More fuel pain on the way
27/07/2008
EDF Energy has announced that it is putting prices up again with immediate effect for the second time in six months, blaming rising oil prices and the knock-on effect it has on wholesale gas prices. The increases are 22% (or £143) for gas and 17% (or £65) for electricity - and other suppliers are now expected to follow suit. The days of cheap energy are well and truly a thing of the past.
Pensioner campaigning organisations are warning of the dire effects this will have on the millions of pensioner households in the country. Dot Gibson, NPC vice president said: "Today's announcement will have a devastating effect on those older people already struggling to pay their energy bills and is likely to drag thousands into financial hardship.
"Around 2.4m pensioner households are currently spending more than 10% of their income on fuel bills, and for every 1% increase in bills – a further 40,000 older people fall into fuel poverty. Increases like this mean that older people will be facing even higher bills than before and having to make the unenviable choice between whether they can eat or heat."
“It's time the government intervened to prevent the energy companies making profits at the expense of vulnerable pensioners, raised the winter fuel allowance to £500 and regulated social tariffs to give proper discounts to older customers."
Adam Scorer, energywatch Director of Campaigns, said: “Consumers have been bracing themselves for price hikes but the scale of these rises will be a hammer blow to many. The indexation of the price of these two entirely separate commodities must be explored, and if the link is found to be artificial and unfair then action needs to be take to see what remedies can be implemented."
On January 18th EDF Energy made increases of 12.9% (or £74 for gas) and 7.9% (or £28) for electricity. The average household bill for a dual fuel EDF Energy customer was £907 in January 2008, then £1,007 before today’s announcement - and will go up to £1,211 immediately. This makes a staggering increase of 33.5% - or £304 since the beginning of the year.
And the bad news is ...
... that rocketing global wholesale gas prices, the soaring cost of oil and the UK’s lack of storage facilities will continue to impact on prices going forward. If current wholesale gas trading prices continue at over £1 per therm, this could translate into a further 10%-15% going onto household energy bills in the first half of 2009. The brutal reality is that households will have no choice but to adjust to paying far more for their gas and electricity.
Ann Robinson, Director of Consumer Policy at uSwitch.com, said: “After weeks of speculation and warnings, the axe has finally fallen. Although EDF Energy is the first supplier to succumb to the inevitable, this is not going to be a unilateral move – other suppliers are suffering too and are sure to follow suit over the next weeks or months.
“The days of cheap energy are over, and today’s move means we are another step closer to seeing the largest ever increase in household energy bills in one year - potentially 61%. If industry insiders are correct and the average energy bill hits £1,467 by the end of 2008 then spending on energy will account for 5% of the average household’s net income. We are in danger of seeing household energy becoming unaffordable for growing swathes of society.
“This is not just a short-term spike, and consumers cannot afford to ignore it - they need to take action now to stand any chance of limiting the impact of higher prices.
“Online energy plans remain a good option for those who want to pay a lower price now and are happy to take their chances on the market in the future. However fixed or capped price plans could be a lifeline for those who are more vulnerable to price rises. These plans carry a premium, but if you’ve never switched before you will probably still save money immediately by moving to one. However, the best fixed and capped deals are disappearing fast so consumers need to act quickly.”
uSwitch.com is a free, impartial online and telephone-based comparison and switching service, helping consumers compare prices on gas, electricity, water, heating cover, home telephone, broadband, digital television, mobile phones, personal finance products and car insurance. Their aim is to help customers take advantage of the best tariffs and services on offer from every supplier.
For more information visit www.uSwitch.com or call 0800 093 06 07. Alternatively write to: Customer Services, uSwitch.com, 111 Buckingham Palace Road, London, SW1W 0SR, with your postcode and usage details.