Energy Bills Archives - Page 2 of 11 - End Fuel Poverty Coalition

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.

Councils warn on Household Support Fund while Scottish fuel payments axed

More than four out of five councils in England expect demand for welfare support to increase over the winter, according to the Local Government Association.

However the Household Support Fund, which is the main route for councils to provide assistance, will close in September as central government funding will run out. This has left six in 10 local councils saying they will be unable to provide extra welfare support.

The Household Support Fund was introduced by the previous government in 2021 aimed at helping people struggling to buy food, pay bills and cover other essentials.

A spokesperson for the End Fuel Poverty Coalition, commented:

“The Household Support Fund is one of the last lines of defence against poverty for hard-pressed families and vulnerable people.

“We have publicly commended the Government in taking some of the long term measures to tackle high energy bills, such as the drive for more renewable energy and a Warm Homes Plan. But these solutions will take time to bring down bills.

“In the meantime, households of all ages will need more support from the Government to stay warm this winter, not less.

“As well as extending the Household Support Fund, we urge the Chancellor to rapidly consult with consumer groups to reverse planned changes to Winter Fuel Payments, to introduce support to end energy debt and expand the Warm Homes Discount.”

The Scottish Government has also now outlined how the UK Chancellor’s cuts to winter fuel payments will affect pensioners in Scotland.

Plans to means-test Winter Fuel Payment in England and Wales will see the Scottish Government’s funding for the scheme cut by up to £160 million.

The Winter Fuel Payment UK benefit was due to be replaced by a Scottish alternative – but ministers have confirmed it will be means tested, while the roll out has been delayed.

Age Scotland said the government in Edinburgh has been left with no decision but to replicate plans to means-test the Winter Fuel Payment.

Frazer Scott, chief executive of Energy Action Scotland, commented:

“The UK Government has left little choice for the Scottish Government but to remove this vital support from hundreds of thousands of older households.

“It is a real body blow for pension age households struggling to pay for unaffordable energy.

“Confirmation of the loss of this income for budget conscious older households will undoubtedly put additional pressure on health and advice services putting health at risk. This is not a fairer system, it widens inequalities.

“Deeper and more targeted support is need to ensure that older people can stay warm this winter and help them avoid unrepayable debt. A reformed support not a wholesale removal from many who are just above the level of means tested benefits.”

The End Fuel Poverty Coalition spokesperson added:

“This is a decision essentially made in Westminster by the Chancellor, but it is pensioners in Scotland and across the rest of the UK that will pay the price.”

Letter to the Chancellor on Winter Fuel Payments

Charities have written to Chancellor, Rachel Reeves MP, to set out the challenge now faced by pensioners this winter and ask the Government to reconsider its plans to axe Winter Fuel Payments.

The full text of the letter is below.

To:

Rt Hon Rachel Reeves MP, Chancellor of the Exchequer

Copied to:

Rt Hon Ed Miliband MP, Secretary of State for Energy Security and Net Zero

Rt Hon Liz Kendall MP, Secretary of State for Work and Pensions

Rt Hon Darren Jones MP, Chief Secretary to the Treasury

Miatta Fahnbulleh MP, Minister for Energy Consumers

Monday 5 August 2024

Dear Chancellor,

The Winter Fuel Payment to pensioners has been a settled part of support to help older people stay warm each winter for years.

The decision to remove the Payment to all but a small minority of pensioners will see millions more older people face the prospect of spending this winter in cold damp homes.

This has the potential to create a public health emergency. The impact of living in cold damp homes is particularly harsh on those older people with a disability, a long term health condition or with poor mental health.

It results in these people turning to an NHS that is already under stress and in some cases, can result in additional winter deaths.

We understand the arguments for means testing the benefit, but the approach you have taken is the wrong one.

We urge you to rapidly consult with consumer groups to broaden the targeting of the Winter Fuel Payment, to introduce support to end energy debt, expand the Warm Home Discount and extend the Household Support Fund.

For the medium term, we recommend that the Government reforms standing charges and consults on how a social tariff could protect the most vulnerable in society from the cost of energy.

We have publicly commended the Government in taking some of the long term measures to tackle high energy bills, such as the drive for more renewable energy and a Warm Homes Plan. But these solutions will take time to bring down bills.

