Now energy bills will rocket 25%
FAMILIES are facing another crippling hike in energy prices, with bills set to soar by £250 for every household.
Fears over gas supplies and the rocketing cost of oil have driven up wholesale power prices, which will hit homes this summer, experts are warning.
The impending 25 per cent increase for gas and electricity could push annual bills beyond £1,250, with industry analysts predicting the credit crisis will be overtaken by an energy crunch.
Consumer groups say the move will be “catastrophic” for families already struggling with inflation-busting rises of about 15 per cent earlier this year.
It means fuel, energy and mortgage costs will leave the average family massively worse – even after pay rises.
Hard-pressed households have already suffered inflation-busting rises in council tax, prescription charges, water rates and television licences. Now they are being told to brace themselves for a second round of fuel bill rises.
Mark Todd, of energyhelpline.com, said: “There is no doubt that there is an energy crisis looming. This winter we have had the credit crunch. Next winter it will be the energy crunch. We feel it’s unfair that consumers are going to be hit so hard when the energy companies have been reporting such exceptional profits.
“The winter fuel allowance that is paid to the elderly should be extended to the poor, because it should be as much about stopping poor kids freezing in their homes as old people.”
Wholesale gas and electricity prices have risen by about a third since the start of February when the last round of increases began, according to analysts.
Unless the wholesale prices fell substantially, it was “inevitable” that bills would start rising again by August or September, they claim.
The “double whammy” of hikes adds to the growing sense that the UK is facing an energy crisis. Families are also facing food and petrol prices which have risen at their fastest rate since records began, and higher mortgage costs.
Allan Asher, chief executive of consumer watchdog energywatch, said yesterday: “Rises on such a shocking scale would be catastrophic.
“It suggests the market is being talked up to prepare the ground for more pain for consumers.”
He said the increase would consign another million households to the misery of fuel poverty – spending more than 10 per cent of disposable income on their heating and lighting.
“The Government has to be bold enough to admit its fuel poverty strategy has been broken on a vicious cycle of price rises,” he said.
Five of the Big Six suppliers – E.ON, npower, British Gas, EDF Energy, ScottishPower and Scottish And Southern Energy – have increased prices since the start of January. Some bills rose by as much as 16 per cent.
The average annual total gas and electricity bill now stands at £1,058. Energy companies’ profits have risen by £2.3billion in the past three years.
The price rises will come as a severe blow to pensioners and others on low fixed incomes.
And the pain will be felt even more keenly by the likelihood of increases during the late summer and autumn, as consumers are turning on the heating. The average annual household bill has risen by £128 since December, but the price paid by energy companies for gas and electricity has soared since then.
David Bootle, spokesman for the charity National Energy Action, said: “This is distressing news, particularly for vulnerable and low-income consumers throughout the country.”
“Over 4million households in the UK are in fuel poverty, which equates to 8million people who are unable to keep themselves warm in their home.
“Something must be done quickly to counter this escalating problem.”
He called on ministers to do more to help the hardest-hit consumers. “The Government should introduce a simple, mandatory social tariff, which guarantees that the most vulnerable customers get the lowest price a supplier offers,” he said.
On Wednesday John Hutton, Secretary of State for Business, Enterprise and Regulatory Reform, will meet the chief executives of the Big Six suppliers for a fuel poverty summit.
Allan Asher of energywatch added: “Consumer groups and charities will also be there, wanting to hear the decisive plan of action that is going to rescue the fuel poverty strategy. We won’t be holding our breath.”
Last night British Gas spokesman Julian Mears said: “We continue to monitor the market but it’s too early to say where wholesale prices will go for the rest of the year.”
E.ON spokesman Jonathan Smith said: “Clearly we keep a close eye on wholesale power and gas prices and we have no current plans to increase our price.”
The price rise warning comes as a report by the Energy Efficiency Partnership for Homes demanded millions of pounds to improve poorly-insulated housing for the elderly to help cut fuel bills.
It calls for a £57million investment to improve the 800,000 homes run by housing associations and local authorities, saving residents more than £14.4million a year.
Nicholas Doyle, chairman of the EEPH’s managed housing group, said: “Over 85 per cent of the homes today will still be lived in by 2050, a growing number by older people.
“The Government needs to invest in the supported housing sector for over-60s and improve the efficiency of hundreds of thousands of homes to help protect against future energy price shocks, cold-related deaths in winter and the threat of climate change.”
