Category: Reports

Ministers should go further on Warm Home Discount reforms

The UK Government’s proposed expansion of the Warm Home Discount (WHD) is a welcome step, but campaigners have urged ministers to go further in ensuring vulnerable households receive the support they need this winter and beyond.

From 1 April 2025, energy bills will rise by 6.4%, keeping costs at levels 77% higher than in 2020.  Millions of households – especially older people, renters, prepayment meter users, and those with health conditions – are struggling to afford these soaring costs.

In a consultation issued by Government, Ministers have proposed removing the high-cost-to-heat threshold from WHD rules which means that more means-tested benefit claimants will be able to qualify for the scheme.

However, in the End Fuel Poverty Coalition response to the consultation, experts stress that disabled people and those on non-means-tested disability benefits must also be included, as they often face significantly higher heating costs.

Furthermore, campaigners argue the WHD should be increased in line with inflation and funded from sources like the £4bn in excess profits made by energy network companies, rather than customer bills.

Expanding the Park Homes Warm Home Discount Scheme (PHWHDS) is also crucial, as many in atypical housing arrangements have been excluded from previous energy support. This includes people living in park homes who tend to be older and also those such as Gypsy, Traveller, and Boater communities.

However, there are concerns that broadening the scheme without increasing funding will mean many existing and newly eligible households could miss out.

A spokesperson for the End Fuel Poverty Coalition, commented:

“We strongly support the expansion of the Warm Home Discount as set out in the consultation. However, we believe that in expanding the scheme, the Government must also extend the support to more households who will otherwise suffer in cold damp homes next winter.

“Ministers’ proposals must also be properly resourced, rather than diverting money from energy advice initiatives that help those struggling with energy costs.

“Looking ahead, we need to see a more sustainable, long-term energy bill support scheme that targets all low-income households, including those with high energy needs who do not receive means-tested benefits.”

ENDS

Full consultation response available:  https://www.endfuelpoverty.org.uk/news/reports-and-correspondence/

Image credit: Ascannio / Shutterstock.com

Campaigners urge stronger action on energy standing charge tariff reform

Charities and consumer groups have warned that Ofgem’s proposals for standing charge reform could see many households end up worse off if they accept one of the proposed tariffs. 

In a submission to the official consultation on the issue, the End Fuel Poverty Coalition describes how consumers would only need to use half of the “typical domestic consumption values” before their bills increase if on a “zero standing charge” tariff.

Given the risks posed by the proposals, campaigners stress that the consultation should proceed with extreme caution and only after thorough piloting and evaluation to assess potential negative impacts on consumer behaviour.

A spokesperson for the End Fuel Poverty Coalition explains the concerns: 

“In essence, the proposals create only two groups who might see savings.

“Firstly, those who drastically self-ration or self-disconnect from energy, potentially putting their health and well-being at risk. There can be no ethical justification for forcing households to reduce energy use to dangerously low levels in order to maintain the benefits of a particular tariff.

“The second group who may benefit are those who can minimise usage through smart technology, but this risks creating further inequality in the energy market due to ongoing issues with smart meter rollout.”

Other concerns expressed by the Coalition argue that the proposals do not move costs away from energy bills and simply “rearrange the deckchairs”, that they present a flawed version of rising block tariff for consideration and do not contain wider proposals for reform previously put forward (pdf).

It is argued that the current consultation also fails to address the unfair burden of standing charges, particularly for prepayment meter customers, who often accrue standing charge debt when disconnected. 

National Energy Action warns that under the next price cap, some gas prepay users could face nearly £60 in charges before they can reconnect their supply and that 67% of prepayment users expect to ration their energy, highlighting the financial hardship imposed by the existing system. 

Unlike other consumers, prepayment customers often lack a direct relationship with suppliers, making it unlikely they will switch to proposed zero-standing charge tariffs.

Campaigners are calling for more targeted policy solutions, including shifting standing charge accrual to the back of prepayment meters to prevent debt accumulation. They argue this measure would be minimally disruptive for suppliers while significantly helping vulnerable households.