Energy bills are due to increase further on 1 October, meaning that a pensioner who no longer receives Winter Fuel Payment, will experience a real-terms increase in their energy bills of up to 15% in winter 2024/25 compared to winter 2023/24.

Unless we see urgent action from the Government to keep people warm this winter, one of the first actions of the new Government will be to condemn more vulnerable households to fuel poverty.

We would be happy to meet with you to discuss this further.

Yours sincerely,

End Fuel Poverty Coalition

Disability Poverty Campaign Group

Fuel Poverty Action

National Pensioners’ Convention

Disability Rights UK

Warm This Winter

350.org

Community Action Northumberland

Advice for Renters

Fairer Housing

Scope

Green Rose CIC

MND Association

The Printing Charity

VOICES ADFOCAD

Surrey Coalition of Disabled People

Bringing Us Together

Independent Age

Agewell CIC

Adult Social Care Warriors

Zero Hour

The Working Class Climate Alliance

38 Degrees

High Peak Green New Deal

Voluntary Organisations Disability Group (VODG)

Community Housing Cymru

Hackney Foodbank

Equal Right

Global Witness

Harrow Association of Disabled people (HAD)

Bristol Reclaiming Independent Living

WinVisible (women with visible & invisible disabilities)

The Climate Coalition

Community Money Advice

Climate Cymru

Clynfyw Care Farm

Stop Climate Chaos Cymru

Pontypridd Land Society

Awel Amen Tawe

Cardiff Quakers

Ffynnone Community Resilience

Climate and Community

Tir Natur

Egni Cooperative

The Coproduction Network for Wales

Climate Shop

Gwyrddni

The One Planet Centre

The Mentor Ring

Sustainable Wales

Datblygiadau Egni Gwledig

XR Cardigan

Friends of the Earth

Medact

Image Credit: Martin Suker / Shutterstock

Pensioners face surge in winter energy bills

The Chancellor’s decision to cancel the Winter Fuel Payment for most pensioners will leave millions of older households facing an inflation-busting energy bills increase this winter.

A combination of the end of the Winter Fuel Payment and a likely increase in energy prices from 1 October will mean that the average older household will see their energy bills increase by up to 15% in real terms, compared with winter 2023/24. [1]

Charities have written to Rachel Reeves MP this week to set out the challenge faced by pensioners and ask the Government to reconsider its plans.

The letter, signed by over 50 organisations, says:

“The decision to remove the Payment to all but a small minority of pensioners will see millions more older people face the prospect of spending this winter in cold damp homes.

“This has the potential to create a public health emergency. The impact of living in cold damp homes is particularly harsh on those older people with a disability, a long term health condition or with poor mental health.

“It results in these people turning to an NHS that is already under stress and in some cases, can result in additional winter deaths.”

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

“In the meantime, households of all ages will need more support from the Government to stay warm this winter, not less.

“We urge the Chancellor to rapidly consult with consumer groups to broaden the targeting of the Winter Fuel Payment, to introduce support to end energy debt, expand the Warm Home Discount and extend the Household Support Fund.”

The letter ends by warning ministers that:

“Unless we see urgent action from the Government to keep people warm this winter, one of the first actions of the new Government will be to condemn more vulnerable households to fuel poverty.”

Members of the public have also been asked to write to their MPs through the Warm This Winter campaign or the Independent Age website urging the Government to think again. Hundreds of thousands of people have also signed petitions on the Age UK and 38 Degrees websites. [2]

National Pensioners Convention General Secretary Jan Shortt commented:
“I seriously believe the Chancellor has underestimated the harm her decision will cause to older people still struggling with energy costs and facing higher rates in October. It is absolutely shocking that the new Labour government should treat older, vulnerable people in this manner. The triple lock alone will not enable them to keep up with energy bills.”

Jonathan Bean from Fuel Poverty Action added:

“Making heating even more unaffordable for those trying to survive on basic pensions is a cruel and reckless move that will cause widespread suffering, and increased NHS admissions this winter. Instead we need an energy pricing system that guarantees everyone the essential energy they need to stay warm and safe.”

Jacky Peacock from Fairer Housing said:

“While it makes sense to withdraw the payment for wealthy pensioners, the bar has been set too low. We’re asking the Chancellor to re-think this move to allow pensioners on modest incomes to enjoy their home in comfort this winter without the worry of how they will be able to afford it.”

