Tag: Energy Bills

Energy firms’ profits surge as households left in the cold

Weeks of autumn profit announcements by energy firms have come at the same time as data from the Warm This Winter campaign found that over a third (38%) of people from vulnerable households think they won’t or may not be able to afford to put the heating on at all this winter.

Among the recent announcements were National Grid, which posted profits of hundreds of millions of pounds in their distribution and transmission businesses. SSE also declared  £335m profits in similar parts of its company.

A large part of these profits come from the firms’ role as Distribution Network Operators (DNO) for electricity, which customers pay for through Standing Charges. In practice, it means that these firms can vary the cost of bills for people across different regions it provides electricity to.

For example, in the East Midlands, National Grid customers have the cheapest energy in the UK, but households it serves in south west England are paying £75 more every year in standing charges.

Ofgem has now announced an investigation into Standing Charges and a spokesperson for the End Fuel Poverty Coalition commented:

“The announcement of a Standing Charges review is a welcome step forward. Recent Warm This Winter Tariff Watch reports have highlighted how we need much more transparency in how our energy bills are calculated and the factors that go into calculating what is seen as a fair tariff.”

Another firm which benefits from Standing Charges is Scottish Power which is both an energy distributor and a supplier to households. Its Madrid-based parent company Iberdrola posted profits of 3.4bn Euros for the first nine months of 2023.

The supplier, which was previously named and shamed by Ministers as the worst culprit for forcibly installing prepayment meters, was recently granted 124 warrants for forcible PPMs in a move that has sparked concern among campaigners and politicians.

Jonathan Bean from Fuel Poverty Action, said:

“Firms are celebrating bumper profits whilst energy firms continue their plotting to restart the abhorrent process of breaking into homes to install prepayment meters. 

“It’s yet another example of firms profiting from misery.”

As research for Warm This Winter found that among those badly affected by the energy bills crisis are pregnant mothers and young families, all aspects of the energy industry have enjoyed a profits bonanza.

BP announced £2.7bn profit and Shell reported over £5bn profits.

Shell was recently offered 10 of the new 27 oil and gas licences in the North Sea by the Government. However, an audit of production data by analysts at Uplift found that across the hundreds of licences offered by UK governments since 2010, just 16 days of new gas has been delivered to the grid – half of which was sent to the Netherlands.

Equally, Norwegian firm Equinor’s profits continued to soar – up to £6.6bn according to the latest results. The company will also enjoy a tax break from the UK Government for its controversial Rosebank field.

Reporters at Bloomberg concluded that this field won’t begin pumping oil and gas until at least 2026, and it isn’t large enough to have an impact on the security of UK energy supply or prices

Fi Waters, spokesperson for the Warm This Winter said:

“These profits are shocking as 38% of vulnerable households say they cannot afford to put the heating on at all this winter. That’s pregnant women, the elderly, families with young kids and people with long term illness.

“The Government must step in and provide a consistent Help to Repay scheme for households in energy debt and an Emergency Energy Tariff guarantee which is available to all vulnerable households, regardless of supplier.”

The Emergency Energy Tariff would use the existing Energy Price Guarantee mechanism to fix the unit costs and standing charges for vulnerable groups at a lower level. Campaigners have suggested that this is fixed at the levels of energy bills in winter 2020/21, which would see eligible households’ monthly energy bills reduced by approximately £87 a month from current levels – a saving of around 46%.

Proposals for such a move are backed by 83% of the public and the initial research to inform the development of the Emergency Energy Tariff and targeting of support was undertaken by the University of Oxford’s Environmental Change Institute and Cambridge Architectural Research.

Dr Tina Fawcett, Associate Professor, University of Oxford:

“Our research has helped identify how to effectively target vital support to households most at risk this winter. To avoid future energy bill crises, locally we need more investment in energy efficiency and energy advice, and nationally we must rapidly reduce our dependence on fossil fuels.”

The public can sign the petition supporting an Emergency Energy Tariff online: https://www.warmthiswinter.org.uk/get-involved/emergency-energy-tariff-petition

Ministers told to show leadership on prepayment meters scandal

Ministers must show further leadership and ban the forced transfer of homes onto prepayment meters, according to campaigners.

In a letter sent to the Secretary of State for Energy Security & Net Zero, Claire Coutinho MP, and copied to the Minister for Consumer Energy and the Lord Chancellor, the End Fuel Poverty Coalition has claimed that to date, people across government and industry have tried to “wash their hands of responsibility.”

The latest revelations in the Times on forced prepayment meters (PPMs) showed agents for Scottish Power securing warrants to break into the homes of mothers with young children to force them onto PPMs.

Concerns were raised about Scottish Power by the House of Commons Energy Security Committee after a letter on the issue to MPs from the Coalition. Scottish Power is among the firms being considered by Ofgem as potentially being in a fit state to restart the forced transfer of homes onto PPMs in the coming weeks.

However, according to the letter now sent to the Minister, the Times investigation raises concerns that: “the checks and systems Scottish Power have in place are not fit for purpose. 

“Given the firm has been making progress towards being granted permission from Ofgem to restart forced PPM installations, we believe this calls into question the whole system the regulator has in place.”