The spokesperson continued:

We know that some of these issues need to be addressed working with the Government and are not in Ofgem’s gift. We urge the regulator to think again and meet with Ministers to discuss how their decisions can positively alter the affordability of energy bills, avoid discriminatory pricing and deliver longer-term reforms that bring down the cost of energy.

ENDS

Full consultation response available: https://www.endfuelpoverty.org.uk/news/reports-and-correspondence/ 

Millions to spend a fourth winter in cold damp homes

New figures reveal that 16% of UK adults (8.8m people) live in cold damp homes, exposed to the health complications that come from living in fuel poverty. [1]

While the Government has announced that a Warm Homes Plan will help improve people’s homes in years to come, this will come too late for the one in ten (9%) who frequently experienced, dangerous, levels of mould in their homes over the past 12 months.

People who live in poorly insulated homes risk seeing damp and mould spread and the NHS warns that people living in these conditions 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.

To tackle the problem, a large majority of people support a fully funded nationwide insulation and ventilation programme to create healthy, energy efficient homes that will slash excess deaths caused by cold, damp houses in winter. 

Nearly three-quarters (72%) agree the worst insulated homes should be the priority as almost half (47%) of those polled are worried about how they will stay warm this winter, with 46% worried if they have to rely on the NHS this winter. [2]

A spokesperson for the End Fuel Poverty Coalition, commented:

“The sheer numbers of people living in cold damp homes this winter should send alarm bells ringing throughout Westminster. 

“These shocking figures have hardly changed since last year and with energy bills heading upwards again in January, the situation is now critical for the Government.

“The Chancellor must take two immediate steps in the Comprehensive Spending Review. Firstly, she must fully support the Warm Homes Plan with £13.2bn of funding and a commitment to help the worst insulated homes get support first.

“Then Ministers must also bring in more support for vulnerable households this winter and speed up plans to bring in a social tariff for next winter – a move that is backed by the vast majority of voters.”

Following the findings of the poll, commissioned by campaign group Warm This Winter, organisations have signed an open letter sent to Darren Jones, the Chief Secretary to the Treasury calling for the Government to commit to the  £13.2 billion. 

Warm This Winter spokesperson Caroline Simpson said: “It is shocking that whilst people are looking forward to celebrating the festivities, too many are still living in true Dickensian conditions, where cold damp homes are making them ill.

“We need to see a Government that has the ambition to create the homes people deserve and banish these appalling conditions to a bye-gone era where they belong.”

ENDS

[1] Opinium conducted an online survey of 2,000 UK adults between 22nd and 26th November 2024. Results have been weighted to be nationally representative.  In 2023, there were 54,196,443 people aged 18 plus in the UK according to ONS.

[2] Opinium conducted an online survey of 2,014 UK adults between 7th and 8th October 2024. Results were weighted to be nationally and politically representative of the UK adult population.

Critically low energy usage hits fuel poor during cold weather

Some of the UK’s poorest households use 21% less energy during cold weather than other households, leaving them exposed to potentially dangerous cold damp homes, according to new research.

Research also finds that households on smart prepayment meters could not stay warm when it got really cold and became disconnected from their energy.

Those most affected were households identified as vulnerable and listed on the Priority Services Register – the sick, disabled, elderly and young.

The analysis has been conducted by a group of academics from the UCL Energy Institute, University of Oxford Environmental Change Institute and Cambridge Architectural Research.

Eoghan McKenna of the UCL Energy Institute said:

“We know that these fuel poor households are living in colder homes, and that they cut back on their heating in response to the rise in energy prices.”

Academics found that the poorest households are those least able to respond to the coldest weather and examined the Cold Weather Payments system. This pays out £25 to eligible households after there has been a week of below freezing weather, but was found that it covered less than half the extra cost of keeping warm during a cold snap.

The scheme was condemned by a House of Commons Energy Committee report as “an outdated, old-fashioned scheme.”

As reported exclusively in the Mirror, the new paper recommends that an Extreme Weather Payment system is set up that credits the energy account of all eligible households on every day that the Met Office declares the minimum temperature will be -4 degrees Celsius or lower on the following day.