Jenna Fansa from Hackney Foodbank commented:

“We urge the government to widen the eligibility criteria for Winter Fuel Payments. Last year we saw a 95% increase in the number of older people coming to our food bank due in part to rising food and fuel costs. For many, it’s a choice between having the heating on or going hungry. Restricting the criteria only to those on certain benefits will cause more anxiety for many pensioners and will inevitably bring more pressures for food banks like ours.”

Morgan Vine, Head of Policy and Influencing at Independent Age, said:

“It is not an overstatement to warn that, in its current form, this sudden change puts lives at risk. Pension Credit has an unacceptably low take-up at just 63%.

“This means up to a staggering 1.2 million older people who are eligible could be missing out on money they need to turn their heating on. On top of this, every day we hear from older people who just miss out on Pension Credit but still struggle to pay their energy bills. They could now be heading into winter without this important lifeline.

“We urge the Chancellor to not make this change now, and instead ensure every older person has an adequate income to avoid financial hardship before removing the Winter Fuel Payment.”

Ken Butler, Welfare Rights and Policy Officer at Disability Rights UK said:

“The removal of winter fuel payment from millions of pensioners, many of them Disabled people, is shameful. Many pensioners live on the margins of poverty and need more heat and energy to manage their health conditions and charge their health-related equipment.

“In addition, due to a DWP backlog assessing pension credit claims, award decisions are taking several months to be made. Because of this, many eligible pensioners could miss out on fuel payments this winter.”

ENDS

For a full copy of the letter visit: https://www.endfuelpoverty.org.uk/letter-to-the-chancellor/

[1] Average energy bills in winter 2023/24 were GBP1,834 – but for households receiving the full GBP300 Winter Fuel Payment this would have been GBP1,534.

Average energy bills for winter 2024/25 are forecast to be GBP1,762 according to analysts Columbia Threadneedle (accessed 22 July 2024). This means the average household who received the full Winter Fuel Payment in 2023/24 will now pay 14.68% more for energy in winter 2024/25.

[2] Age UK petition stands at over 138,000 and the 38 Degrees petition stands at over 105,000 as at 1500 on 2 August 2024

Charities condemn Chancellor’s Winter Fuel Payment decision

Charities have lined up to condemn the new Chancellor’s decision to restrict the Winter Fuel Payment (WFP) to a smaller group of older households.

Age UK estimate that more than 800,000 older people living on very low incomes – under £218.25 a week for single pensioners and under £332.95 for couples – who are already missing out of the Pension Credit, will now lose the WFP that helps them to pay their fuel bills.

In addition, the charity estimates that there are also about a million pensioners whose weekly incomes are less than £50 above the poverty line, who will also be hit hard by the loss of the Payment.

Finally, older people whose incomes are a little higher, but who live in energy inefficient homes and/or who are seriously unwell and need to keep the thermostat turned up high in order to protect their health will also suffer.

This equates to around 2m pensioners forced into fuel poverty. In addition, Warm This Winter data suggests that another 2.9m pensioners will now face financial difficulty this winter due to the decision. [1]

Caroline Abrahams, charity director at Age UK said:

“We strongly oppose the means-testing of Winter Fuel Payment (WFP) because our initial estimate is that as many as two million pensioners who badly need the money to stay warm this winter will not receive it and will be in trouble as a result – yet at the other end of the spectrum well-off older people will scarcely notice the difference – a social injustice.

“It is well established that pensioners tend to do everything possible to avoid going into debt so if they are worried about their future energy bills we know their likely response will be to ration their fuel use and economise by reducing their spending on other essentials. This proposed policy change is therefore certain to result in more older people experiencing a horrible ‘eating or heating’ dilemma.

“Means-testing WFP this winter, with virtually no notice and no compensatory measures to protect poor and vulnerable pensioners, is the wrong policy decision, and one that will potentially jeopardise their health as well as their finances – the last thing they or the NHS needs. With winter now just over the horizon, the Government should halt their proposed change to WFP and think again, given the clear evidence of how it will hurt the older people who need it the most.”

National Pensioners Convention General Secretary Jan Shortt said:
“This is devastating news for millions of older people whose income is literally just a few pounds above the threshold to receive pension credit.

“These people are already barely able to make ends meet – this move effectively wipes out any benefit they receive from the triple lock increase on the state pension.