In the letter, the Coalition asks the Secretary of State to:

  • Ban the practice of forced prepayment meters outright through legislation in the House of Commons. Ministers rejected the opportunity to do this during the passage of the Energy Act, leaving enforcement up to voluntary codes of practice and licence conditions.
  • Instruct Ofgem that the current ban – which includes switching of smart meters into PPM mode – must stay in place until at least April 2024. 
  • Ensure that Ofgem places Scottish Power under heightened monitoring for all aspects of its customer service and for its dealings with vulnerable customers. Scottish Power and its subcontractors must also be instructed to cancel all warrants it has sought so far and cease any current warrant applications being made.

The letter also highlights the “cloak of secrecy” which magistrates courts operate under and raises concerns that the same poor practices identified in the original PPMs scandal are still present, including distant hearings and nodding through batch applications.  

The End Fuel Poverty Coalition stresses that it recognises energy firms have genuine concerns about the levels of household energy debt caused by record energy bills, but argues for an alternative to forced PPMs – the introduction of a Help to Repay scheme and an Emergency Energy Tariff for vulnerable groups.

Over the summer, the End Fuel Poverty Coalition repeatedly highlighted to regulators and Ministers that the PPMs scandal was in danger of returning, first issuing a warning about energy firms’ conduct on PPMs on 17th May.

On 13th July, in a formal consultation response [pdf], the Coalition warned the regulator about firms’ conduct and in an accompanying press release urged the Government to act, also writing to the Minister highlighting the consultation response [pdf].

On 8 Sept the Coalition wrote to the current Secretary of State asking for a ban on forced PPMs again and on other issues including energy debt. The minister is still to reply to this letter.

Jonathan Bean from Fuel Poverty Action said: 

“This is yet more evidence that energy firms and Ofgem cannot be trusted to protect struggling customers from harm.  

“Forced installations of prepayment meters or switches of smart meters to PPM mode are inherently risky as they can lead to the loss of heating in the depths of winter.”

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

“The Secretary of State must ensure that the regulator, Ofgem, is much more proactive in applying the Code of Practice. 

“The NPC has been assured in writing that no energy provider currently meets the standards and therefore no Court should be undertaking the signing of warrants. 

“The impact on customers put through this process should not be dismissed by the energy industry and government so lightly.”

Warm This Winter campaign spokesperson Fiona Waters added: 

“It’s appalling that Scottish Power were granted warrants which would allow them to force their way into over a hundred homes to install prepayment meters and leave vulnerable people with just £30 credit.

“We now know at least two of those targeted had babies and toddlers which is completely against the Ofgem guidelines. It shows vetting is not working and the only way to safeguard against children being put in danger is to ban this barbaric act and find a better way to help ordinary people who find themselves in energy debt through no fault of their own.”

The full letter can be read online [pdf].

Call for Emergency Energy Tariff as vulnerable households fear the winter

Over half of people from vulnerable households (56%) are worried about being cold this winter, according to new data from Opinium, commissioned by the Warm This Winter campaign. [1]

The figure rises to 63% among people living in a household where someone is suffering from a pre-existing health condition or is disabled.

Meanwhile, over a third (38%) of people from households where someone is under 5, pregnant, over 65 or with preexisting health conditions think they won’t or may not be able to afford to put the heating on at all this winter. Almost two thirds (62%) already want to put the heating on, but are worried about the cost. 

Three quarters (76%) of people living in households with young children will be putting in place measures to keep warm this winter, with almost a quarter (23%) saying the family will be going to bed early to keep warm. 

For people from households where there is an expectant mother, almost nine in ten (88%) are taking cost saving measures, with over a third (35%) of pregnant mothers or their partners saying that they will spend more time in public heated places (for example a library, community centre or warm space).

The energy bills crisis is now predicted to be so severe that a wide range of health, poverty, housing and environmental organisations and academics have written to Chancellor, Jeremy Hunt MP, to request the introduction of an Emergency Energy Tariff.

The Emergency Energy Tariff would use the existing Energy Price Guarantee mechanism to fix the unit costs and standing charges for vulnerable groups at a lower level. Campaigners have suggested that this is fixed at the levels of energy bills in winter 2020/21, which would see eligible households’ monthly energy bills reduced by approximately £87 from current levels – a saving of around 46%. [2]

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The coordinator of the End Fuel Poverty Coalition, which is part of the campaign to introduce the Tariff, commented:

“The reality of this winter is that, without support, we will be a nation sheltering in warm spaces, cowering in one room of our homes or wrapped up inside like the michelin man. This should not be acceptable in a modern society. 

“Failure by the Government to avert this cold homes crisis will lead to pressure on the NHS, a mental health catastrophe and additional winter deaths caused by living in cold damp homes.

“The proposed Emergency Energy Tariff is a specific, targeted, time limited and practically possible intervention which the Chancellor can make to send direct help to households who are most at risk of living in cold damp homes. 

“The Government should meet with charities and industry to finalise the details of the proposal. It can then use the opportunity of the Autumn Statement to send a clear message to the public that Ministers understand their suffering and are prepared to help them stay warm this winter.”

Polling suggests that 83% of the public who have an opinion would support such a measure – with support consistently high among all demographic groups and all parts of the UK [3].

The research also suggests that, among those who will have to cut back on essentials to afford their energy bills or can’t afford them, the plans for an Emergency Energy Tariff would provide them with enough financial support to enable them to avoid the worst of the winter crisis. [4] 

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

“As millions of households batten down the hatches and prepare for a miserable winter in cold damp homes, only the Government can now prevent a winter crisis.

“As well as this emergency tariff for those now priced out of the market, people want to see bills come down permanently, which is going to require government action. We need to see beefed up programmes to insulate homes, more heat pumps fitted, which are cheaper to run, and more homegrown renewable energy built so we can get off expensive gas.”