The payment of £10 per day would be made in advance of the cold weather, on a daily basis. It should be available to all vulnerable households to offset the extra cold and existing fuel poverty.

Dr Tina Fawcett of the Environmental Change Institute, Oxford University, said:

“This simple change, which will not be expensive, will help households stay warm when it really matters. It will ensure the Government can deliver the right support at the right time.”

A spokesperson for the End Fuel Poverty Coalition, commented:

“Exposure to critically low levels of energy use in fuel poor households means that they are not heating their homes to an adequate level – leaving them to live in cold, damp conditions.

“While energy saving through better insulation and ventilation of properties is part of the long term solution to people living in cold damp homes, we need emergency support for households for foreseeable winters.

“For a Chancellor suffering from the political fallout from the Winter Fuel Payment cuts, a modern, updated, compassionate level of support during cold weather should be an obvious step to take.”

Jason Palmer from Cambridge Architectural Research and UCL added:

“It is extremely worrying that households in fuel poverty are cutting energy use compared to other households when it is coldest. This puts their health, and ultimately their lives, at risk.”

ENDS

Brief report available to download: Cold Weather Payments Analysis

Winter fuel payment cuts set to hit 84% of disabled pensioners

Over four-fifths (84%) of older people with a long-term health condition or disability claim they will no longer get Winter Fuel Payments according to new research. [1]

The figures, reported in the Daily Express, suggest that one in five (19%*) people who have long-term health conditions or disabilities, are over 66 and say they will no longer likely get Winter Fuel Payments claim that they are worried about their own safety because of the risks of living in a cold damp home this winter. This compares with 17% of the general public and 14% of all over 65s.

The figures* also indicate that those respondents who claim they are no longer eligible for Winter Fuel Payments and have a physical disability are more likely to live in a home that is often cold and damp than the general population.

81% of older people who are already worried about cold and damp in their own homes claim they will not get Winter Fuel Payments.

While owner occupiers are most likely to no longer get Winter Fuel Payments, 77% of older people who rent will miss out, with those in social housing* especially affected by the cuts.

Commenting on the figures, a spokesperson for the End Fuel Poverty Coalition, commented:

“The data is yet another warning sign. The indications are that older people who no longer get the Winter Fuel Payment are more likely to suffer in cold damp homes this winter than the general public. 

“For those pensioners with a physical disability, the situation is potentially even worse. Many do not have access to the means tested benefits needed to claim the Winter Fuel Payment and the Government must urgently assess the impact on this group in particular and provide more support for them.

“Until the Government fully implements its plans to improve insulation and ventilation of buildings as well as stabilise energy costs, vulnerable households will continue to need financial support. 

“That’s why the Winter Fuel Payments were so important. The money provided help for older households to stay warm each winter. Sadly, now more older people are expected to live in cold damp homes this winter and this puts them at greater risk of ill health, with over quarter of a million older people becoming so ill they will be forced to the doors of the NHS.”

James Taylor, Scope’s executive director of strategy and social change, said:  

“These findings are a shocking indictment of a plan that will leave older disabled people in an impossible situation this winter.

“Life already costs more when you’re disabled. Higher electricity bills because of medical equipment to power. Higher heating bills because of health conditions affected by the cold. 

“Since the start of this crisis, we’ve heard from disabled people who are going without heating and forgoing medical treatment. Sacrifices that put their health at risk. 

“While some disabled pensioners receive pension credit, there are an alarming number who will miss out this winter. We’d urge anyone who thinks they could be eligible to apply, or to get in touch with our helpline for advice. 

“We desperately need a longer-term solution for the eye-watering energy costs many disabled people face, which is why we’re calling for the government to bring in discounted bills for disabled households.”

ENDS

[1] Winter Fuel Payment research by Opinium (undertaken 7-8 Oct 2024, sample of 2,014, weighted to be politically and nationally representative). 