“I seriously believe the Chancellor has underestimated the harm her decision will cause to older people still struggling with energy costs and facing higher rates in October. It is absolutely shocking that the new Labour government should treat older, vulnerable people in this manner. The triple lock alone will not enable them to keep up with energy bills.”

Matt Copeland from National Energy Action commented:

“Today the Chancellor announced that the Winter Fuel Payment will only be given to pensioners receiving benefits going forward. Although this would make the policy more progressive, it will leave many pensioners who need support, without it. One third of fuel poor households do not receive benefits. They should not be forgotten.

“Energy prices remain high and are due to increase again this winter. This creates a significant challenge for low income households. Any funds raised from this policy change should go towards helping low income and vulnerable energy customers this winter as a priority.”

A spokesperson for the End Fuel Poverty Coalition added:

“When Rishi Sunak threatened to axe Winter Fuel Payments in September 2023 we said that this could be a death sentence for pensioners who are only just about managing to keep out of fuel poverty.

“Nothing has changed.

“Energy prices are still high, people are still struggling with the cost of living and this dangerous decision by the Chancellor could condemn pensioners to living in cold damp homes this winter.

“Figures for the Warm This Winter campaign suggest that almost half of over 75s could now see their winter heating budget torn to shreds as they have modest incomes and will not now be eligible for the payment.

“The Chancellor must urgently think again and consult with older people’s charities on a better way to target this support to a wider group of pensioners.”

Jonathan Bean from Fuel Poverty Action, said:

A spokesperson for Independent Age commented:

“Today’s decision to end the Winter Fuel Payment for those not receiving Pension Credit risks driving hundreds of thousands of older people into further financial hardship. We welcome the Chancellor’s intention to tackle the low uptake of Pension Credit, however means testing the Winter Fuel Payment now will mean too many older people will fall through the cracks and not get the vital financial support they desperately need, especially when household bills like energy are still extremely high.

“Pension Credit has an unacceptably low uptake at just 63%. This means a staggering 880,000 older people who are eligible could be missing out on money they need to turn their heating on. On top of this, every day we hear from older people who just miss out on Pension Credit but still struggle to pay their energy bills. They could now be heading into winter without this important lifeline.

“We understand the UK Government needs to make some tough choices, but today’s announcement demonstrates just how important it is for all older people facing financial hardship to receive the money they are entitled to. We also hope the new UK Government will take this opportunity to work cross party to determine what an adequate income in older age is and ensure that everybody receives it so that nobody lives in poverty in later life.”

ENDS

[1] 2m based on Age UK calculations. 2.9m based on Opinium data for Warm This Winter (December 2023) and based on the number of pensioners with an income of GBP20-30k a year combined with population estimates from the ONS.

Further energy firm profits set to be announced

Further energy firm profits will be announced this week as new Ministers are still to set out the measures that will be taken to keep households warm this winter.

Iberdrola (owners of Scottish Power), Equinor, Centrica (British Gas), EDF and Drax are all expected to post financial results this week.

A tracker that monitors the declared profits of firms ranging from energy producers through to the firms that control our energy grid as well as suppliers suggests that these five firms alone have profits running well into the hundreds of millions in recent years.

Warm This Winter spokesperson Fiona Waters said:

“Frankly it is just obscene. In fact it’s hard to grasp the mind boggling sums involved but it equates to global energy fat cat corporations making a billion pounds each week under the last government since the energy crisis started three years ago.

“That is why we have to bring back fairness and introduce a proper tax on all companies profiteering in the energy sector while six million people in the UK are living in fuel poverty, facing a stark choice between heating and eating.

“We welcome the new government’s pledge to prioritise lowering energy bills as part of the green energy transition, they have inherited a broken energy system but we must see urgent action to support struggling households through the next winter.”

In total, energy corporations have made nearly £427 billion in profits since the energy crisis according to the analysis of company reports to June this year.

A spokesperson for the End Fuel Poverty Coalition added:

“These figures show that there is plenty of money in our broken energy system. But rather than this money being used to help people struggling in cold damp homes and with the record cost of energy, the cash is being used to line the pockets of energy firms.

“As households struggle in energy debt and even turn to illegal money lenders, new ministers must step in. We need to ensure the most vulnerable households are protected with a more comprehensive warm homes discount, action to bring down energy debt and the Treasury must draw a line in the sand to stop this profiteering.”

