

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

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

Support for households who are in fuel poverty is available from organisations such as Citizens Advice and can be found in our resources section.