Among respondents aged over 66, 88% say they do not receive a qualifying benefit and, therefore, will no longer get the Winter Fuel Payment in winter 2024/25. 2% preferred not to answer or did not know, leaving 10% saying they are on a qualifying benefit.

 2024 voting behaviour

90% of Labour voters aged over 66 claim they will no longer get the Winter Fuel Payment

89% of Conservative voters aged over 66 claim they will no longer get the Winter Fuel Payment

96% of Lib Dem voters aged over 66 claim they will no longer get the Winter Fuel Payment*

80% of Reform voters aged over 66 claim they will no longer get the Winter Fuel Payment

Region

93% of Scots aged over 66 claim they will no longer get the Winter Fuel Payment*

91% of people aged over 66 and living in southern England claim they will no longer get the Winter Fuel Payment

88% of people aged over 66 and living in London claim they will no longer get the Winter Fuel Payment*

87% of people aged over 66 and living in the English Midlands claim they will no longer get the Winter Fuel Payment

85% of people aged over 66 and living in northern England claim they will no longer get the Winter Fuel Payment

81% of people aged over 66 and living in Wales or Northern Ireland claim they will no longer get the Winter Fuel Payment*

* indicates that the base sample is below 50 and caution should be taken in using or reporting on this figure with more detailed research required to confirm the findings.

Cold damp homes cost to NHS estimated as energy price cap rises

New estimates predict that cuts to the winter fuel payment could lead to increased costs to the NHS. [1]

The analysis, first reported in the Daily Express, suggests that in 2024, the total cost to the NHS for treating pensioners in cold, damp homes may reach at least £1.5bn a year, with c.2.3m older people living in poor housing conditions.

Within these figures, an estimated 262,000 pensioners will live in cold damp homes due to the decision to axe winter fuel payments. This alone could cost the health service more than £169m a year, the research suggests.

The news comes as energy bills are set to increase for all households by 10% from 1 October.

This will leave the average household paying around 65% more for their energy than in winter 2020/21 and comes on top of years of the wider cost of living crisis, meaning households have less ability to pay these high prices. Energy debt has now hit £3.7bn according to Ofgem figures published last week.

For pensioners who previously had winter fuel payments, but now miss out, energy prices will seem higher than at any point in their lives. Those missing out on Winter Fuel Payments this year include 1.2m pensioners in absolute poverty and 1.6m disabled older people.

As personal finance experts point out, the increase in the triple lock does not replace the winter fuel payment and Uswitch.com estimate 752,000 older people will not use heating at all this winter.

Among the wider public, National Energy Action has calculated that around half of households will be rationing their energy use.

A spokesperson for the End Fuel Poverty Coalition commented:

“We’re now heading into the fourth winter of sky high energy prices, meaning the average household will have paid more than £2,500 extra for their energy than had we not been so exposed to volatile energy markets.

“For older people who previously received the winter fuel payment, but will no longer do so under the Chancellor’s new rules, the situation is even worse.

“The long term way to reduce the costs to the NHS of people living in cold damp homes is to improve insulation and ventilation of buildings as well as stabilise energy costs by getting the country away from being hooked on volatile gas prices.

“But until the Government fully implements its positive plans in these areas, vulnerable households will continue to need financial support. That’s why the Winter Fuel Payments were so important, the money provided help for older households to stay warm each winter.

“Sadly, now more older people are expected to live in cold damp homes this winter and this puts them at greater risk of ill health, meaning the costs to the NHS will soar.”

Caroline Simpson, Warm This Winter campaign spokesperson added:

“This 10 percent price cap rise is yet another blow that households can ill afford, especially when energy companies are raking in billions in profits every week.

“People want to see a transition to renewables, they want to see an end to being reliant on unscrupulous gas giants which is leading to them having to choose between eating and heating and frankly that money needs to go back in people’s pockets.

“That’s why we are pleased this government is taking great steps to end the broken energy system they inherited, but they must also help households who simply cannot afford to continue paying 65% more than they were three years ago on energy bills and look at help such as a social tariff. If they’re looking at how to fund it,  these profiteering energy companies would be a good place to start.”