Tessa Khan, executive director of Uplift added:

“The UK’s high dependence on expensive gas is why millions are still struggling with unaffordable energy bills. Energy companies obviously want to lock us into oil and gas for years to come to keep the profits rolling in, but the only way to reduce bills is to insulate homes and switch to homegrown renewable energy. We need to see the government now deliver on its commitment to move us off oil and gas and onto a better, fairer energy system.”

The energy industry profit tracker will be updated again at the end of the summer.

ENDS

Data extracted from the Energy Firm Profits Tracker. EDF has claimed that since 2018, the firm has invested double what it has made back into Britain, investing £2 for every £1 it has made. In 2023 EDF spent £3.6bn strengthening the country’s energy security and boosting jobs, compared to £3.4bn profit from the UK business.

Reaction as Labour win UK general election

Labour has won a landslide victory in the UK general election as years of staggering energy bills have left households £2,500 out of pocket due to Britain’s broken energy system.

Research published earlier this year found that people are turning to loan sharks to pay their energy bills, millions of people are living in cold damp homes and many are experiencing a mental health crisis driven by high bills.

A spokesperson for the End Fuel Poverty Coalition commented:

“The new Government has said that we will see change and that they will lower energy bills, insulate homes and invest in homegrown clean energy while getting us off oil and gas.

“But Ministers inherit a broken energy system which has prioritised oil and gas company profits while millions of ordinary people have shivered in cold, damp, mouldy homes they can’t afford to heat.

“Lowering bills permanently will take time, but short term steps can be taken to help struggling and disillusioned households.

“The new Government must earn the public’s trust by protecting vulnerable households, reducing energy debt, driving more onshore wind, bringing in changes to energy meters, ramping up insulation programmes, reforming standing charges and ending energy industry profiteering.”

Actions new Ministers will be asked to consider include:

PROTECT VULNERABLE HOUSEHOLDS – Consult on a social tariff, but in the short-term introduce a more comprehensive warm homes discount for vulnerable households so that fewer people have to choose between heating and eating.

REDUCE DEBT – Introduce a Help to Repay scheme to offer a lifeline to millions of people who are trapped in energy debt through no fault of their own, and ban energy companies from selling debts on to debt collectors.

ONSHORE WIND – Lift the de facto ban on onshore wind, which is one of the quickest and cheapest forms of electricity generation to get up and running and supported by nearly 8 in 10 Brits, so that we can start to reduce our dependence on volatile oil and gas.

METERS – Ban the forced installation of prepayment meters for good and require suppliers to fix broken smart meters so that consumers are only ever charged for what they use.

INSULATION – Invest in insulating our leaky housing stock so that vulnerable people do not have to spend yet another winter shivering in cold, damp, and often dangerously mouldy homes.

STANDING CHARGES – Reduce electricity and gas Standing Charges to bring down energy bills for everyone ahead of the next price cap change in October and consult on a social tariff so that vulnerable high-users are not unfairly penalised.

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

“The UK’s dependency on expensive gas is why our energy bills have soared and why so many people have struggled to afford to heat their homes. People have seen through some politicians’ smokescreens and misinformation about net zero.

“With only 103 days of new gas reserves left in the dwindling North Sea it’s no wonder people have rejected candidates who argued for more drilling.

“We need to reduce our reliance on fossil fuels and the energy firms that have made £427bn in profits in the last few years. We need to end energy debt, protect households from the energy market, bring down bills for good, improve housing standards and make Britain a clean energy superpower.”

Greenpeace UK’s co-executive director, Areeba Hamid, said:

“This landslide victory has buried Sunak’s divisive anti-green agenda once and for all and is a powerful call for change. Voters have resoundingly rejected his climate rollbacks and elected a party with a proper plan to turbocharge cheap, clean, renewable energy – promising to slash emissions, lower bills and deliver hundreds of thousands of new green jobs.

“However, the Green surge and success of the Lib Dems, who stood on much bolder climate and nature pledges, shows that there is a genuine appetite from voters for much stronger green policies from the government. Keir Starmer must take note.

“Our new Prime Minister must show real leadership on climate and nature – both at home and abroad – demonstrating that the green transition can be done in a fair and equitable way. He must seize the opportunities for economic revival and energy independence that delivering a greener, cleaner Britain presents.

