The average household energy bill is already close to £1,000 a year, and with a new round of price hikes currently underway, 2008 could well be the year when the cost of heating and powering your home finally smashes through in to four figures.
Last week, Npower welcomed in the new year by unveiling a 13 per cent rise in its electricity prices, and an eye-watering 17 per cent hike in its gas prices – with some regional prices increasing by as much as 27 per cent. The other major suppliers are expected to follow suit imminently.
The Npower move was the latest increase in what has been a rollercoaster year for energy prices. Scottish & Southern Energy (SSE) was one of many suppliers to up their costs early in 2006, increasing rates in January by 12 per cent for gas and 9.4 per cent for electricity. But these were later followed by headline reductions of 16 per cent in gas costs by all of the bigger providers.
In fact, according to the independent watchdog EnergyWatch, the average gas and electricity user typically paid less for energy in 2007 than they did in 2006. Only Npower customers paid more,around £20 more in electricity and £3 in gas.
The rise in prices has been driven by the increase in the price of crude oil and a 60 per cent increase in coal prices over the past year. And, according to TheEnergyShop.com, wholesale gas prices have continued to rally since the start of 2008.
Suppliers have been accused of profiteering from energy price changes, by passing on price increases quickly to consumers but neglecting to do the same when the cost of wholesale energy falls. Uswitch.com, the comparison site, claims that suppliers failed to pass on cuts worth £177 for every household last year.
"The prospect of being able to raise prices has had suppliers champing at the bit, so it was always a matter of time before one of them made the move," says Tim Wolfenden, the head of home services for Uswitch.com. "Npower has now given the other suppliers the green flag they've been waiting for. The coast is clear for a general price hike and energy bills can be expected to top £1,000. Consumers are going to be in for a rough ride this year."
That's the bad news. The good news is that there are still ways to ward off the effects of those increasing costs without digging up the road outside your home or getting used to sub-zero temperatures in your living room.
Switching
The big debate is whether to sit tight and see what price changes the "big six" suppliers inflict, or whether to bite the bullet and switch now. Switching energy suppliers could cut your bills by up to a third, especially for households who have never switched before. According to new Uswitch.com figures, consumers can save up to £325 on their annual electricity and gas bills by choosing a different supplier.
Price comparison sites such as Uswitch.com, Moneysupermarket.com and Simplyswitch.com, as well as specialist sites such as Energylinx.co.uk, can all provide you with a league table depending on your needs. A full list of suppliers in your area is available from Energywatch.org.uk. Changing suppliers usually just means making a few phone calls. You may even find that your new supplier is willing to pay you a cash incentive to switch.
Before you do, though, find out whether your new supplier has a high number of complaints, and watch out for any extra or hidden charges. The golden rule is that "dual fuel" deals – where customers buy both their gas and electricity from one supplier – tend to be the cheapest. Paying by direct debit is also essential, as many providers levy an additional charge for customer who don't.
Finally, don't relax once you have made the switch. Be sure to check on a regular basis that your tariff is still the most competitive.
Price caps
Capping the price of your energy is another attractive option in the current market climate. Suppliers have traditionally offered a deal for consumers to fix or cap energy prices over a specific period – usually a few years – in return for the consumer paying slightly above the standard energy unit rate at the time. But move quickly if you are planning to go down this route. With significant price hikes ahead, demand for these deals has been high, and they are quickly becoming harder to get your hands on.
Scottish Power is the latest supplier to close all its price-fixing products this week. In fact, as we went to press, just one price cap deal was left – E.ON's Price Protection 2009, fixed until 1 October 2009. At its standard rate, an average household in London would pay around £881.52 per annum. In contrast, the same household on one of the best current tariffs – British Gas Click Energy 4 – would pay annual energy bills of around £739.66.
Energy Use
We know that turning off lights and only boiling the water we need can reduce both our energy costs and carbon emissions. But once you've turned your plugs off at the wall, removed phone chargers after use, stopped using your tumble dryer, and turned down the thermostat and washing machine temperature by a few degrees, there are still other measures you can take.
Simply placing a "jacket" around your boiler could reduce bills by £20 a year. Upgrading your boiler or even your whole central heating system, though pricey, could save a packet over the long haul. Insulating your loft space, adding cavity wall insulation, and putting in double glazing can also be expensive – but at today's prices, you could recoup the costs within 10 years. When you replace electrical goods, look for the energy saving logo. An efficient fridge freezer will cut £40 off your bill.
There are also a number of little-known grant and incentive schemes available, depending on your financial situation and where you live. The Government provides grants of up to £2,700 for households to improve their heating and energy efficiency.
Most local authorities have similar programs. The Energy Saving Trust (www.energysavingtrust.org.uk) has a comprehensive list of available funding and discounts, or contact your supplier.