Jan Shortt, general secretary of the National Pensioners Convention, said:

“The loss of the winter fuel allowance for the majority of older people clearly puts them at risk. It is a known fact that older people require warmth and a stable temperature to maintain their health.

“Living in cold, damp homes heightens the risk of strokes, heart disease, respiratory conditions and generally harms the rest of the body.

It therefore follows that the risk of overwhelming the NHS in winter is high and the cost of dealing with the consequences of the Government decision will be felt throughout the NHS and care sectors.”

Age UK charity director Caroline Abrahams added:

“We’re hearing from older people worried about how they will cope without their winter fuel payment, including many on low and modest incomes who are planning to ration their heating this winter because they’re frightened how they’ll manage this winter.

“For an older person to be forced to live in a cold home is deeply worrying because it’s very bad for their health, especially if they are living with lung or heart conditions or are very frail.

“The consequences for them could be severe and we’re sure that we’ll see more older people going to hospital this winter as a result – the last thing they or the NHS needs.

“The Government must do more at the Budget to ensure pensioners can navigate the coming cold months safely and with their health intact, or the consequences will be felt by older people and the NHS.”

Morgan Vine, head of policy and influencing at Independent Age, warned that living in a cold and damp home can have “very serious implications” for OAPs:

“Many of the older people on a low income we speak to tell us they were already cutting back on heating before the announcement to means test the winter fuel payment.

“With the reality of now losing hundreds of pounds this winter, many have shared they will be making severe cutbacks including not turning the heating on at all.

“Others have told us they will reduce the amount they eat so they can turn the heating on for a few hours a day.

“It is unacceptable that people in later life are having to make dangerous sacrifices as we approach the colder months, and we are concerned that the demand for NHS services could increase as a result.”

ENDS

[1] Estimates and calculations available online in this pdf. The research was first reported in the Daily Express on 29/30 September 2024.

Ministers urged to review nine nightmare energy rules

Ministers should send a clear signal that they are on the side of consumers by reviewing nine sets of rules, according to campaigners.

As households count down to the next Ofgem price cap announcement on Friday (23 August), an analysis of recommendations from previous Warm This Winter Tariff Watch Reports [pdf] has identified ways regulators could cut bills.

While six recommendations from a series of Warm This Winter Tariff Watch Reports published during 2023 and 2024 have been implemented by Ofgem, a further nine proposals have not been acted on.

Chief among them are recommendations to bring down standing charges, cap exit fees and improve governance of the energy industry. [1]

The standing charge reforms could see a reduction in these annual charges on households by £152.06 (46% from £334.08 a year to £183.02).

Delivering these changes would require changes to Ofgem regulations and Government funding as well as action taken to protect low income and high usage households, such as those who rely on energy for medical needs.

This could include the introduction of a social tariff, which is backed by well over half the population according to recent polling by Opinium, and could be paid for through contributions from energy industry profits (producers, networks and suppliers).

Meanwhile, the loose regulation on exit fees has left bill payers at risk of being stuck on expensive fixed rate energy tariffs or with poor customer service as the cost of leaving a fixed tariff early would leave the household out of pocket.

Exit fees on energy bills 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. A snapshot taken in April 2024 found that 76% of fixed tariffs have annual costs above the Ofgem price cap.

Other rules which have been highlighted in Tariff Watch reports include a lack of transparency in energy firm ownership which has seen British households boost the profits of Chinese and Qatari Government-backed funds as the cost of the gas network has surged 38%.

Questions were also raised about the profits being made by energy firms due to an underinvestment in electricity infrastructure and 14 obscure charges to households’ electric bills. 

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

“These suggestions must be part of a road map to bring down energy bills, improve transparency in the industry and reset Britain’s broken energy system so it is on the side of consumers.

“While these changes to regulation won’t be enough to resolve all the problems we see, it would signal a welcome change in direction.

“We know the Government has the ambition to bring down bills in the long term, but it also needs to look at shorter term measures too.

“Ministers can earn the public’s trust by protecting vulnerable households, reducing energy debt, bringing in changes to energy meters, ramping up insulation programmes, reforming standing charges and ending energy industry profiteering.”