“But to do that he must take on the elites, increase taxes on the super-rich and polluting companies, and invest, invest, invest. Invest in cheap, clean power and create new, secure green jobs for workers. Invest in warm homes, trains and buses to lower our energy bills and transport costs for good. Invest in greener farming and restoring nature so our rivers become free from sewage once more and wildlife can flourish. This is the change people voted for – it’s time for Starmer to deliver.”

Tessa Khan, executive director of Uplift
“The public has voted for a government that is promising to fix our broken energy system and tackle the climate crisis.

“Scottish Labour’s platform of green growth and the transition to clean energy, in particular, delivered huge gains. People in Scotland know that the North Sea is in decline – with jobs supported by oil and gas more than halving in the last decade, despite hundreds of licenses being issued in this period – and that clean energy is the only way to deliver a fairer and more secure energy system in the long term.

“The lesson for all politicians is that policies that tackle the climate crisis and lower bills are popular with the British public, with the Greens making gains and the Conservatives’s backtracking on environmental commitments losing them support in large parts of the country.

“This new government must now get on with the crucial job of rolling out renewables and insulating homes to lower bills, and ensuring that the UK has a coherent transition plan that ensures workers and communities benefit from the shift to green energy.”

A spokesperson for Climate Cymru added:

“The UK parties with the most robust climate manifestos have quadrupled their number of MPs. The parties with strong climate manifestos have doubled them. There is a strong public mandate for action and it is time to get on with it.”

Angela Terry CEO One Home commented:

“British citizens want to go green but don’t know how so public education is critical. The new Government must prioritise tackling climate change and in particular insulating people’s homes to keep the heat in and reduce bills and carbon emissions for the long term.”

£1,071.98: The energy price cap households could have had

Energy bills are set to fall by 7% on 1 July as the new Ofgem price cap comes into force, but campaigners have claimed the figure could be £500 lower if measures had been taken to mend Britain’s broken energy system.

Insulating homes, reducing standing charges and removing VAT from energy bills would have significantly reduced household’s costs, according to analysis by the End Fuel Poverty Coalition. [1]

With the Ofgem price cap expected to rise again by around 10% in October 2024, the next Government has been urged to implement proposals to bring down the cost of energy from day one.

Chief among the asks for new ministers are to launch a comprehensive plan to bring down standing charges, provide more support for vulnerable households this winter and create more energy efficient homes (by strengthening minimum energy efficiency standards in the private rental sector and laying the statutory instruments needed for the Future Homes Standard and the Clean Heat Market Mechanism).

A majority (57%) of the public also back a social tariff, designed to offer cheaper energy to vulnerable households.

A social tariff is a discounted energy bill for people in greatest need, such as those people that have low incomes and are elderly, have young children or rely on energy for medical needs. It could be paid for by the £427bn in profits that have been generated by the whole energy industry since the start of the energy bills crisis. [2]

Campaigners have also called for the next Government to introduce a universal, consistent, nationwide, energy debt matching programme funded by the £1.3bn customers are paying through bills for energy debt costs this year.

A spokesperson for the End Fuel Poverty Coalition commented:

“Throughout the energy bills crisis we have seen sluggish progress on insulating and ventilating our homes, bringing down standing charges, moving to cheaper energy sources and bringing in comprehensive support for vulnerable households with their energy bills.

“Had we seen more concerted action on all these fronts, then the Ofgem price cap coming into force on 1 July would be £1,071.98 – £496.62 lower than what the average household is going to be paying.

“Given energy bills will stay high for the foreseeable future we now need the next Government to act quickly after the election to end energy debt, protect households from the volatile global energy market, bring down bills for good, improve housing standards and make Britain a clean energy nation.”

Warm This Winter spokesperson Fiona Waters said:

“Energy bills will go up again in October and years of staggering prices have taken their toll. Customers are already £2,500 out of pocket because of Britain’s broken energy system and now we know they are going to continue to be penalised if we don’t see the reforms we need.

“As well as the plans to insulate homes, bring down standing charges and provide support through a social tariff, we also need to see new renewables schemes that, according to the House of Commons Library briefings, are able to generate electricity more cheaply than fossil fuels.”

Juliet Phillips, UK energy lead at E3G added:

“It’s been repeatedly shown that investing in long-term, clean solutions to fix our broken energy system will bring bills down permanently.

“The British public backs common-sense proposals to upgrade our homes and ensure that everyone can afford to heat their home. We urge all political leaders to make this a national priority, and take action before energy bills are set to soar again this winter.