Jan Shortt, General Secretary of the National Pensioners Convention:

“Government financial support for this winter is absolutely crucial to older and vulnerable people. A longer term effective policy of addressing fuel poverty must contain genuine and active moves to sustainable, renewable and affordable energy.”

The Chancellor has also recently been urged to use the Autumn Statement to tackle record levels of existing energy debt through a Help To Repay scheme, which would be in addition to support for tariffs to prevent debt levels escalating further.

Researchers examined the make-up of groups who think they will or could be  unable to afford to turn the heating on this winter and found little difference between groups who work or do not work and found that 27% of people who are not on benefits can’t or may not be able to afford to heat their home. However, with 50% of benefit recipients saying they will not or may not be able to afford to turn their heating on, campaigners have also called for the Government to upweight pensions and benefits in line with inflation and remove punitive measures such as the two-child benefits cap.

The initial research to inform the development of the proposal and targeting of support was undertaken by the University of Oxford’s Environmental Change Institute and Cambridge Architectural Research.

Dr Jason Palmer, Cambridge Architectural Research:

“Financial support for households struggling with fuel poverty is critical this winter, and only with government help will the most vulnerable people stay out of hospital and avoid anxiety from going into debt. This support should run in parallel with much greater investment in energy efficiency to address fuel poverty and bring down carbon emissions from homes.”

Dr Tina Fawcett, Associate Professor, University of Oxford:

“Our research has helped identify how to effectively target vital support to households most at risk this winter. To avoid future energy bill crises, locally we need more investment in energy efficiency and energy advice, and nationally we must rapidly reduce our dependence on fossil fuels.”

Rachael Williamson, Head of Policy and External Affairs, Chartered Institute of Housing:

“Our members see first hand the impact that high energy prices are having on some of the most vulnerable. Even before the recent rapid increase in gas and electricity prices, approximately 4.5 million UK households were living in fuel poverty. An emergency energy tariff would help provide targeted support for those most at risk this winter. This should be coupled with a longer-term strategy to develop a social tariff, boost energy efficiency and tackle energy debt so we can reduce fuel poverty and carbon emissions.”

Alex Massey, Head of Policy, Public Affairs and Campaigns, MND Association

“People living with MND have been hardest hit by the energy crisis. Many rely on a wide range of personal powered equipment at home to maintain life, health and wellbeing. Consequently, soaring energy costs have placed many households in an impossible financial position. Targeted government investment is now essential to prevent people living with MND being forced to choose between which vital piece of medical equipment to switch off this winter.”

ENDS

Notes to Editors

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

Previous research found that 18% of the population spent last winter in cold damp homes, with a quarter of people with health conditions unable to heat their homes to a safe standard (26%, 4.75m).

[2] Read the pdf of the letter online: https://www.endfuelpoverty.org.uk/wp-content/uploads/231101-Chancellor-AS-Letter.pdf

[3] Polling figures on support for the Emergency Tariff exclude those who responded “don’t know”. Including Don’t Knows still sees consistent support in the high 60s, low 70s percentage. 

[4] On average, researchers found that these groups felt they needed £73 off their monthly bill this winter to make it affordable to heat their homes to a comfortable level. The proposed Emergency Energy Tariff would provide approximately £87 off the bills.

People unable to clear energy debts as calls for Help to Repay scheme increase

One in four people with energy debts (24%) are currently unable to repay, according to new research commissioned by National Debtline.

The debt advice service is leading a coalition of 13 organisations calling on the Chancellor to introduce a ‘Help To Repay’ scheme in the Autumn Statement.

The findings, based on UK-wide research commissioned from Opinium, show that an estimated 6.4 million UK adults (12%) are behind on their energy bills heading into this winter – an increase of more than 824,000 since April.

More than one in five people (22%) say they have cut back on food and other essentials in order to keep up with energy bills (an estimated 11.6 million people). Two thirds (66%) say they will reduce how much they use the heating this winter.

Meanwhile millions of people have sold personal possessions (9%, 4.7 million), used their overdraft (7%, 4 million) and turned to high-cost credit (4%) in an effort to stay on top of rising energy costs.

The research also reveals the difficulties facing people falling behind in resolving their situation. Of those currently behind with their energy bill, 21% said their supplier had not accepted an affordable offer of repayment – and 18% had been unable to get through to their supplier when they tried to contact them to discuss the debt.

One in four (24%) say they are regularly losing sleep worrying about their energy debt.

The findings come as energy debt hit its highest-ever level of £2.6 billion, according to the energy regulator Ofgem.

A coalition of 13 organisations led by National Debtline and including National Energy Action, Scope and the End Fuel Poverty Coalition, have written to the Chancellor, Jeremy Hunt, urging him to introduce a ‘Help to Repay’ scheme to provide repayment matching and debt relief for unaffordable arrears.

Separate National Debtline research shows that almost three quarters of UK adults (73%) think people who have fallen into energy debt due to high prices should be given help to reduce what they owe.

David Cheadle, acting chief executive of the Money Advice Trust, the charity
that runs National Debtline, said:
“High energy costs have left millions trapped in energy debt – and these
households urgently need support this winter. The Government now has only a limited window of opportunity to act, which is why we are calling on the Chancellor to use the Autumn Statement to step in with the help people need.

