Watchdogs warn of soaring fuel poverty

Watchdogs warn of soaring fuel poverty

Consumer watchdogs last night called on energy companies to do more to protect vulnerable people from the worst effects of rising gas and electricity prices.

They predicted the number of households suffering fuel poverty would rise by around 50% to more than 6m following warnings that gas bills alone could soar by the same figure beyond £1,000 a year within a few years.

The National Consumer Council (NCC) said suppliers should offer more low-cost "social tariffs", with discounts and rebates, to families on low incomes, older people and those with long-term illness, while Energywatch called for EU-wide action to break a historic link between oil and gas prices which threatened "catastrophic" increases for consumers, businesses and the wider economy.

The imminence of the £1,000-plus annual gas bill, if oil prices remained at $140 a barrel, came from analysts Eclipse Energy in a report commissioned by Centrica, parent company of British Gas. Further oil price rises could send gas bills even higher and a similar impact was expected on electricity prices.

It claimed energy prices in the UK had been among the lowest in the EU but now they would rise to the level of other countries.

Households are deemed to be in fuel poverty if they need to spend at least 10% of their income keeping their living areas at an acceptable temperature.

Average gas bills have more than doubled from £310 in 2003 to £646 now while.....continued below

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electricity bills have risen from £244 to £412 over the same period. The NCC's energy expert, Cassie Higgs, said some companies were doing well in protecting vulnerable customers "but others are offering schemes that are inadequate - often rationed and applied inconsistently. The government needs to do more to make sure these companies deliver these initiatives. Action is needed now so that effective measures are in place by Easter".

The rapid increases in energy bills were hitting pensioners particularly hard, said Gordon Lishman, director general of Age Concern. "Price rises on this scale would mean well over 3m pensioner households - more than one in three - would be in fuel poverty."

Graham Kerr, of Energywatch, said: "We need to establish the true costs of the oil-gas price link estimated by some to be €50bn to consumers across Europe each year. We also need to be clear that the price consumers pay for gas reflects the cost of producing it and that price is set by the usual market forces of supply and demand."

Governments across Europe should insist that the EC's competition experts scrutinise contracts set by gas producers to see if there were remedies to halt "the relentless increase" in the burden on consumers, Kerr added.

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