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Are you paying more but using less energy?

Energy prices up

Ever get the feeling that despite reducing your energy usage your bills aren’t get any smaller? Well, it’s not just you – our research shows energy price increases of over £410 a year compared to a decade ago.

Interestingly, the Department of Energy and Climate Change stats show that we’ve cut down our energy use by 17% over the last decade. So we’re using less but not feeling the benefit when it comes to cost savings.

Our analysis shows yearly spending on energy has rocketed by 52%, over and above inflation.

This means households are shelling out an extra £410 per year on their energy bills, on average. And as Red Magazine succinctly put it in its response to our research, this means many of us will be wrapping up warm again this winter:

Energy price increases

So how does this compare to other price increases? Well, the rise in energy costs are around five times greater than the rise we’ve seen in rents over the same period. Over the same time frame water costs have gone up by 62% and food by 42%.

Energy price increases compared to other costs

With such massive energy price increases over the past decade, big reforms are needed. We hope these will restore confidence in the energy industry and give us fair prices.

At a time when rising energy prices are our number one concern, we think it’s shocking that people are paying more despite using less. That’s why it’s all the more urgent that government acts to give us confidence that the price we pay for energy is fair.

How much more are you paying for your gas and electricity these days? Do you think you’re actually using less energy than you used to?

Comments
Member

The energy companies currently operate a system which enables them to charge whatever they like to make sure their profit margins stay healthy. They are able to increase your DD payments willy nilly according to their own estimates or fail to pass on price reductions if you have opted for variable ‘pay what you use’. Our dependency upon them to keep warm during the winter months to survive is taken advantage of and puts you in a lose lose situation. Scottish Power owned by Spanish firm Iberdrola made a profit of nearly 1 billion euros last year, according to a report in The Guardian Money on 11th October, and no doubt my sizeable credit surplus must have contributed to that figure.

What is the point of trying to economise on our energy consumption if you are being systematically robbed by these large consortiums on any savings made. Is it not time for consumers to be given the legal right to establish their own set of terms and conditions through conciliation with Ofgem to protect us from what amounts to blatant exploitation of an essential commodity? Are smart meters with all their obstacles and concerns the only remedy to achieve a fairer way forward to counter this
abuse of consumers custom?

Member

I wonder what the increase would be if the government levies were stripped out of the figures. I am thinking here of the Renewables Obligation, the Feed In Tariff scheme, the Warm Homes Discount scheme,and the Energy Companies Obligation. I make no comment on the policy objective and effectiveness of each scheme but I fail to understand why they cannot be funded – more equitably – from general taxation [but not by increasing the 5% VAT rate for gas and electricity!].

Member

Policy and regulation costs typically were 8% of a bill in 2007 and are now 15%, set to become 23% in 2020, according to a breakdown I have seen.
Why tax domestic energy? It is as essential as housing and food and these are not taxed.

Member

Thanks for the figures Malcolm – that’s nearly a tripling of the percentage over a 13 year span, and it’s worse than it appears because these percentages are, of course, levied on bigger real-terms bills and compounded by the fact that less energy is actually being consumed. Perhaps the levies have now reached such a level that it would be politically impossible to transfer them to taxation, but it could produce a more equitable distribution of the burden. At the moment people on benefits are paying high energy bills including charges for somebody else’s solar panel profits; sometimes it might be circular in that they get a Warm Homes Discount paid for out of their own contributions. There are some arguments in favour of taxing energy [to curb waste and incentivise energy conservation] but that could be done through a tiered rate process. Every time we take money out of people’s pockets and wash it through a bureaucratic machine it shrinks and loses value in the process.

Member

I couldn’t agree more. I have this last week received an updated version of Scottish Powers terms and conditions, needless to say most work in their favour.

If it were legally possible to create a consumers list of terms and conditions, top of my list would be for any credit balances over £100 should be refunded within a stipulated timeframe.

More suggestions would be very welcome..

Member

Beryl – Over the years, I had to call e.on and their predecessors about refunding credit balances and raising my direct debit when there was obviously no need. When I switched to Scottish Power, a year ago, I asked if they would do the same. The person I spoke to was quite open about the company aiming for customers to build up a credit balance over the summer to help cover winter bills. Here is what is on the SP website:

“You can always request a credit balance refund and we’re happy to arrange this. However, you can often build up a credit balance through the summer months, so we’d recommend leaving this balance on your account to pay for the extra energy you’ll use during winter.

In most circumstances you don’t need to do anything, if you have built up a credit balance we will automatically refund this to you after your annual review.”

I don’t doubt that many would prefer to have a fixed monthly payment but I would be happier to pay energy companies the amount I owe, whenever the meter is read.

Member

I agree with you and since there are already so many fancy tariff structures I don’t see why this option cannot be available for those who want it. The SP method seems to be the same as how E.on do it but it has led to a yo-yo-ing of my direct debit payments over the last eighteen months as they try to get my payments to conform to their profile by the time of the annual review without actually returning any money to me. Their efforts have not been helped by the fact that as a new property there was no historic consumption data [hence it was generously overestimated at the outset], the weather was kinder than usual and meant less gas was used for heating, we took more steps to conserve energy and adjust controls to reduce consumption, and we have been able to spend more time away from home. It’s about as scientific as Bernie the Bolt in “The Golden Shot”.

Member

Being retired, at least we have time to sort out these problems and even write about them, John. 🙂

I have never had any problem in getting e.on (and their predecessor, Powergen) to make a refund or to cancel a proposed increase in direct debit. On a couple of occasions, the person I spoke to said they could not understand why the DD had been increased in view of the credit balance and I was once invited to choose what DD to pay. On the other hand, others have had difficulties in getting refunds on credit balances of many hundreds of pounds, as has been reported on Which? Conversation and elsewhere.

This morning I found a 2009 article on the Guardian website saying that Scottish Power would pay interest on balances in excess of £100 but I’m not aware that this has happened. I believe that Ovo pays 3% on credit balances. That seems like a good investment but I imagine they are good at refunding credit balances.