“Our Help to Repay proposal would help bring down the record £2.6 billion energy debt in the market – and offer a lifeline to people whose incomes simply will not stretch to pay off their energy arrears. It would also have the support of the general public – with 73% backing this kind of government help.

“National Debtline advisers hear every day of the toll that energy debts are taking on people’s lives and health, and the urgency of the situation cannot be underestimated. Crucially, no one needs to go through this alone. I would urge anyone struggling to cope with their energy bills to seek free, independent debt advice as soon as possible.”

Matt Copeland, head of policy and public affairs at National Energy Action, said:
“Debt levels in the energy market are at an all-time high after years of unaffordable prices. And monthly energy bills for many will be higher this winter than the last. The impact that this has on low-income households is
profound. One-third of British adults say they will struggle to pay their energy bills this winter.

“Ofgem’s proposal to raise the price cap as a way of dealing with the increased debt only exacerbates the problem. Failure to provide support to reduce energy bills and energy debt would be catastrophic, leaving millions of households unable to stay warm and healthy this winter.

“A ‘Help to Repay’ scheme would accelerate debt payments, ease the burden on household budgets, and help create a more sustainable energy market.”

James Taylor, executive director of strategy at disability equality charity Scope, said:
“Winter hasn’t hit yet and already Scope’s energy helpline is being inundated with calls from disabled people facing eye-watering amounts of debt. On average, our customers have almost £1,800 worth of energy debt – more than double this time last year. That’s despite cutting back everything they can.

“Life costs a lot more for disabled people, who need more energy to power wheelchairs and breathing equipment, or have the heating on more for their health. The government must defuse this debt timebomb, bring in emergency support for this winter, and keep its promise to consider an energy social tariff which would end sky-high bills for disabled people.”

This month Ofgem announced plans to increase energy bills by £17 per household to reduce the risk of energy firms going bust or leaving the market – a decision that Fiona Waters a spokesperson for the Warm This Winter campaign called  “appalling.” Waters added:

“The government needs to put the public’s need for an affordable energy supply ahead of the demands of energy giants.”

Commons Committee asked to take urgent evidence on forced PPMs

The House of Commons Energy Security Committee has been asked by campaigners to hold an urgent evidence session on the prepayment meters scandal.

Last week Scottish Power was granted 124 warrants by Berkshire Magistrates Court to forcibly enter people’s homes to force them onto prepayment meters (PPMs). 

According to media reports, the magistrate granted all 124 warrants after examining just 20 of them in detail.

One of these warrants was granted against a property in Grimsby, almost 200 miles away.

The End Fuel Poverty Coalition has now written to the Committee outlining more than ten serious concerns about this decision and requesting its help in understanding the circumstances around the warrants. 

The group has asked the Committee to take evidence within the next 28 days from Scottish Power, Richburns Ltd (debt collection agency), His Majesty’s Courts and Tribunals Service and Ofgem.

The forced PPMs scandal rocked the energy industry after investigations by the i paper and The Times revealed the extent energy firms were using the courts to gain warrants to people’s homes to force vulnerable people onto PPMs. 

Expert reports highlight the health dangers potentially caused by people’s PPMs switching off and leaving them in cold damp homes.

These warrants were granted despite a ban on the forced transfer of homes onto prepayment meters still being in place. 

Campaigners have previously written to Ministers to call for a Help To Repay scheme to be introduced to remove the need for forced prepayment meter transfers.

A spokesperson for the End Fuel Poverty Coalition, commented:

“It is totally inappropriate for energy firms to be seeking to force their way into people’s homes to push them onto dangerous prepayment meters in this way. This strategy leaves potentially vulnerable customers at risk of disconnection and going without energy.

“Instead, we need Government and industry to agree to a Help To Repay scheme which will help bring down the astronomical levels of energy debt and help households struggling with the cost of living crisis to get back on an even keel.”

National Pensioners Convention General Secretary Jan Shortt said: 

“It is interesting that Scottish Power had warrants passed before 8 November, when Ofgem’s mandatory regulations covering energy providers are due to come into force.

“We oppose magistrates signing warrants for forced entry in bulk. Magistrates have the overriding power when it comes to human rights, and we expect that they will take genuine steps to ensure that every application for a warrant to force entry to fit a prepayment meter will be vigorously scrutinised to ensure adherence to the Ofgem Code of Practice.  

“We recognise this will cause delays, but the alternative is to breach individual human rights and cause distress to those struggling with paying bills.

“We would prefer to see an end to the use of prepayment meters with an agreed strategy to transfer those customers who do not want them back to a payment scheme that enables them to be debt free.”

Frazer Scott, CEO, Energy Action Scotland commented:

“People are struggling with unaffordable energy costs and spiralling debt. This has reached record levels. Some of the most vulnerable in society have not seen the right levels of support to ensure that their health and wellbeing is protected. 

“The forced movement of people from credit to prepayment places an unacceptable level of risk to the lives of people. Government, regulator, suppliers and our courts are failing to provide meaningful protection. 

“We are dismayed that action has been taken by suppliers and the courts ahead of the introduction of changes to regulations which should ensure that no vulnerable person has to endure being subject to a forced installation.” 

Warm This Winter spokesperson, Fiona Waters said: 

“It’s appalling that Scottish Power have been granted warrants to force their way into over a hundred homes, install prepayment meters and leave vulnerable people with just £30 credit. Prepayment meter users often have to clear debt before they can top them up. We hope Ofgem and the Energy Security Committee will exert all their authority to stop this and not condemn these customers to living without any heating or lighting.”

