Poor families 'pay higher gas and electric bills'
Families on low incomes often face higher gas and electric bills than the average household, according to new research by Save the Children. The charity found that poorer families commonly pay hundreds of pounds more for domestic energy than their wealthier counterparts, mainly because they tend to use prepayment meters. The findings highlight the need to compare energy prices, as this can help to keep bills as low as possible.
Low-income families pay 'poverty premium'
The average low-income family pays nearly £1,300 more per year than other families for heating, basic goods and services, with a significant proportion of this additional outlay going to gas and electric companies, new research suggests. The latest study by Save the Children shows that poorer families often pay hundreds of pounds extra to heat their homes. Whereas the average family might expect to pay £880 for their gas and electricity, low-income families typically receive bills in the region of £1,135 per year. There are concerns that this figure will rise even further this year, in light of recent increases in heating prices.
Prepayment meters to blame
According to Save the Children, the main reason for the discrepancy is that many low-income families use a prepayment meter, rather than settling their gas and electric bills by direct debit. Those with cash flow problems often find their money management easier if they have a prepayment meter, but energy suppliers tend to charge more for these tariffs. In fact, a family with a prepayment meter could save an average of £250 by taking the time to compare gas and electric deals and switch to direct debit.
Sally Copley, head of UK policy at Save the Children, warned that youngsters' health could be compromised if families are unable to heat their homes effectively. She observed: "There is a clear link between living in cold, damp conditions for long periods and children's health being put at risk. We believe the poverty premium is totally unfair and is ripping off low-income families who are already struggling to make ends meet."
Fuel poverty - energy giant npower increases gas and electricity bills by 5.1%
Npower customers nowl face higher utility bills as the energy supplier issues hikes in tariffs.
Household gas and electricity bills havel increase by an average of five per cent from January 4, which will amount to an increase of £54 on the average annual dual-fuel energy bill.
The increase will affect 6.5million customers.
Npower is the fourth of the 'big six' energy suppliers to raise prices in recent months, following hikes from Scottish & Southern Energy, British Gas and Scottish Power.
Industry watchdog Ofgem recently revealed plans to investigate the UK's energy giants after it emerged that recent price hikes have seen suppliers' profit margins soar by 38 per cent.
Ofgem announced the probe after discovering average margins on a standard dual-fuel tariff had risen to £90, compared with £65 in September.
Ofgem said it would look at the 'facts behind the numbers' as companies claimed rising prices in the wholesale market - where suppliers buy their energy - left them with no choice but to lift bills.
With four of the Big Six suppliers having now announced price rises averaging 6 per cent, the focus on Ofgem's review of whether energy prices are justified will be even sharper.
Millions of the poorest households living in fuel poverty should focus the Government's minds on how to make the Green Deal a "game changer" for fuel poverty as well as energy efficiency.
Fuel poverty hits 1 million more UK homes, they went up by one million in 2009 to 5.5 million - a 22% rise.
More than a fifth of all households in the UK were affected by fuel poverty in 2009, the latest government figures have shown. Figures from the Department of Energy and Climate Change (DECC) show a big jump in the number of homes burdened by high fuel bills.
DECC predict that the numbers for 2010 and 2011 will have risen because of continuing increases in the price of energy.
Between 2004 and 2009, energy prices increased: domestic electricity prices increased by over 75%, while gas prices increased by over 122% over the same period. This led to the rise in fuel poverty seen over this period
Before 2004, the problem had been in decline, with fuel poverty across the UK dropping from 6.5 million homes in 1996 to just under 2 million in 2003.
This had been driven by the combined effect of rising incomes and falling energy prices.
Despite increased effort and money being put into insulating homes to make them more energy efficient, DECC admitted that the benefit of these initiatives was being swamped by the effect of fuel prices which have been rising steeply.
IN SCOTLAND - The scale of fuel poverty in Dumfries and Galloway has been described as "unacceptable" by councillors.
It is an issue which affects an estimated 41% of all households in the region compared with 28% nationally.