Fiona Waters, spokesperson for the Warm This Winter campaign which commissioned the reports, said:

“The new government has inherited a nightmare set of rules that are clear hurdles to creating the fairer energy system that the public are crying out for. 

“With energy bills forecast to increase again in October, this problem is only going to get worse if new ministers do not step in now. Now is the time to bring back fairness with urgent action to support struggling households through the next winter and a commitment to end profiteering by properly taxing the wider energy industry.”

Dylan Johnson, from Future Energy Associates which compiled the reports, added:

“More can and should be done by the energy regulators. 

“Overall, Ofgem must become more proactive in identifying problems with our energy system and more efficient in enacting the necessary changes to protect the most vulnerable in our society. 

“For now, Ofgem must implement immediately actionable solutions and not shy away from making the key long-term decisions that can achieve a fairer, greener energy system.”

ENDS

Recommendations Addressed by Ofgem / Government (edition of Tariff Watch):
  • Convergence of PPM and Direct Debit Prices (TW1): Ofgem implemented a levelling charge, balancing the standing charges between PPM and Direct Debit customers.
  • Review of Wholesale Energy Allowances (TW1): Ofgem conducted a thorough review and concluded no systematic differences in costs.
  • Reduction on EBIT Allowance (TW1): Ofgem revised the EBIT allowance to include both fixed and variable components.
  • Market Stabilisation Charge (MSC) Removal (TW1): The MSC expired on March 31, 2024.
  • Consumer Standards Consultation (TW2): Ofgem announced reforms to improve customer service, effective December 2023.
  • New Prepayment Meter Rules (TW2): Ofgem set conditions for PPM installations, effective November 8, 2023, although these did not go far enough in addressing the concerns of all campaigners.
Recommendations Not Addressed by Ofgem / Government:
  • Transparency in Cost Calculations (TW3a, TW3b): Ofgem has not improved the transparency or provided detailed breakdowns and machine-readable data formats for DNO and gas network costs.
  • Clearer Explanations for Shifting DUoS and TNUoS Costs (TW3a): Ofgem has initiated a review but has not provided clear explanations or justified the cost shifts.
  • Addressing Chronic Underspending by DNOs (TW3a): It remains unclear what specific actions Ofgem is taking to ensure adequate investment by DNOs.
  • Dynamic Approach to Line Losses Calculation (TW3a): Ofgem has not implemented a dynamic framework for line losses.
  • Management of Gas Network Decommissioning Costs (TW3b): Ofgem has acknowledged the issue but has not detailed specific steps to manage decommissioning costs.
  • Ownership and Ethical Considerations (TW3b): Ofgem has not outlined specific actions to scrutinise and align gas network ownership with national security and ethical standards.
  • Cap on Exit Fees (TW4): Ofgem has not implemented measures to cap exit fees or improve their transparency.
  • Shift Costs from Standing Charges to Unit Rates (Standing Charge Report): Ofgem has closed their call for input on standing charges, but no further steps have been taken to move adjustment allowances, headroom allowances, profit allowances, payment uplift, and levelling costs entirely to the unit rate section of the bill.
  • Shift Policy Costs from Standing Charges to General Taxation (Standing Charge Report): While the Labour Party has indicated a willingness to broadly address standing charges in their manifesto, no concrete steps have been taken yet to move policy costs from standing charges to general taxation.

The full report is available to download. Previous Tariff Watch reports can be downloaded from the reports and correspondence section of the EFPC website.

Changes could halve energy standing charges

A new discussion paper that would see energy standing charges reduced has been published by campaigners.

Future Energy Associates have identified how standing charges for every household with electricity and gas connections could plummet from £334.08 a year to £183.02 – a reduction of almost half (£152.06 / 46%).

For electricity the standing charge would reduce from £219.42 to £149.17 per year (32% reduction) and for gas the standing charge would reduce from £114.66 to £33.85 per year (71% drop). 

Delivering these changes would require changes to Ofgem regulations and Government funding as well as action taken to protect low income and high usage households, such as those who rely on energy for medical needs.