Jonathan Bean of Fuel Poverty Action added: 

“Scottish Powers’ plan to break into homes, and risk leaving people unable to stay warm this winter, has been exposed. The courts are failing to properly assess most cases, and Ofgem is guilty of wishful thinking. Government must act now to end this inhumane and dangerous practice.”

The full letter is available to read as a pdf.

Consumers need help to repay energy debt, not higher bills

Proposals to increase energy bills further in response to surging levels of household energy debt have been criticised by campaigners.

While energy suppliers made more than £2bn in profits in the first half of 2023 alone, new figures from Ofgem found energy debt reached a record £2.6 billion due to soaring wholesale prices and cost-of-living pressures on households.

A one-off increase to customers’ energy bills of up to £17 a year is now being considered by Ofgem, which the regulator argues will protect firms from customers running up large debts.

But charities and campaigners have called for the introduction of a “Help To Repay” scheme instead of passing the cost of debt onto all households.

The coordinator of the End Fuel Poverty Coalition, commented:

“Households are struggling under the huge weight of energy debt – which has been caused through no fault of their own, but by record energy bills.

“All this time, energy firms have continued to profit from the misery of people racking up debt and living in cold damp homes.

“Rather than pass on more increases to energy bills, the Government needs to work with energy firms to introduce a ‘help to repay’ scheme to help get Britain’s households back onto an even keel.

“Given that the Government is due to hand Norwegian oil giant Equinor a massive tax break for the controversial Rosebank fossil fuel field, there’s an obvious source of money for this support plan.”

Adam Scorer, chief executive of National Energy Action, said: 

“This is the highest level of energy debt we have seen, it is growing quickly and concentrated in the poorest households.”

In June, a range of organisations including the End Fuel Poverty Coalition, Money Advice Trust, StepChange Debt Charity, Scope and National Energy Action wrote to the Secretary of State for Energy Security and Net Zero [pdf] with proposals to set up a ‘Help To Repay’ repayment-matching scheme.

David Cheadle, acting chief executive of the Money Advice Trust, the charity that runs National Debtline, told Press Association: 

“With energy debt at a record high, now is the worst possible time to increase bills further, as Ofgem is proposing.

“Instead, the Government must step in and act now to help households facing unaffordable debt repayments by introducing a Help to Repay scheme to offer payment matching and write-off.

“Doing so would help tackle the record levels of energy debt we are now seeing, without the need to increase energy bills for all customers.”

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

“The fact Ofgem is considering a £17 additional bill on all households is appalling. They say it’s to cover £2.6 billion of energy debt, but that enormous debt just proves ordinary people cannot keep footing the bill for our broken energy system. 

“The government needs to put the public’s need for an affordable energy supply ahead of the demands of energy giants. 

“Why not use the billions that its giving in tax breaks to Norwegian oil giant Equinor for the Rosebank oil field, which will do nothing to lower fuel costs, to write off this debt that people have through no fault of their own. ”

Fixed price tariffs could trap customers on higher bills

The second Warm This Winter Tariff Watch report has revealed that the energy market has 337 fixed price tariffs that are more expensive than the current Ofgem price cap. 206 tariffs will still be more expensive than the predicted January price cap.

Consumers on these tariffs will be paying a penalty for having fixed their energy bills and with an average exit fee of £138, many households could feel trapped into remaining on tariffs which now represent a bad deal.

The report also reveals an unwelcome league table of the exit fees some energy firms charge for leaving a tariff early. [1]

Just one in twenty (6%) British Gas tariffs come with no exit fees – and the firm’s average exit fee is £62. Among the other main suppliers, 12% of EONs tariffs have no exit fees, 14% of EDF and 15% of Ovo’s tariffs are free of exit fees.  Ecotricity, Utility Warehouse, So Energy also had small proportions of their tariffs with zero exit fees.

On the other hand, almost all tariffs for Good Energy, Octopus and Cooperative Energy come with no exit fees. However, one smaller supplier, Ecotricity, charges the highest exit fees, averaging £150.

As unit costs have come down in recent months, but are expected to increase again in January 2024, the report reveals that customers could save money over the next 12 months if offered a “one year fixed” tariff with unit rates and standing charges below the current price cap. [2]

These rates for a direct debit customer are as the below:

  • Standing Charges: Electric 53 p/day, Gas 30 p/day
  • Unit Rates: Electric 27 p/kWh, Gas 7 p/kWh

However, the analysis shows there just ONE dual fuel fixed tariff currently on the market is below these levels. For the best variable deal, the report authors predict that the current best offer could be with two different suppliers.

The report also reveals that energy firms’ operating costs are making up £242 (an average of 13%) of customers’ bills.

In an analysis of firms’ operating costs, the report reveals that energy firms may be spending almost as much on marketing, which includes sponsoring football teams, event venues and creating TV adverts (c.11% of operating costs), as they do on operating customer contact centres (c.12% of operating costs).

Operating costs, which go into the standing charges paid by households, also consist of central overheads, such as office rents and the cost of maintaining energy meters.

The report also reveals that suppliers are now expected to make an additional £140m in profit on the nation’s energy bills over the next 12 months, thanks to changes to the Ofgem price cap which came into force on 1 October.

The new rules mean that firms now make an average £64.70 profit per customer per year, up by £4.70 per customer. The projected 12 month profits for all energy suppliers has hit £1.88bn, an increase of £140m from the previous Warm This Winter Tariff Watch report (an 8% increase).