We are constantly told that the gap between the haves and have-nots is widening and here is a classic case in point.
I think at the end of the day we have got to mobilise public opinion and put pressure on our elected representatives to say to these people who are continually hiking the fuel costs - enough is enough, we are not prepared to accept any more.
How the Big Six energy firms are holding us to ransom - by Alan Simpson
Don't laugh. It's worse than you think.
Embarassing exchanges in the House of Commons of the United Kingdomns about whether the government will or will not legislate to force energy companies to offer customers their lowest tariffs are just the tip of the iceberg.
Now that regulator Ofgem has stepped in and said that it is going to do pretty much everything the government is considering apart from legislate it is hard to see what wriggle room there is left.
The real danger in this latest "omnishambles" episode is that it may distract public attention from an even bigger mess coming our way.
Even if the lowest energy company tariffs become compulsory and political parties compete with each other to be the most enthusiastic advocates of "switching," you have to ask yourself where this takes us?
Britain does not have a competitive energy market. It has an energy cartel.
The Big Six firms control over 90 per cent of UK electricity supply.
Does switching suppliers change anything fundamental? Faced with a choice between Fred West, Rose West and the Wild West, we need to be changing the energy game not switching between villains.
In Germany, rather than faffing about with marginal issues, communities are reclaiming ownership of their local electricity grids and cutting huge chunks out of their energy costs.
The forthcoming UK Energy Bill is tailored to block this in Britain. It offers soup-kitchen subsidies to Big Energy, which will probably consolidate into the Big Three within a couple of years of the Bill's enactment, and nothing that will make Britain's energy market more open, transparent, competitive or sustainable.
UK bill payers and taxpayers will find themselves saddled with huge extra subsidies to prop up new nuclear, new gas and old oil irrespective of which supplier they've switched to.
The Bill's real agenda can be found elsewhere.
A rigged market is to be strengthened. Future energy prices will be driven higher. Corporate profits will be propped up. And tomorrow's most exciting choices about different energy "systems" will not even make it into Britain's energy debate.
We have already seen the beginnings of an orchestrated moral panic about the country's energy security and the dangers of "the lights going out."
The ruling Quad - messrs David Cameron, Nick Clegg, George Osborne and Danny Alexander - has already gone into a 10 Downing Street huddle, drawing straws to see who will emerge with another half-baked plan to "save the nation."
But the lights are not going to go out. And a crisis, if there is one, would be entirely manufactured.
The panic fuelled by parts of the press stems from a wilful misreading of Ofgem's report on our electricity prospects over the next four years.
In fact in its worst-case scenario Ofgem said that the "risk level" of a power reduction could fall from today's "near zero" to the safety margins currently existing in France, the Netherlands and Belgium.
For the average household it would be the risk of a power failure or voltage reduction once every 12 years.
I can feel my palpitations rising already.
Poor Ofgem was at pains to qualify its assessment, saying: "Although it is clear that risks to security of supply will increase, it is very difficult to accurately forecast the level of security of supply provided by the market.
"This is because of uncertainties regarding commercial decisions about generating plants, electricity interconnection flows to and from the Continent, and the level of demand."
But no-one took any notice.
By far the most interesting space behind all the newspaper headlines is the gap that exists between the objective statements that Ofgem could make and the political observations that it could not.
The reduction in power-generating capacity over the next four years will be due mainly to a "significant reduction in electricity supplies from coal and oil plants which are due to close under European environmental legislation," it noted.
Highly polluting coal power stations have to close by 2016 unless they can meet new EU emissions standards.
With coal currently being cheaper than oil, power stations have been chalking up big profits by using up their pre-2016 environmental quotas early.
Generators have been stepping up coal-fired production and have rapidly burned through their remaining 20,000 hours of legitimate operation.
Some power stations, like Tilbury and Ironbridge, have opted out of the EU Large Combustion Plant Directive which aims to curb pollution.
