Bills, Bills, Bills, that's certainly what it can feel like these days with the cost of gas and electricity bills rising and all the major companies now having recently issued dramatic rate increases. N-power, British Gas and Powergen all raised their prices substantially this year blaming high whole sale costs.
To further add salt to the wound dwindling gas supplies in the North Sea means that more gas is having to be imported raising prices even further. However with the new Langeled gas pipeline now online from Norway some reason for optimism may be over the horizon because although making these pipeline connections gives a clear signal to consumers that the plans ahead are to import more gas into the UK than ever, the pipeline does give some signs of more stability ahead. The pipeline and others like it do open doors for the UK adding more diverse and plentiful energy resources to see us through the winter and other winters ahead and while importing gas in this manner may not be cheaper it should lead to more stability in prices for the future.
With the increase in prices comes an increase in the number of households that are in fuel poverty (a household that needs to spend 10 per cent or more of their income to meet fuel costs). The Energy Watchdog estimates annual average gas and electricity bills paid by standard credit now total £993.
A group of people hit heavily by this are the elderly. According to statistics over 22% of people over 70 won't be able to heat their homes this winter compared to only 6% of the rest of the population. The problem arises as energy bills have risen faster than inflation and much faster than any revised pension payments leaving state pension reliant elderly people with out a means to pay. Many elderly people will simply turn off their heating systems to avoid running up any large bills. The amount of pensioner households in fuel poverty has more than doubled since 2004.
Other pensioners understandably value the heat in the homes and are subsequently going into debt. This is a rising problem and according to the Sesame Debt Survey “UK pensioners are building up debt, with no intention of paying it off.” “Rather than finding ways to manage and repay their debtors, pensioners are leaving the balance on their credit cards when they pass away”.
Further more elderly people living in old housing are unable to benefit from adequate insulation. Many older homes have wall cavities too small for insulation or no cavities at all. Some residents who live in listed buildings are not permitted to install double glazing, attempts have been made to combat this with secondary glazing but this is far from efficient. In a typical house 25% of heat can escape through the roof, 35% can escape through the walls, 10% through the windows, 15% through doors and 15% through your floors. Government grants have been made available for people to insulate their homes such as the “Energy Incentive Grant” but the eligibility and entitlement clauses still leave lots of people in the cold.
A “Winter Fuel Payment” Scheme is available for most people over 60, some people who are eligible will be automatically receiving this through their pension or other benefits but these grants are not widely advertised enough and many people who have not claimed do not realise they are eligible. If you are in doubt older people can contact their local Age Concern to check they are receiving all the money benefits they are entitled to.
There is some good news though… with all the major energy companies having announced their price hikes, now is a good time to compare companies to make sure that you are getting the best deal. You can use a number of free services to make sure that you're not paying over the odds for your energy.
Energy prices are set to fall again in 2007 but the industry is hinting that this may not be felt by the consumer for quite some time to come, so getting the best deal now is vital if you want to save money. Unfortunately customers who have recently switched and who have signed up to fixed price schemes may not reap the benefits of this price fall and may have moved too soon.
Gas tariffs such as British Gas's “fix and fall” promise no more price rises and a drop in rates next year, as tempting as this prospect may sound lower prices for regular tariffs may arrive sooner than customers hoped leaving them with an undesirable high fixed price.