The Government's Energy Efficiency Commitment means that energy suppliers with a certain number of customers operating in Great Britain are obliged to achieve targets for improving home energy efficiency. The suppliers therefore provide a range of offers that significantly reduce the cost of installing energy efficiency measures. And you can take up offers from any of the energy companies, regardless of who supplies your energy.
Meanwhile, if you qualify, don't forget to claim your winter fuel allowance.
The green way to cut bills
* Replacing an old dishwasher with an Energy Saving Recommended (ESR) version could save you £16 per year and £145 over its lifetime.
* If all the UK's dishwashers were upgraded to ESR, in a year we could save £80m from electricity bills and 400,000 tonnes of CO2.
* Replacing an old washing machine with an ESR version could save you £80 over its lifetime.
* If all the UK's washing machines were upgraded to ESR, in a year we could save £84m from our electricity bills and 440,000 tonnes of CO2.
* Replacing an old fridge with an ESR version could save you £16 per year and £145 over its lifetime.
* If all the UK's old fridges were upgraded to ESR, in a year we could save £145m from electricity bills and 570,000 tonnes of CO2.
* Replacing an old freezer with an ESR version could save you £26 per year and £200 over its lifetime.
* If all the UK's old fridges were upgraded to ESR, in a year we could save £275m from electricity bills and more than a million tonnes of CO2.
Do it yourself
Another, increasingly popular way to cut your energy bills is to generate your own energy. Known as 'micro-generation', this really is a long-term commitment for homeowners, and the cost takes many years to recoup. But grants are often available for it, providing that the product and installation are certified and recognised by the grant board.
The savings on your energy bills can be substantial. For example, a biomass-powered boiler, fuelled by organic materials or even industrial and commercial products, costs between £5,500 and £12,000 to install – but could save you around £200 a year on your bills and around 8 tonnes of C02 per year.
A small wind turbine like David Cameron's is another option, particularly in urban areas and very remote locations. Assuming that planning permission is not a problem, a roof-mounted wind turbine could cost as little as £1,500. Solar photovoltaic panels are fairly expensive to produce, but costs are dropping as the technology improves. If you find a spot for the panels within 90 degrees of the sun's rays, you could be saving up to 1.1 tonnes of CO2 a year, and this could mean £150-£200 off your electricity bill (albeit for an initial outlay of between £5,000 and £8,000). If you're really successful you could even start selling your energy back to the national grid.
full article
Saturday, 12 January 2008
Friday, 11 January 2008
Dash to go nuclear 'will add £250 to energy bills'
A new generation of nuclear power stations will be in place within a decade, the Government promised yesterday.
MPs were told that the technology was "tried and tested, safe and secure".
John Hutton said nuclear power would also mean Britain would not have to rely on oil and gas supplies from unstable regimes in the Middle East and elsewhere.
The Business Secretary said he had invited energy firms to build new reactors and the first could be in place "well before" 2020.
Critics said the move would see household electricity bills rise by up to £250 a year, partly because of the cost of dealing with waste. They said plants would be built only with taxpayer subsidies.
However, EDF, a French nuclear power giant, said yesterday it would submit plans to build four reactors by 2017.
By DANIEL MARTIN and DAVID DERBYSHIRE
full article
MPs were told that the technology was "tried and tested, safe and secure".
John Hutton said nuclear power would also mean Britain would not have to rely on oil and gas supplies from unstable regimes in the Middle East and elsewhere.
The Business Secretary said he had invited energy firms to build new reactors and the first could be in place "well before" 2020.
Critics said the move would see household electricity bills rise by up to £250 a year, partly because of the cost of dealing with waste. They said plants would be built only with taxpayer subsidies.
However, EDF, a French nuclear power giant, said yesterday it would submit plans to build four reactors by 2017.
By DANIEL MARTIN and DAVID DERBYSHIRE
full article
Wednesday, 9 January 2008
Energy firms keep £1bn cost savings from customers
ENERGY companies have been accused of overcharging customers by more than £1 billion by exploiting changes in gas and electricity prices.
Millions of households are paying an estimated £200 a year over the odds for fuel because firms are quick to pass on price increases when their wholesale costs rise but slow to cut prices when costs fall.
Last week Npower, Britain’s fourth largest supplier with 6m customers, raised the price of gas by 17.2% and electricity by 12.7%, blaming the sustained rise in wholesale energy costs since September. All the other big suppliers, including British Gas, the market leader, are expected to follow suit with increases of 10% to 15%.
However, when wholesale prices started falling in January 2006 it took the energy firms more than a year to start cutting customers’ tariffs - and, according to analysts, they did not reduce bills by as much as they ought to have done.
Joe Malinowski, of price comparison website TheEnergy Shop.com, said: “This industry has never passed on the full benefits of the falls in 2006, but has been very quick to pass on the latest increases.”