They are now converting to biomass so that they can continue generating high-carbon electricity once their pre-2016 operating hours quotas have expired.
Energy Secretary Ed Davey and Chancellor George Osborne have allowed the Big Six energy companies to dictate terms of the recent Renewable Obligation Banding Review so that biomass conversion and "enhanced" co-firing are given the most generous treatment, albeit at the expense of new-build dedicated biomass power stations.
That is the cheapest way for Britain to meet its EU 15 per cent renewable energy target and get around the LCP directive's requirements, while exporting the environmental and climate impacts.
For example, biomass emissions are falsely treated as biogenic and carbon neutral by policy-makers even though scientific advice from within the EU - and common sense - now says this is wrong. Fuel supplies for this level of generation can only be supplied by massive imports. Developers openly admit that Brazilian eucalyptus will become a key future source.
In protecting their current monopoly position, the same power companies have also been mothballing at least 3 gigawatts of planned or existing gas power plants until they see what happens to the economy. It becomes a great ruse if you are looking for new public subsidies.
With a Chancellor so obviously in love with fossil fuels this provides energy companies with a great opportunity for gaming the system by manufacturing a panic that allows their companies to extract new subsidies, tax allowances or pollution exemptions in exchange for "rescuing" the country from a crisis of their own making.
Britain's lights will not go out because of any burgeoning demand for electricity. Any crisis would have to come from a collapse in supply. Ofgem's fears begin from the "retirement" of some 12 gigawatts of coal and oil-fired capacity from power stations not intending to clean up their act by 2015.
In its assessment of future energy supplies Ofgem sets out its base case scenario, along with two variations on both the availability of gas and the role of European electricity imports.
It is at this point that Ofgem throws in more caveats than a government policy statement.
First, Ofgem's base case talks of households facing the risk of some sort of power shortage once in every 12 years. This could reduce to a once in 100 years if some of the other variables change.
Next, the greatest risk levels come when power companies are allowed to withhold generation unless prices rise. Ofgem is not allowed to examine how this might change if, instead of being allowed to blackmail the public, energy company executives were assured of prison sentences for failure to supply.
Then, Ofgem's assumption in its base case of net zero use of electricity fed in from the continent is a puzzle.
The European grid is currently awash with surplus renewable electricity coming mainly from Germany. At times wholesale electricity prices are negative. More extensive use of such surpluses would drive down British electricity prices and weaken the ability of its energy companies to hold the public to ransom.
A more ambitious programme of British investment in renewable energy would also drive down the risk of a shortfall in electricity supply, and put further downward pressure on electricity price setting by the Big Six.
So too would the least expensive intervention - a radical expansion of direct funding for energy efficiency programmes in Britain's homes and buildings.
Cutting electricity demand massively increases the security margins of existing energy supply systems. Extending the local ownership of electricity grids would change the whole energy game, allowing localities to sell "non-consumption" - energy-efficiency measures, smart grids and local energy generation - that would turn Britain from an energy oligarchy to an energy democracy within the space of the current decade.
No such propositions fall within Ofgem's remit. But the government, if it pretended to be a government, could make this call.
It will not happen.
In the forthcoming Energy Bill the public will be sidetracked and then fleeced. "Old energy" will have its subsidies propped up. Parliamentary advocates of competitive markets will extend the corporate welfare state. The next recession will be guaranteed. And Britain will not face an energy future that is secure, affordable, sustainable or democratic.
So, ignore the tabloid distractions of a fictitious or avoidable crisis of "lights going out" in four years' time.
Look instead at the one we are already knee-deep in.
It doesn't matter whether it is the PM, his deputy, the Chancellor or the Davey who steps up to the plate with the next half-baked announcement on energy policy. Look into the minister's eyes. The lights are already out.
*** Alan Simpson was Labour MP for Nottingham South from 1992-2010 and was the architect of feed-in-tariff amendments to the Energy Act 2008. He is now an independent campaigner on energy and climate issues.
Morning Star Readers & Supporters Group