The predictions are in addition to any profits which firms have already made in 2023, which stand at a conservative estimate of over £2bn. [3]

A spokesperson for the End Fuel Poverty Coalition, commented:

“With energy prices subject to change, customers should exercise extreme caution when thinking about switching and fixing and we would call on companies to waive exit fees so people can switch easily to the cheapest tariff available.

“And while households suffer, the Government sits on its hands and refuses to introduce longer term tariff reforms which could bring down bills and help people stay warm this winter and every winter.

“Indeed, with the Prime Minister recently halting work to improve the energy efficiency of buildings, Britain’s households will be trapped in cold damp homes for years to come.”

Fi Waters, spokesperson for the Warm This Winter campaign which commissioned the report, said:

“Energy firms spending £242 per customer on operating costs adds insult to injury for UK households struggling to stay warm this winter. Customers should not be subsidising fancy headquarters, entertaining and marketing when these companies are making billions. That money should be used to end energy debt and lower bills. It’s yet another example of our broken energy system which the government and energy firms seem to be in denial about.”

ENDS

This press release refers to England, Scotland and Wales only. For full details, methodology and sources, read the full report available at: https://www.endfuelpoverty.org.uk/wp-content/uploads/Tariff_Watch_2_Final_Oct_2023.pdf

[1] Minimum, maximum and average single fuel exit fees per supplier for fixed tariffs in the last two years.​​

Energy firm Minimum exit fee Maximum exit fee Average exit fee Count of zero exit fee tariffs % with zero exit fees
Ecotricity £100 £200 £150 0 0%
Utility Warehouse £25 £75 £46 0 0%
So Energy £5 £75 £27 0 0%
Shell Energy £30 £75 £44 1 1%
British Gas £30 £100 £62 7 6%
E.ON £25 £30 £29 3 12%
EDF Energy £15 £200 £66 29 14%
OVO Energy £30 £75 £37 30 15%
SSE £30 £75 £40 19 33%
ScottishPower £30 £150 £66 66 40%
Outfox the Market £30 £300 £62 24 47%
Sainsbury’s Energy £30 £30 £30 9 69%
Affect Energy £75 £75 £75 25 93%
Ebico Living £75 £75 £75 33 94%
Co-operative Energy £75 £75 £75 85 98%
Octopus Energy £75 £75 £75 249 99%
Good Energy £0 £0 £0 4 100%

[2] Best tariff prices correct as of 2 October 2023. The energy market is constantly changing and customers should always check for the best deal based on their actual usage. The information on suppliers is solely a reflection on tariff prices and takes no other factors into account (e.g. customer service levels, support for vulnerable households etc). Households should always think before they fix. 

Advice provided in this press release should not be seen as formal financial advice. Energy prices are volatile and subject to significant changes at short notice. Ofgem updates its price cap calculations every quarter. Future Energy Associates advise that households who suspect they may be on overly expensive energy tariffs should explore alternative options on price comparison websites, consult with their energy suppliers, or seek guidance from consumer advocacy groups, such as Citizen’s Advice to determine the most suitable steps for them.

[3] Declared profits from 2023:

Among the firms which also provided energy, but whose supply side profits are harder to quantify EDF, profits lept to £2bn (€2.3 billion) in the first half of 2023. Ofgem is consulting on plans to make profits reporting more transparent.

Government isolated as organisations line up to back energy tariff reform

Over 140 charities, organisations and MPs have taken joint action to call on the government to support vulnerable households with their energy bills.

In an open letter sent to the Prime Minister [pdf], the groups highlight how the government is yet to announce any winter financial support, despite households facing even higher costs of living and with energy bills still at relative highs.

According to new polling carried out for National Energy Action by YouGov, a third of British adults are expecting to struggle to afford their heating bills this winter if the government doesn’t offer financial help with energy bills.

The government has previously committed to consult on future approaches to consumer protections including a social tariff. This was promised on repeated occasions, as the End Fuel Poverty Coalition has highlighted to the Speaker of the House of Commons.

But with the next winter looming and no consultation launched, the signatories to the letter are urging the government to make good on its commitment to consult on a social tariff.

Adam Scorer, CEO at National Energy Action, said:

“With a third of households expecting to struggle to heat their homes this winter, the cost of energy will remain simply unaffordable for millions.

“We have to face reality. Even without a price rise, which now looks likely in January, the crisis is deepening, and it demands a proper response from government now.

“That means urgent targeted financial support this winter and for government to get moving on its commitments to consult on and deliver a longer-term social tariff for energy.”

Caroline Abrahams CBE, Charity Director of Age UK, said:

“We believe the introduction of a comprehensive, targeted energy social tariff is the best way to deliver support to those who need it. That’s why we are calling on the government to keep their promise and launch a consultation. Older people struggling to heat their homes have waited patiently only to learn that in fact there would be no social tariff consultation before the autumn.

“With estimates showing that high energy prices are here to stay, at least for the next two winters, this targeted support package cannot come soon enough for our older population.”

Louise Rubin, Head of Policy at disability equality charity Scope, said:

“Life costs a lot more for disabled people. When you rely on energy for equipment to help you breathe or get out of bed, cutting back on energy is not an option.

“Last winter pushed disabled people and their families to the brink. Now disabled people who’ve cut back everything they can are facing the terrifying prospect of even higher energy bills.

