Category: News

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.

Surge in energy disconnections and debt

New figures from Ofgem have revealed that the number of customers disconnecting from the grid have surged – along with levels of energy debt.

The data shows that in quarter 1 2023, people disconnected from their energy supply more than 5 million times. Almost 1.2m customers were affected with over 800,000 bill-payers disconnecting for more than three hours.

Meanwhile, official energy debt levels have also surged.

The average household energy debt for homes not on a payment plan, is £1,214 on electricity bills and £965 on gas bills. Figures from the Money Advice Trust suggest that this “bad debt” is just the tip of the iceberg.

A spokesperson for the End Fuel Poverty Coalition commented:
“This is exactly what we have been fearing. As Bank of England figures show, people have burned through savings just to keep up with essentials and the cost of living crisis continues. Meanwhile average energy debt is surging to unprecedented levels

“It’s clear that households are just unable to cope.

“The majority of this debt is caused by the record high energy prices which have caused misery for millions, but generated excess profits for the firms involved in Britain’s broken energy system.

“Rather than end the Windfall Tax early, as the Government plans to do, it should instead look at how this could be used to help get those people suffering back on an even keel.

“Calls to introduce a Help to Repay debt matching scheme are backed by a range of charities. These plans would help reduce levels of fuel poverty as well as helping wider household finances.”

The figures come as the Ofgem Price Cap brings the average annual energy bill to customers down to around £2,074 from 1 July 2023. The Price Cap affects 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.

Older people’s ‘parliament’ debates energy crisis

The 2023 National Pensioners’ Annual Convention has heard a stark warning that millions of vulnerable people will be unable to stay warm this winter.

Last year, over 9m adults lived in Dickensian conditions unable to keep their homes warm and damp free. The figures for the Warm This Winter campaign, also revealed that over 1m of these adults were older and those with disabilities were especially vulnerable to living in cold damp conditions.

From 1 July energy bills will be roughly the same as last winter and while some reduction in the Ofgem price cap may come through before winter 2023/24, the Convention heard that this would still mean energy bills are double what they were in 2021/22.

New figures from Age UK and the ONS reveal that almost half (45%, 11.3 million) of people aged 50+ in Great Britain are currently finding it difficult to afford their energy bills.

Addressing the meeting in Blackpool, Simon Francis, coordinator of the End Fuel Poverty Coalition, said:

“At a recent meeting with pensioners, one told me that the only change between their living conditions in the 1940s and those of today was that they had an inside toilet now. They said that the poverty they experienced as a child is what they are now experiencing again.

“Food banks, sanitary banks, pet food banks and massive government support for energy bills are the only things keeping people from destitution.

“We cannot allow this to continue any more and the Government needs to act to keep people warm this winter and every winter. We can only do this through debt relief and financial support now alongside a rapid programme of energy efficiency improvements and speeding up the generation of cheap renewable energy and moving us away from the fossil fuel profiteers of the past.”

Delegates representing the National Pensioners Convention’s 1.1 million UK members have met at The Imperial Hotel in Blackpool to discuss why millions of today’s – and tomorrow’s – older people face poverty, hardship and the loss of vital services.

NPC General Secretary Jan Shortt said: 

“The last few years have been particularly tough on our oldest and most vulnerable. 

“Hundreds of thousands died in the pandemic, and millions now struggle to make ends meet as prices rocket, while the real value of pensions drop. Older people are having to choose between eating and heating, while the essential services they rely upon, from health and care to housing and transport, continue to decline or disappear completely. 

“This isn’t just a problem for older people now, it is a major issue for today’s workers who wonder if they’ll ever be able to afford to retire. Especially if the government pushes back the retirement age to 68 and threatens to scrap the Triple Lock that should guarantee state pension cost of living increases.” 

Other Convention speakers will include Robert Palmer from Tax Justice, John Lister from Keep Our NHS Public, Lord Davies of Brixton on the future of the state pension, and Tom Lowe from the Digital Poverty Alliance on the exclusion of older people from our increasingly online world. Leaders from national organisations like Age UK, Independent Age, Ageing Better, as well as the TUC, Unite and UNISON will also be attending.

Poorest constituencies missing out on support for energy bills

New analysis of Government data by the End Fuel Poverty Coalition has revealed that some of the poorest constituencies in the country had some of the highest levels of undelivered or unredeemed payments through the Energy Bills Support Scheme. [1]

Westminster Constituency-specific data shows that some of the constituencies with the highest levels of child poverty were the least likely to get the full amount of support payments that they were owed. 

In Brent Central, where more than a third of households with children are in poverty [2], more than one in twenty (6.18%) of vouchers were not delivered or redeemed. 

Meanwhile in Liverpool Riverside, more than 22,000 (5.19% of payments) were not processed, even though more than 7,000 families are in poverty.

The latest UK-wide figures show that millions of pounds worth of support has not made it to the households that it was meant for, with the majority of that due to those on prepayment energy meters (PPMs).

In the constituency of Hampstead & Kilburn, 43% of vouchers issued to PPM households have not been redeemed. And while the problem is worst in London, other places across England have also been hit hard. In Bradford West, a third of vouchers are still to be claimed, in places such as Preston or Pendle, the figure is 29%.

Scotland’s voucher redemption rate (26% left unclaimed) is worse than everywhere else in the UK apart from London (32%). Constituencies such as Edinburgh East, Edinburgh North & Leith, Glasgow North (all 36%) and Inverclyde (35%) all have low take up rates.

The government provided households across the country with £400 of energy bills support from October 2022 until March 2023 through the Energy Bills Support Scheme. For traditional prepayment meter customers, this support came in the form of vouchers delivered monthly by text, email or post. 

The deadline to collect any missed payments is 11.59pm on 30th June. 

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

“Far too often support payments under this scheme have not found their way to vulnerable households. There is now less than a week to go before this support will be lost to households forever.

“If anyone feels they have missed out on Energy Bills Support Scheme payments they should contact their energy firm immediately.”

Frazer Scott, CEO of Energy Action Scotland commented “Over 1 in 3 households in Scotland are in fuel poverty and are struggling to access heat and power to maintain their health and wellbeing. Energy debt levels are rising yet vital support is not reaching people. Legacy prepayment meter households should be receiving the support to which they are entitled. It isn’t right and it isn’t fair that so many voucher remain unredeemed.”

Jonathan Bean of Fuel Poverty Action said: “As usual in our cruel energy system, those that need the help most are not getting it.  Government and energy firms are failing vulnerable people again.  Extra time and effort is needed to sort out this mess.”  

 ENDS

[1] End Fuel Poverty Coalition analysis of official Government data published on 20 June 2023. All data is available to download from: EFPC EBSS Calculations energy-bills-support-scheme-gb-payments-june-2023

[2] End Child Poverty Coalition / Loughborough University data https://endchildpoverty.org.uk/child-poverty/