Energy News

Fuel Poverty Faces One in Four

Tuesday 09 September, 2008

By hazel.cottrell@consumerchoices.co.uk

One quarter of the British population will experience fuel poverty by 2009

A new report entitled “Energy Prices and Debt”, by the National Housing Federation has revealed that as a result of energy price rises, one in four Britons will face fuel poverty by the end of next year.

The study suggests that 5.7 million UK households will spend at least 10% of their income on energy bills - an increase of 100% compared with 2005. Bills will reach more than £1,406 (compared with £676 in 2005) which will mean that 13.4 million people (23% of the population) will be pushed into fuel poverty within the next two years.

The report follows price hikes from all six of the major energy suppliers, including British Gas (www.britishgas.co.uk), which recently announced a record price increase of 35% for gas and 9% for electricity.

The Federation said that low income households will be the worst affected, with price rises affecting pre-payment schemes. The report revealed that energy suppliers charge pre-payment meter customers far more than those who are billed quarterly. It suggested that these customers will pay up to £65 more by 2010.

Indeed, recent research by the consumer group Energywatch calculated that the average pre-payment customer already pays £159 a year more than those paying by direct debit and a full £322 more than a customer who signs up to a direct debit tariff online. British Gas came out worst in the report with the difference between its pre-payment tariff and its online deal totalling £567.

Ruth Davison, Federation Director of Campaigns and Neighbourhoods, said: “The findings of our survey are shocking and show that we now have a full-scale national energy crisis.”

Calling for action from the government, she continued: “Energy companies must be regulated so that they can no longer charge prepayment meter customers grotesquely high tariffs, a cap must be put on the prices they charge, and they must be made to use their profits to pay for their social and energy efficiency responsibilities rather than piling these costs on the already crippled consumer.”

Chris Eagle, Commercial Manager at Energy Choices is shocked by the report. He says: “Pre-payment meters have always been grossly more expensive, with most of those on a pre-payment meter having no choice but to pay this way. The issue of “penalising the poor” in the current climate is unacceptable and the government must take action.”

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