“Without action, households are set for another £200 price rise in the Autumn, as the UK remains dependent on expensive foreign gas.”

ENDS

[1] The cost was calculated by taking the following steps:

Take published Ofgem unit rates and standing charges for the average household based on current typical domestic consumption values (average use) of £1,568
Reduce gas consumption levels to reflect impact of improving insulation in home, in line with the ECIU model (brings average bill to £1,348.80)
Reduce unit costs to reflect the lowest available unit cost available on the market (Future Energy Associates database, brings the average bill to £1,292.28)
Reduce standing charges and adjust unit costs in line with Future Energy Associates discussion paper, published on 20 June 2024 (brings bill down to £1,124.95)
Remove VAT at 5% (£1,071.98)

Figures and methodology peer reviewed by Chris Galpin at E3G.

[2] Data as at 6 June 2024. Researchers examined the declared profits of the 20 firms the End Fuel Poverty Coalition is most asked to comment on. This sample of the industry ranges 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). It does not include supply chains nor market trading firms.

Energy giants have pocketed just under £427 billion in profits since the energy crisis started according to a new analysis of company reports. Over £34 billion of these profits (the equivalent of over £1,153 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. Standing charges have risen 147% in recent years for electricity and 15% for gas.

The last update was on 1 April 2024 which showed industry profits of £420bn with £30bn from networks and transmission.

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, please email info@endfuelpoverty.org.uk.

Ofgem called on to keep the ban on energy acquisition tariffs

A coalition of consumer organisations and energy firms is urging Ofgem not to lift the ban on acquisition-only energy tariffs, which could lead to existing customers being excluded from the best deals and risk opening the door to loyalty penalties.

Ofgem has said it is minded to remove the ban on acquisition-only tariffs – which would be used by energy suppliers to attract new customers or lure switchers from rival firms – from 1 October 2024. It has consulted on this and is due to reach a final decision imminently.

Existing customers would not have access to these deals and Which? is concerned consumers who want to stay with their current supplier could be left worse off. These customers – and new ones whose initial deal expires – face being hit by so-called “loyalty penalties” as their bills jump in subsequent years.

New Which? research shows the public are opposed to cheap deals that exclude existing customers.

The consumer champion has written to the regulator alongside Eon, Octopus, So Energy, Rebel Energy, End Fuel Poverty Coalition, Citizens Advice and Fair by Design, calling for it to reconsider its proposals to lift the ban on acquisition-only tariffs.

In the letter, the organisations warn of the risk of “a return to a market which discriminates against loyal customers”. They also raise the potential impact on customers in debt, who may not be able to switch but could also find themselves struggling to access a better deal with their current supplier under the plans.

The letter highlights the lessons of recent history, when more than 30 suppliers went bust – many after trying to win customers with unsustainably cheap tariffs.

Which?’s latest survey findings show eight in 10 (81%) people would think it was unfair if their supplier was offering cheaper deals to new customers only. A similar number (78%) said they would think this was unfair even if they would potentially benefit in the short term by signing up to a discounted deal.

Rocio Concha, Which? Director of Policy and Advocacy, said:

“Our research has shown that consumers overwhelmingly believe cheaper energy deals only available to new customers are unfair – even when they might stand to benefit.

“That’s why Which? and a coalition of energy firms and consumer organisations have written to Ofgem warning them not to lift the ban on acquisition-only pricing.

“Allowing deals exclusively for new energy customers could open the door to loyalty penalties and would come at the expense of those who wish to stick with their current supplier on their best deal.”

A spokesperson for the End Fuel Poverty Coalition, commented:

“Removing the ban on acquisition tariffs will create price discrimination against loyal customers and also hurt further the millions of households who can’t switch to a new supplier because they are in energy debt.

“Removing the safeguard also means risking a return to the unsustainable form of competition in the energy market that existed before 2021. Suppliers collapsed partly because they had grown too quickly in a market driven by acquisition tariffs.

“Ultimately energy bill payers bore the heavy price of these collapsed firms through the Supplier of Last Resort programme which added billions to households’ standing charges.”

ENDS

The joint letter is available on the Which? website at this link.

Two-thirds of bill payers call for automatic energy credit refunds

Over two thirds of bill payers (68%) are calling for energy suppliers to automatically return any credit in their account after winter following the success of a mass protest which saw 20,000 demand their cash back. [1]

Over 20,000 customers joined the Big Energy Credit Claim Back launched in May, which urged supporters to reclaim unused customer credit. The campaign is set to end on July 1 when households need to start saving again for winter.