“We’re hearing from people who have been forced to go without food for days. One person told us they’d been surviving on food donations from a neighbour.

“We need emergency support now, and a social energy tariff to end sky-high bills for disabled people. The government must keep its promise.”

Frazer Scott, CEO of Energy Action Scotland, said that a social tariff is essential for health and wellbeing:

“That we are still having to argue a case for a social tariff as we approach autumn is a disgrace. People need to know that essential and basic levels of heat and power are within reach.

“The UK government must work with regulators and energy suppliers to create a long-term, fair and affordable social tariff. Millions of households are approaching this winter with significant amounts of debt. This means that while gas and electricity prices remain at historically high levels, energy bills are simply unaffordable for those on the lowest incomes, those with essential medical needs, the disabled and older people. It is exacerbated by poor-quality housing, that is cold and damp. This is fast becoming a humanitarian crisis unfolding in plain sight of our politicians and policymakers.”

A Department for Energy Security and Net Zero spokesperson told Press Association that the Government “continues to keep all options under review for those most in need.”

But a spokesperson for the End Fuel Poverty Coalition responded:

“MPs on the Energy Select Committee back reform to energy tariffs, MPs on All Party Parliamentary Groups back reform, charities and campaigners back reform, the public backs reform. Even energy firms support reform.

“The only people left who do not support making our energy system fairer are Rishi Sunak and his Cabinet. They need to wake up to the strength of feeling on this issue and take action now to keep people warm this winter – and every winter.”

Ofgem price cap change sets sky high energy bills for winter

People will still feel the pain of high energy bills this winter as a new Ofgem price cap comes into force from 1 October 2023. 

Decreases in the unit costs of energy are offset by higher standing charges, the wider cost of living crisis harming people’s ability to pay high energy bills and a lack of financial support from the Government compared to last winter.

The latest Cornwall Insight predictions are that energy bills will increase from 1 January 2024 and stay high throughout the rest of next year.

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

“From 1 October, all households in every part of the country will pay more on energy standing charges, more into the profits of energy firms and many are more in debt to their suppliers.

“Average energy bills are still almost double what they were three years ago and Government help for households, which was available last winter, has been axed. This means this winter will feel worse for many households.

“If Members of Parliament on the House of Commons Energy Security Committee can see problems households will face, why can’t the Government? The MPs’ recent report on tackling the energy bills crisis sets out sensible recommendations to help vulnerable households and Ministers need to implement these ideas immediately.”

Paying MORE on standing charges

  • Standing Charges are paid by customers every day they are connected to the grid – and they are a postcode lottery with customers in Merseyside and North Wales paying significantly more than those in London.
  • Compared to winter 2020/21, daily standing charges for gas are up 8% and for electricity up 119%. The cost of every unit of energy used is also significantly higher:
Daily standing charges and unit costs in pence. 

Based on what the average customer paid (on a standard variable tariff, paying by direct debit).

 Ofgem Price Cap from 1 Oct 21 Ofgem Price Cap from 1 Aug 22 EPG Rate from 1 Oct 22 EPG Rate From 1 Jan 2023 EPG Rate From 1 April Ofgem Price Cap from 1 Jul 23 Ofgem Price Cap from 1 Oct 23
GAS UNIT (kwh) 4.07 7.37 9.9 9.84 10.3 7.51 6.89
GAS Standing Charge 26.12 27.22 28.49 28.49 29.11 29.11 29.62
ELECTRICITY UNIT 20.8 28.34 32.36 32.42 33.2 30.11 27.35
ELECTRICITY Standing Charge 24.88 45.34 46.36 46.36 52.97 52.97 53.37
Source: End Fuel Poverty Coalition records of Ofgem and BEIS/DESNZ data
  • Analysis of Ofgem data by the End Fuel Poverty Coalition, suggests that customers on standard credit terms pay substantially more for their energy than those on direct debit – with gas standing charges 18% higher, electricity standing charges 13% higher and unit costs also c.5% higher:
Uplift from direct debit cost to Standard Credit cost for customers on the standard variable tariff. Ofgem Price Cap from 1 Oct 21 Ofgem Price Cap from 1 Aug 22 EPG Rate from 1 Oct 22 EPG Rate From 1 Jan 2023 EPG Rate From 1 April Ofgem Price Cap from 1 Jul 23 Ofgem Price Cap from 1 Oct 23
Gas Unit Uplift 3.44% 5.29% 7.58% 8.74% 0.00% 5.33% 5.22%
Gas Standing Charge Uplift 27.07% 17.56% 17.73% 17.73% 17.97% 17.97% 18.13%
Electricity Unit Uplift 5.34% 5.33% 7.97% 10.55% 0.00% 5.35% 5.27%
Electricity Standing Charge Uplift 18.53% 12.84% 13.03% 13.03% 12.35% 12.35% 12.48%
Source: End Fuel Poverty Coalition records of Ofgem and BEIS/DESNZ data

Paying MORE into profits of energy firms

  • Ofgem has changed the rules on energy firms profits. This means suppliers are likely to earn 2.4% profit on every average customer’s bill from 1 October – up from 1.9% currently.
  • These new arrangements include a fixed component and a percentage component on top of that, rather than the whole value being a larger percentage of the total bill. Experts from the Warm This Winter campaign calculate that customers will only pay less profit to energy firms than before if their bill is above a staggering £4,000 a year.
  • The Warm This Winter Tariff Watch report estimated that energy firms will rake in almost £2bn in profits over the next 12 months. In addition to the record profits already announced in 2023. 

