Energy bills jump by more than 50% in a decade despite lower consumption

3rd March 2014

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The typical amount spent by UK households on energy bills soared by more than 50% between 2002 and 2012 even though consumption actually dropped by 17% over the decade according to official numbers writes Philip Scott.

The Office for National Statistics (ONS) in a report titled Expenditure on Household Fuels, 2002-2012, shows trends in spending on gas and electricity over the period.

It concluded that households spent an average of £106 a month on electricity, gas and other household fuels in 2012, compared to £69 a month in 2002.

After adjusting for inflation using the Consumer Price Index (CPI), this means there was a 55% increase in average household spending on energy between 2002 and 2012.

But over this same time period, household energy use has fallen, with figures from the Department of Energy and Climate Change (DECC) showing that the average amount of energy used per household was 17% lower in 2012 than in 2002, highlighting that the increase in the average spend is explained solely by rises in energy prices.

Average household energy use has fallen for a number of reasons. These include the installation of energy efficiency measures (such as loft and wall insulation, and more efficient boilers), households responding to higher bills by reducing use, and generally increasing public awareness of energy consumption and environmental issues. However, energy prices have risen faster than average household consumption has fallen, resulting in rising average bills.

Most of the increase in average spending on energy came between 2004 and 2009, reflecting the significant increases in energy prices, which occurred over this period. By 2009, the average household spent the equivalent of £108 a month (in 2012 prices) on energy. Since then, there has been relatively little change in the average monthly spend on energy.

The limited change in expenditure since 2009 may be explained by a combination of factors, including a fall in domestic energy prices in 2010, and price rises in subsequent years appearing to be offset by lower energy use, partly due to milder winter temperatures says the report.

Commenting on the findings of this report, Tom Lyon, energy expert at comparison site uSwitch says: “Today’s figures highlight that energy is becoming increasingly unaffordable for many consumers. Our own research shows that the average annual energy bill for a household, using the same amount of gas and electricity each year, has rocketed by £800 or 169% from £472 in 2004, to an eye-watering £1,272 a year today.

“The impact of rocketing bills is clear and consumers are having to ration their energy use; over seven in 10 households  have gone without heating at some point this winter because of the cost and over a third say these cutbacks are affecting their quality of life or health. What’s more is that over eight in 10 expect household energy to increase again this year which means these figures could be even higher by next year.

“However, rather than compromising on health, I would urge consumers to take a few simple steps which could help them keep a lid on bills. There is currently a £284 difference between the cheapest and most expensive tariff on the market, so shopping around could really put pounds back into pockets.”

Jeremy Cryer, energy spokesperson at price comparison site, Gocompare.com, adds: “The report from the ONS confirms what we all know – that energy prices are approaching unsustainable levels for large swathes of the population.

“That the average monthly spend on energy rose from £69 to £106 between 2002 and 2012, while consumption fell by 17%, clearly points to energy price rises as being the main reason behind why people are now paying much more for their heating and lighting. And the grim truth is that, since 2012, this trend has shown no signs of abating.”

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