This could include the introduction of a social tariff, which is backed by well over half the population according to recent polling by Opinium, and could be paid for through contributions from energy industry profits (producers, networks and suppliers).

The analysts identified that up to £5bn a year of costs on energy bills could be moved to general taxation. Policy makers could remove these costs from all bills, which would bring down electricity unit rates as well or (for a lower cost to the Treasury of around £200m a year) remove the costs just from vulnerable low income households with high energy needs.

The options paper commissioned by the Warm This Winter campaign includes moves to:

  • Transfer five elements of standing charges (the adjustment allowance, headroom allowance, profit allowance, payment uplift and levelling costs) entirely to the unit rates.
  • Shift some policy costs to general taxation.
  • Revise the ratio of operating costs paid through standing charges versus unit rates to increase the amount on unit costs, thereby delivering an incentive to the energy market to drive down excess costs such as marketing.
  • Reduce the standing charge elements of network costs by 10%, funded by excess shareholder profits.
  • If all these options were taken together (i.e. changes to standing charges and unit costs) these proposals would reduce the total energy bill for the average household by £214.22 a year.

Dylan Johnson, one of the analysts involved in the report, said:

“The comprehensive changes we have suggested would bring down standing charges and could also mitigate negative distributional impacts of standing charge reform previously identified by Ofgem. We would urge new ministers to meet with industry, consumer groups and experts to analyse how we can change standing charges in a way that is fair to all households.”

A spokesperson for the End Fuel Poverty Coalition, commented:

“Standing charges are an unfair flat tax on every energy consumer. Every household pays through the nose just to be connected to the grid, even if they use no energy.

“In the past there has been caution about reform due to the potential impact of change on households with a high dependency on energy for medical needs, we still need further detailed analysis of these options by Ofgem to ensure that this group is not penalised. 

“However, this report does indicate that reform of standing charges may actually be possible in a fair way. It will need Ofgem, the next Government, energy industry and consumer groups to work together to make it happen. The prize of cutting standing charges in half before this winter should be one which new Ministers seize upon.”

Jonathan Bean from Fuel Poverty Action added:

“Millions of us are suffering energy starvation due to high standing charges that leave no money for heating, hot water or power. Many on prepayment meters get cut off. This cruel energy system needs urgent reform by the new Government.”

Warm This Winter spokesperson Fiona Waters said: 

“The energy crisis has already left bill payers £2,500 out of pocket since it started three years ago and we know energy bills will go up again in October.

“People up and down the country are literally at breaking point, are still paying 50 percent more for energy and at the heart of these unfair bills are the standing charges. The public are crying out for action now.

“The next UK Government will need to act quickly, bring down bills for good, end energy debt, improve housing standards through insulation and ventilation and also make Britain a clean energy superpower so we are not at the mercy of profiteering global oil and gas giants.”

For customers in energy debt, campaigners have also called for a universal, consistent, nationwide, debt matching programme funded by the £1.3bn customers are paying through bills for energy debt costs this year. 

ENDS

Standing Charge Reduction Analysis by Future Energy Associates is available to download: https://www.endfuelpoverty.org.uk/wp-content/uploads/Standing_Charges_Final.pdf

Energy debt causing households to live in fear of loan sharks

Households in energy debt are turning to illegal money lenders to pay for their bills and everyday essentials, according to new research shared with the House of Commons Energy Security and Net Zero Committee today.

Research among households in energy debt by the Warm This Winter campaign, found that almost one in five (18%) have turned to illegal money lending sources in the last 12 months. [1]

Among younger households in debt the situation is even worse, with a quarter (24%) of under 35s and a third (32%) of customers aged 35-44 turning to illegal money lending.

In the next 12 months, the illegal debt mountain is due to grow with two-thirds of households in energy debt due to look for more sources of money. While many will turn to credit cards (27%) and overdrafts (14%), 20% will borrow from family and 14% will turn to illegal money lenders.

The impact on households is that 13% of customers in energy debt owe money to someone they are frightened of. This figure rises to 18% among those living with long-term illness and in households with young children under the age of 5.

