Wednesday, 21 September 2011

Energy suppliers and Government launch Warm Home Discount

EDF Energy last week became the final one of the Big Six suppliers to reveal inflation-busting increases.

Yet Your Money can reveal a bid to ease the pain of rocketing bills will ignore millions of families who need help the most.

Experts fear this year’s double dose has plunged another 840,000 ­households into poverty, leaving 6.9 million with a daily struggle to afford heating. Until now, suppliers tried to lessen the blow by offering ­cheap-rate deals – known as social tariffs – to those facing hardship.

In 2009/10, firms provided an average discount of £84 each to 1.6 million customers. But many people don’t know they exist and suppliers have different rules on who qualifies.

To tackle this, the Government has launched the Warm Home Discount, setting legal targets for suppliers to help the most needy.

Under the scheme, costing £1.1billion over four years, those deemed the most vulnerable will automatically get electricity rebates of £120 in the first year, eventually rising to £140.

You don’t have to apply, instead letters will be sent to those who qualify, with the money credited to accounts by next March. There are different arrangements for pre-payment meter customers.

The vast majority of people getting help – more than 600,000 households – are pensioners, the ­Department of Energy and Climate Change said.

Yet only ­households who get the guarantee element of pension credit will receive the money this winter.

Pensioners who only get the savings element, because they’ve put money aside, won’t get the rebate until later years, depending on age.


The boost is in addition to winter fuel payments for pensioners.

This will see households with someone under 79 get £200 this year, down from a temporary jump of £250 last year.

For those over 80, the amount is down from £400 to £300.

It’s also in addition to cold weather payments that older people (along with disabled households and ­families with children under the age of five on income-related benefits) get in extreme conditions during the worst months of the year.

But, while the scheme is a positive step, critics are worried about the many others facing a bleak winter.

Industry regulator Ofgem is talking to suppliers about how to provide emergency help but the DECC admits as few as 26,000 households in what it calls a “broader group” will get the £120 rebate this year.

This will rise to 650,000 by 2014/15 but they will have to apply rather than get the rebate automatically.

Yet it’s a fraction of those struggling to make ends meet, with campaigners fearing this year’s price hikes will leave as many as 12 million people in “fuel poverty” – defined as spending at least 10% of their income on energy.

The automatic rebates for pensioners came after the Department for Work and Pensions shared information with suppliers about who is in need.


“We want to see more measures to protect the poorest from energy price rises so that families aren’t sitting in the cold this winter.”

Suppliers’ trade body the Energy Retail Association says social tariffs will be offered for the next four years, so those who don’t get rebates at first still benefit from cheaper deals. Policy adviser Alun Rees said: “The rebates are just one way of helping those in fuel poverty. Another is energy ­efficiency and suppliers will have invested £5.5billion in providing things such as insulation by the end of 2012.”

EDF Energy will raise gas prices by 15.4% and ­electricity by 4.5% in November, following recent hike announcements by British Gas, npower, E.ON, ­Scottish Power and ­Scottish & Southern Energy.

Since November, suppliers have increased average prices by £224, or 21%, leaving the typical family facing an annual bill of nearly £1,300.

Tom Lyon, energy expert at comparison website, said: “You cannot have two ­consecutive rounds of energy price hikes in less than a year without seeing ­casualties.

“The visible victims are the 6.9 million, or over a quarter of all ­households, now living in fuel poverty, but they are more than matched by those who struggle to pay their bills and are starting to ­self-ration their usage.

“We are in danger of seeing energy becoming an ­unaffordable luxury instead of a ­household basic.

“My concern is the impact will really become apparent this coming winter.

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