Analysts at another price comparison website, Energyhelpline.com, said consumers should have benefited from an additional 10% price fall last year, before tariffs started to increase again.
They calculated that household gas bills ought to have fallen by 30% in 2006, while electricity rates should have been cut by about 8%. In fact, gas bills went down by an average of 12.3%, while electricity costs fell by 3.8%.
Mark Todd, of Energyhelpline.com, said: “With the suppliers having failed to pass on the price drops from the wholesale market in 2006, the latest increases are not justifiable. Consumers are already paying at least £1 billion more than they should be.”
The disclosure comes as John Hutton, the energy secretary, said consumers faced the prospect of long-term rises in power bills as a result of measures to curb climate change emissions and improve energy security.
“A lot of what we are proposing will depend on the European emissions trading scheme, under which power generators will pay a price for emitting CO2,” said Hutton. “If the price is high enough then that will change the economics of nuclear power. There are likely to be long-term increases, but our power prices are among the lowest in Europe.”
Prices in Britain have, however, been rising much more rapidly than in the rest of Europe and Energywatch, the consumer watchdog, said comparisons between price levels in different countries were notoriously difficult.
The comparison firm uSwitch says suppliers withheld £177 in price cuts from every household in Britain last year. Npower, whose average dual-fuel bill now costs more than £1,000 a year, did not start cutting tariffs until April 2007 – a year after wholesale prices started falling.
The cut itself was announced in February 2007, so it took the firm almost 10 weeks to pass on the savings. The latest price rise - announced on Friday - came into effect a day later.
Malinowski points out that Centrica, the parent company of British Gas, announced a £533m operating profit in the first six months of 2007 and was making a 15% mark-up on wholesale and supply costs.
“This is an extraordinary margin which suggests it kept a large chunk of the wholesale market falls for itself,” he said.
A spokesperson for the Energy Retail Association said: “Britain’s energy suppliers buy their stock of electricity and gas years and months ahead of the day that they sell it to people’s homes.
“This is the reason that we have a time lag before changes in the wholesale price are fed through to customers. Let’s remember there was a substantial delay before energy suppliers passed on the rises which started four years ago.”
Ali Hussain and Jonathan Leake
full article
Millions of households are paying an estimated £200 a year over the odds for fuel because firms are quick to pass on price increases when their wholesale costs rise but slow to cut prices when costs fall.
Last week Npower, Britain’s fourth largest supplier with 6m customers, raised the price of gas by 17.2% and electricity by 12.7%, blaming the sustained rise in wholesale energy costs since September. All the other big suppliers, including British Gas, the market leader, are expected to follow suit with increases of 10% to 15%.
However, when wholesale prices started falling in January 2006 it took the energy firms more than a year to start cutting customers’ tariffs - and, according to analysts, they did not reduce bills by as much as they ought to have done.
Joe Malinowski, of price comparison website TheEnergy Shop.com, said: “This industry has never passed on the full benefits of the falls in 2006, but has been very quick to pass on the latest increases.”
Analysts at another price comparison website, Energyhelpline.com, said consumers should have benefited from an additional 10% price fall last year, before tariffs started to increase again.
They calculated that household gas bills ought to have fallen by 30% in 2006, while electricity rates should have been cut by about 8%. In fact, gas bills went down by an average of 12.3%, while electricity costs fell by 3.8%.
Mark Todd, of Energyhelpline.com, said: “With the suppliers having failed to pass on the price drops from the wholesale market in 2006, the latest increases are not justifiable. Consumers are already paying at least £1 billion more than they should be.”
The disclosure comes as John Hutton, the energy secretary, said consumers faced the prospect of long-term rises in power bills as a result of measures to curb climate change emissions and improve energy security.
“A lot of what we are proposing will depend on the European emissions trading scheme, under which power generators will pay a price for emitting CO2,” said Hutton. “If the price is high enough then that will change the economics of nuclear power. There are likely to be long-term increases, but our power prices are among the lowest in Europe.”
Prices in Britain have, however, been rising much more rapidly than in the rest of Europe and Energywatch, the consumer watchdog, said comparisons between price levels in different countries were notoriously difficult.
The comparison firm uSwitch says suppliers withheld £177 in price cuts from every household in Britain last year. Npower, whose average dual-fuel bill now costs more than £1,000 a year, did not start cutting tariffs until April 2007 – a year after wholesale prices started falling.
The cut itself was announced in February 2007, so it took the firm almost 10 weeks to pass on the savings. The latest price rise - announced on Friday - came into effect a day later.
Malinowski points out that Centrica, the parent company of British Gas, announced a £533m operating profit in the first six months of 2007 and was making a 15% mark-up on wholesale and supply costs.
“This is an extraordinary margin which suggests it kept a large chunk of the wholesale market falls for itself,” he said.