The protest was launched after an investigation revealed UK energy suppliers are sitting on over £3 billion worth of customer credit, with nearly a third of UK households (32%) in the black to their energy supplier all year.

Further analysis found that the combined bank interest energy suppliers have made through customer credit balances was at least £159 million in 2023.

Bill payers have claimed back an average of £330 [2] from energy suppliers in the mass protest organised by the Warm This Winter coalition which is now calling on the next Government and Ofgem to introduce an automatic credit return of people’s cash after each winter.

Warm This Winter spokesperson Fiona Waters said:

“People are fed up with energy suppliers keeping hold of their cash, making millions in interest on it and then customers often struggle to get their money back from reluctant suppliers. It’s common sense that after winter, if they have credit on their account it should automatically be returned to them and that’s why so many people joined the Big Energy Credit Claim Back.

“The campaign proves that by a simple measure, bill payers can slash on average over £300 from their annual energy bills which is much needed and there is no real reason why an automatic cash back isn’t implemented.”

Customers who pay their energy bills by direct debit are incentivised with better deals to spread payments over 12 months, building up a pot of credit from July onwards to cover the winter months when they will be using more energy on heating.

In May, if their account is in credit, then experts, including Martin Lewis have pinpointed this as the time to reset their balance and get back credit before they start saving again in July.

But under the current system, this is not automatic and instead the onus is on consumers to claim back their credit which can be complex and in some cases suppliers do not return the excess credit.

New research by Warm This Winter on how easy it is to claim back credit revealed nearly a third of bill payers found it difficult to get credit back.

Over a quarter (26%) felt their direct debit payments had been set too high, with OVO first for high direct debits (31%), followed by British Gas and Eon Next (29%) and EDF taking third place at 28%.

Of those who got their credit back, just over half (56%) were paid quickly, for 17% it was paid after a fortnight or more, with 12% still waiting for their money to be returned at the time of polling and 12% were refused their money even though they were in credit.

And over a quarter (28%) never even attempted to claim back their credit.

A spokesperson for the End Fuel Poverty Coalition commented: “Credit hoarding by energy suppliers must become a thing of the past.

“Over a third of people in permanent credit to their energy firms live in households with low incomes and may have cut back on energy use or other essentials because the direct debits set by energy firms are far too high.

“Let’s hope that once general election fever is over the regulator wakes up and introduces a new licence condition on suppliers that credit balances are refunded after each winter on an opt out basis.”

The Warm This Winter research conducted by Opinium this month which surveyed over 2,000 people across the UK also revealed a third of people (33%) who paid by direct debit found understanding how their direct debits were calculated was difficult and a similar number (32%) of UK adults felt it was also hard to understand how much energy they use.

Groups that also backed the Big Energy Credit Claim Back include 38 Degrees, National Pensioners Convention and Fuel Poverty Action, have also called for Ofgem and the next government to close this loophole.

Matthew McGregor, CEO of 38 Degrees said:

“The fact that so many people have taken matters into their own hands by joining this campaign shows just how broken our energy system is – and how much people are still struggling with the cost of living.

“We are currently in the midst of a cost of living election, and the next Prime Minister must take bold action to support struggling families – such as by establishing a proper social tariff for energy bills.”

Jan Shortt, General Secretary of the National Pensioners’ Convention said: “It is important that energy suppliers play fair with their customers. Holding onto excess credit and collecting interest is not acceptable when everyone is still finding it hard financially.

“Energy suppliers making it difficult for customers to be repaid their credit must be taken to task by the Regulator. Clearly, automatic repayment is the answer as the onus is not on older people to search for ways to get their credit back.”

Jonathan Bean from Fuel Poverty Action added:

“It’s disgraceful that Ofgem has allowed energy firms to hoard our money during the cost of living crisis. Our money should be refunded automatically, with interest. Energy firms are deliberately overcharging and making it hard to get the refunds we are due. This exploitation must stop.”

ENDS

[1] Opinium research conducted a nationally and politically representative online survey of 2,185 UK adults between 29th and 31st May 2024.

[2] Based on respondents to the Warm This Winter follow up survey of BIg Energy Credit Claim Back supporters, week commencing June 10.