Further £100 rise in energy bills looms

Further £100 rise in energy bills looms

Households face the misery of being hit by an extra £100 on their energy bills by the end of the year on top of the average increase of £128 they have already faced since Christmas, experts have predicted.

The price rises will come as a particular blow to pensioners and others on low fixed incomes, who are already feeling the pinch of rising food, transport and petrol costs amid wider anxieties over the economy.

The pain will be compounded by the likelihood of increases during the autumn, just as consumers are turning on the heating.

The average annual bill has already gone up by £128 since December but the price paid by energy companies for gas and electricity has soared by a further 26 per cent since then. Some of this will be passed on to households later in the year, with experts predicting that it will add 10 per cent to the average family's energy bill, bringing it to £1,105.

Advertisement starts

---

---

Advertisement ends

Joe Malinowski of TheEnergyShop.com said: 'Recent retail increases have not kept up with the ongoing increase in wholesale prices. This means that we are looking at further increases and misery for consumers throughout 2008.'

He added: 'The price of energy is going to be very high this winter and people are going to need to be well prepared for the bills coming through their doors at the beginning of next year.'

Last week Scottish and Southern Energy became the last of the big six energy companies to put its prices up. From 1 April customers on its standard tariffs will see a 15 per cent increase in their gas and electricity bills.

But energy companies set their prices lower for some households than others. Those who pay by direct debit and manage their bills online pay around £200 less a year than those who do not. 'Unless you take these two measures you are almost destined to pay four-figure sums for your energy this year,' Malinowski said.

NPower is now the most expensive company for those paying their bills by monthly direct debit, according to TheEnergyShop, while Scottish Power charges the most for customers paying by cash or cheque.

Those who use a pre-payment meter will pay even more than those paying by cheque. However, following pressure from consumer groups, the Chancellor announced in the Budget earlier this month that the government would press energy companies to reduce the bills for those households that pay this way.

Given the bleak outlook, there was criticism yesterday of the power company E.On's decision to spend more on sponsoring the FA Cup than helping some of its most vulnerable customers heat their homes. Campaigners say that E.On, formerly known as Powergen, has got its priorities wrong for paying out £32m on the four-year FA Cup deal while just £4.4m is allocated for a scheme to help the over-60s. The Stay Warm scheme fixes prices for the over-60s who live in homes with three bedrooms or less and pay by direct debit.

Karl Brookes, from Energywatch, an independent gas and electricity watchdog, said: 'That a company spends millions sponsoring a cup, entertaining their favoured friends with prawn sandwiches and freebie tickets, is arguably marketing. However, when people realise they spend considerably more on sponsoring this rather than warming the homes of some of the most vulnerable consumers, some might say it's not brilliant marketing and even a bit of an own goal by E.On.'

Energywatch estimated that there are 4.5 million households in fuel poverty, having to spend 10 per cent or more of disposable income on energy bills. E.On contended that the Stay Warm scheme is just one of a range of measures that help vulnerable customers.

A spokeswoman said: 'We have a very broad range of initiatives to help improve the warmth and comfort of older and vulnerable customers. As well as the Stay Warm scheme we offer a second tariff for older people through a link with Age Concern. We also have a £100m Caring Energy fund, that is over three years, to help customers get free cavity wall insulation and ensure they are receiving all the benefits they are entitled to.'

A further increase in energy bills will add to the worry of those households that are preparing for hundreds of pounds to be added to their mortgage bills this year. Andrew Montlake, partner at mortgage brokers Cobalt Capital, said: 'People coming up to remortgage in the next six months are in for a bit of a payment shock. They are going to have far less choice and rates are going to be more expensive.'

guardian.co.uk © Guardian Newspapers Limited 2008