A spokesperson for the Energy Retail Association said: “Britain’s energy suppliers buy their stock of electricity and gas years and months ahead of the day that they sell it to people’s homes.
“This is the reason that we have a time lag before changes in the wholesale price are fed through to customers. Let’s remember there was a substantial delay before energy suppliers passed on the rises which started four years ago.”
Ali Hussain and Jonathan Leake
full article
Gas giants find new way to push up prices
A round of punishing gas and electricity price rises has been set in motion, but reports of a 15% rise across the country do not tell the whole story. Some consumers will pay much more purely because of where they live.
Npower was the first supplier to raise prices, but the remaining members of the 'big six' – British Gas, Scottish & Southern Energy, Scottish Power, Powergen, and EDF Energy – are expected soon to follow suit.
The headlines were grabbed by Npower's 17.2% increase for gas and 12.7% increase for electricity, but hidden within the new pricing structure were regional variations that mean some regions will pay much more.
Users in London will pay an extra 21.7% for combined gas and electricity, while those in the North West will pay 20.8% more. Other regions, including the Midlands and Yorkshire, will pay less than the reported increase.
The discrepancies in price are due to suppliers applying, for the first time, regional variations in gas prices. Npower joined Scottish Power and Scottish & Southern Energy, who were each charging more to customer in the North West and less to those in Scotland.
Suppliers have justified the change by arguing that it costs more to deliver gas to some regions than to others. The distance the gas needs to be piped and the state of the pipes that carry the gas accounts for the differences.
However, consumer groups - who point out that changing suppliers does not mean a change in the gas that flows through the pipes - suggest that new pricing strategy is more to do with exploiting regions where customers have shown themselves to be reluctant to switch supplier. Suppliers see they can charge more in these regions with a lower risk that customers will seek a cheaper alternative.
Energywatch, the independent consumer watchdog for the energy industry said that the Npower move would create confusion. A spokesman said: 'Npower's move is likely to mean the development of regional gas markets with consumers having different unit costs for gas depending on where they live. This means more confusion for consumers in an already complex marketplace.
'To get a better deal, it is vital that they use postcode-based internet comparison sites to be certain they're getting advice specific to their location. Consumers should use the price comparison sites accredited by the energywatch Confidence Code.
Whatever the reasons for the differences the industry regulator, Ofgem, is reluctant to step in to prevent potential inequities in the system.
A spokesman for Ofgem said: 'We are not in the business of dictating how suppliers should set prices. If they become uncompetitive in a region they stand to lose customers.'
The increases applied by Npower will only affect its 6m customers, but customers of other suppliers could see similar regional variations if they apply the same logic when raising prices.
Ed Monk
full article
Npower was the first supplier to raise prices, but the remaining members of the 'big six' – British Gas, Scottish & Southern Energy, Scottish Power, Powergen, and EDF Energy – are expected soon to follow suit.
The headlines were grabbed by Npower's 17.2% increase for gas and 12.7% increase for electricity, but hidden within the new pricing structure were regional variations that mean some regions will pay much more.
Users in London will pay an extra 21.7% for combined gas and electricity, while those in the North West will pay 20.8% more. Other regions, including the Midlands and Yorkshire, will pay less than the reported increase.
The discrepancies in price are due to suppliers applying, for the first time, regional variations in gas prices. Npower joined Scottish Power and Scottish & Southern Energy, who were each charging more to customer in the North West and less to those in Scotland.
Suppliers have justified the change by arguing that it costs more to deliver gas to some regions than to others. The distance the gas needs to be piped and the state of the pipes that carry the gas accounts for the differences.
However, consumer groups - who point out that changing suppliers does not mean a change in the gas that flows through the pipes - suggest that new pricing strategy is more to do with exploiting regions where customers have shown themselves to be reluctant to switch supplier. Suppliers see they can charge more in these regions with a lower risk that customers will seek a cheaper alternative.
Energywatch, the independent consumer watchdog for the energy industry said that the Npower move would create confusion. A spokesman said: 'Npower's move is likely to mean the development of regional gas markets with consumers having different unit costs for gas depending on where they live. This means more confusion for consumers in an already complex marketplace.
'To get a better deal, it is vital that they use postcode-based internet comparison sites to be certain they're getting advice specific to their location. Consumers should use the price comparison sites accredited by the energywatch Confidence Code.
Whatever the reasons for the differences the industry regulator, Ofgem, is reluctant to step in to prevent potential inequities in the system.
A spokesman for Ofgem said: 'We are not in the business of dictating how suppliers should set prices. If they become uncompetitive in a region they stand to lose customers.'
The increases applied by Npower will only affect its 6m customers, but customers of other suppliers could see similar regional variations if they apply the same logic when raising prices.
Ed Monk
full article
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