Simon Francis, coordinator of the End Fuel Poverty Coalition gave evidence to the Committee and presented them with the research findings:

“The findings are horrific and worse than experts had feared. 

“Energy debt is forcing households to wake up in the morning scared of the consequences of using electricity or gas.

“Energy bills and energy debt are a fundamental part of our broken energy system which has led to the cold damp homes crisis we saw this winter. 

“The long term solutions are obviously wider than changes to standing charges and tariff reform. We need to see more insulation, ventilation, unblocked cheaper renewables and weaning ourselves off oil and gas to improve energy security.”

The Committee also heard that Time of Use tariffs, one of the main proposed solutions to high energy bills, risk leaving behind millions of households. Research by Survation for campaign group 38 Degrees found that over half (54%) of the public may become energy exiles – unable to access the latest market innovations due to their household circumstances. [2]

Veronica Hawking, acting campaigns director at 38 Degrees said:

“This research shows millions could miss out on time-specific tariffs designed to lower bills, through absolutely no fault of their own. This includes people who rely on energy for medical needs, who need to leave the house at a regular time of day, or who can’t access a smart meter.

“That’s why it’s crucial that any changes to our broken energy system must be underpinned by a social tariff, and why the government’s U-turn on a social tariff consultation was a huge missed opportunity. Whoever forms the next government must make it an absolute priority.”

As well as introducing a social tariff and banning discriminatory energy tariffs, the Committee heard recommendations on tackling the energy debt crisis. These included:

  1. A universal, consistent, nationwide, debt matching programme funded by the £1.3bn customers are paying through our bills for energy debt costs this year.
  2. A ban on energy firms from selling on debt to debt collectors.
  3. Better regulation of energy debt with energy debt and debt collection agencies used by energy firms to be subject to Financial Conduct Authority rules.
  4. More training for energy firms’ staff in recognising illegal money lending.
  5. Reforms to standing charges, including their abolition for prepayment meter customers if certain conditions are met. [3]

Warm This Winter spokesperson Fiona Waters said: 

“We like to think of ourselves as a civilised society but surely having heat and power is a fundamental human right for everyone and the idea that people are so desperate they are turning to dangerous loan sharks is horrific. 

“It’s extremely worrying to see a quarter of under 35 year-olds in energy debt have no way out other than turning to illegal money lending. This is setting themselves up for a lifetime of being at the mercy of loan sharks and their ilk and I dread to think of the impact this has on young families. 

“We need a government that won’t abandon people with unaffordable energy bills and will instead invest in permanent solutions, like home insulation and homegrown renewable energy.”

Jonathan Bean, from Fuel Poverty Action added:

“Energy inequality is growing to dangerous levels, with millions of us starved of energy or forced into dangerous borrowing. We need a fairer system where everyone is safe, and has access to cheap renewable energy.”

ENDS

[1] Research was conducted among 500 people across the UK living with energy debt. The interviews were conducted online by Sapio Research between April and May 2024 using an email invitation and an online survey. 

Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. In this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 4.4 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample. Sample was selected from Online partner panels. 

[2] Survation polling for 38 Degrees. Survation polled 2,018 members of the general public, online between 26-29 April. Data were weighted to the profile of individuals aged 18+ in UK. Data were weighted by age, sex,  region, ethnicity, education level, and annual household income. The total includes those who are unable to access smart meters, rely on energy for medical or disability needs, have inefficient heating or who are unable to control when they use electrical appliances.

[3] Campaigners have called for reform of standing charges so that:

  • Investment and all policy costs are moved onto general taxation (and an end to the Ofgem “float and true up process”)
  • Reductions in marketing, operating, headroom and EBIT allowances for suppliers and moving marketing and operating costs onto unit charges to improve market competitiveness.
  • Review the £30bn profits in the network and transmission sector and examine the impact of moving network costs onto unit charges.
  • After reforms and reductions in charges, the end to PPM standing charges should be possible, subject to further analysis and equalities impact assessments.

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.