Energy bills – consumers still £53 worse off than last January following half-hearted retreat on price hikes by ‘Big Six’

8th January 2014

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Consumers are still £53 a year worse off on average due to energy bill price hikes despite recent cuts to some bills due to government action on the climate levy.

U-switch says that despite the change in government policy and cuts in bills passed on in wide range of ways by the different energy firms if at all, that households are worse off than last year.

The firm says the cuts have done little to combat the impact of sharp price rises. Reductions average out at £40 or 3%. This will make the average household energy bill £1,264 a year, still leaving consumers paying £53 or 4.3% more for their energy than in January last year when the average annual bill was £1,212.

Npower has become the last of the big six energy suppliers to reveal what action it will be taking to cut prices following the Government’s review of levies on energy bills. It will be cutting prices by £38 on 28th February with a further £12 rebate due to be made on bills later this year.

The comparison firm says that recent changes to prices will have left many consumers confused, with some suppliers hiking their prices last year, only to partially reverse their hikes this year. It points out that in addition, while British Gas has already pushed through its reversal (1st January), SSE customers will have to wait a further three months (24th March), which means they will miss the benefit on their winter bills.

It notes that suppliers have taken different stances over which customers will benefit from reductions, with some cutting prices for all and others excluding customers on fixed price tariffs. And while suppliers have committed to holding prices into 2015, most have added a caveat to say that if wholesale prices, or other costs, increase substantially and for a sustained period of time then they could still push prices up again.

Even more importantly the cuts pale into insignificance against the back drop of a decade of soaring prices. In 2004 the average household energy bill was £472 a year[2]. In March this year once all the cuts come into effect the average bill will be £1,264 a year – an eye-watering £792 or 168% increase, which has made energy unaffordable for many households today. As a result, growing numbers are being forced to make drastic cutbacks with over eight in ten expected to be rationing their energy use this winter due to cost.

Ann Robinson, Director of Consumer Policy at uSwitch.com, says: “These cuts are welcome, but simply skim the surface of the hikes that went before them. The fact is that even once the decreases take effect consumers will still be left £53 out of pocket. Even more disappointing is that many won’t even get to feel the benefit this winter while some won’t get to feel the benefit at all.

“What is clear is that there is only so much the Government has been able to do to help consumers – it’s now time for consumers to help themselves. There is £274 difference between the cheapest and most expensive tariffs on the market[5], which means there is significant scope for consumers to give themselves a real price cut by shopping around and particularly looking at what small suppliers have to offer.”

Supplier Pre-hike bill Post-hike bill Hike effective Bill after levy reduction Cut effective Reduction for fixed and variable? Holding prices?*
British Gas £1,191 £1,306 23/11/2013 £1,265 1/1/2014 Yes Yes until Summer 2015
EDF Energy £1,190 £1,237 03/01/2014 £1,237 N/A No Yes until 2015
E.ON £1,226 £1,240 18/01/2014 £1,240 N/A No No guarantee but says ‘likelihood has receded for next 18 months’ (Spring 2015)
npower £1,220 £1,332 01/12/2013 £1,299 28/2/2014 No Yes, until Spring 2015
ScottishPower £1,230 £1,325 06/12/2013 £1,284 31/1/2014 Yes, in part** Yes, until 2015
SSE £1,211 £1,304 15/11/2013 £1,259 Mar-14 Yes Yes, until Spring 2015
Average £1,212 £1,291   £1,264      

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