Many people are MORE in debt to their energy firms

  • Figures from Ofgem revealed that almost 1.2m customers disconnected from their energy supply in the first three months of 2023, while the average household energy debt for homes not on a payment plan is £1,214 on electricity bills and £965 on gas bills. Figures from the Money Advice Trust suggest that this “bad debt” is just the tip of the iceberg.
  • Customers on prepayment meters are especially hard hit by energy debt levels, with data secured under freedom of information requests by 38 Degrees showing that PPM customers are £1bn in debt on their meters, making them more likely to disconnect as their top up amounts are deducted to pay off their debts.
  • Citizens Advice data found that in the first 6 months of 2023, 7.8 million people have had to borrow money to cover their energy bills and 1.2 million children live in households which have had to go without heating, hot water and electricity. The charity has issued a warning that if the Government doesn’t step in, these numbers will rise this winter.
  • The Money Pensions Advice Service also found that nearly one in five buy now, pay later (BNPL) customers have used this payment method for essentials. Case study evidence from the Fuel Bank Foundation reveals that energy customers are also turning to high-interest payday loans to cover their energy costs.

Price cap history chart (source: End Fuel Poverty Coalition records using Ofgem, BEIS / DESNZ and Cornwall Insight data)

Cap change date Average annual household bill change (GBP) Average annual household energy bill (GBP) % change from last period YOY change Change from Pre-Energy Bill Crisis Change from Pre-Ukraine Invasion
01-Oct-20 -120 1042 -10.33% -11.62%    
             
01-Apr-21 96 1138 9.21%      
01-Oct-21 139 1277 12.21% 22.55% 22.55%  
             
01-Apr-22 693 1971 54.35%      
01-Oct-22* 129 2100 6.54% 64.45% 101.54% 64.45%
             
01-Apr-23* 400 2500 26.84%      
01-Jul-23 -426 2074 -17.04% 5.23% 99.04% 62.41%
01-Oct-23 -151 1,923 -7.28% -8.43% 84.55% 50.59%
01-Jan-24** 9.24 1,932 0.48% -7.99% 85.44% 51.31%
01-Apr-24 -64.55 1,868 -3.34% -25.29% 79.24% 46.26%
01-Jul-24 -45.6 1,822 -2.44% -12.15% 74.86% 42.69%
01-Oct-24 52.05 1,874 2.86% -2.54% 79.86% 46.76%

* Figures from 1 Oct 2022 include EPG and EBSS. Figures from 1 Apr 2023 include EPG. 

** Figures from 1 January 2024, the figures use a new “average household” usage calculation. Using the old estimates indicate even more significant increases throughout 2024.

Figures in italics taken from Cornwall Insight and are predictions.

Winter energy crisis inevitable warn MPs

MPs on the House of Commons Energy Security Committee have warned that another winter energy crisis is “inevitable” without further Government support for households.

The cross-party Committee took evidence from organisations, including the End Fuel Poverty Coalition members, energy firms and regulators. The final report acknowledges that more support for energy bills will be needed this winter.

End Fuel Poverty Coalition members put forward examples of dangerous behaviour that households resorted to in order to try and keep bills down last winter. But despite the Government help for households last winter, almost 5,000 excess winter deaths were caused by living in cold damp homes.

In its final report, the Committee recommended that the energy firms improve the customer service and the empathy shown to households this winter – as well as providing a priority crisis line for charities working with the most vulnerable.

MPs also suggested that the Government must take steps to get 2022 Energy Bills Support Scheme cash to households who missed out, extend the Warm Home Discount and reform cold weather payments. It also recommends radical overhaul of standing charges and the introduction of a social tariff for vulnerable households.

The coordinator of the End Fuel Poverty Coalition was one of the experts called to give evidence to the Committee. They commented:

“This is a welcome report full of practical recommendations that could help avert the looming cold homes crisis this winter.

“We’re disappointed there is nothing specific in the report to help the millions of households in debt to their energy firms and who are running just to stand still with their payments. Frontline charities have recently backed proposals sent to ministers to introduce a “Help to Repay” scheme to tackle the growing mountain of energy debt.

“But the big elephant in the room is if the Government will listen to the eminently sensible suggestions from MPs and take urgent action to keep people warm this winter.”

Recently the End Fuel Poverty Coalition wrote to the new Secretary of State to issue a warning about the risks of the winter ahead and to offer additional suggestions to help tackle fuel poverty in the short and long term.

This week the Coalition, which is part of the Warm This Winter campaign, also joined more than 400 organisations to write to the Prime Minister asking the Government to think again about weakening of net zero policies which could cause lasting damage to the UK economy.

For poverty campaigners, the PM’s decision to rule out increased energy efficiency standards comes with serious implications. New Citizens Advice figures revealed that private renters wasted £1.1bn this year on energy that leaks out of their homes, with this figure now set to continue.

A spokesperson for the End Fuel Poverty Coalition said:

“There is a real-life cost to the PM’s posturing – especially for the millions of households who rent from a private landlord. Many will now face high bills and cold damp homes forever after being abandoned by the Government.

“Last winter, the health problems caused by living in cold homes mounted up. The Prime Minister and Energy Secretary should be focussed on providing help for households to survive this winter and improve their living conditions in the long run.

“We need the Government to double down on support for households, including improving energy efficiency and reforming electricity pricing markets to ensure customers can enjoy the advantages of more affordable renewable electricity.”