Is the UK living in fuel poverty?
A 2018 Ofgem report into vulnerable customers showed that the amount of domestic accounts in debt and without a repayment plan has increased since 2016.
The average debt that a household falls into before being set up with a repayment plan is £600. While the overall number of consumers repaying an energy debt has decreased since records began in 2006, more are now in arrears:
- 600,000 electricity customers are in arrears
- 460,000 gas customers are in arrears
The number of consumers in debt without a repayment plan has risen 28% from 2012 to 2017, while the number of gas consumers in the same position has increased by 14%.
A large number of the UK population are in need of additional support from energy companies. These vulnerable consumers require help to engage with their supplier and avoid slipping into debt. These customers include:
- An ageing population - 20.5% of the population will be 65 and over by 2026
- Dependents - 18.9% of the population are under 16 and 12.2% of families have at least one dependent child
- 11 million people are living with a limiting mental or physical disability in the UK
On average, people with physical disabilities incur extra costs of £570 a month related to their condition, with 1 in 5 facing more than £1,000 extra a month. They often face higher heating bills and use additional electricity to charge up items of assistive technology.
Over half of disabled adults (55%) have worried about paying their energy bills and energy companies are being urged to do more to help these vulnerable citizens.
The human cost of not being able to afford heating
10,600 people per year are dying either as a direct result of fuel poverty or conditions relating to living in a cold home. When you consider that prostate cancer kills 11,000 people a year and breast cancer 11,500, it’s a shock to the system to see that something so preventable is affecting so many.
What is the price cap?
Energy price caps were brought in to ensure consumers paid a fair price for their energy and to protect against overcharging.
It’s only available to the following however:
- Those using a prepayment meter
- Those who get the government’s Warm Home Discount and/or
- are on a 'standard variable' energy tariff or a tariff you haven’t chosen (a 'default' tariff)
The energy price cap limits the price a supplier can charge you per kWH of electricity and gas. This came into effect in Oct 2018 and meant that your energy provider could not charge you more than a set amount for your electricity or gas per kWH used. For many people, this meant a reduction in their bills.
However, the price cap is set to rise on April 1st and depending on which region you live in, your bills could rise by up to £117.
Does the price cap really save you money?
Before the price cap, the top energy suppliers, including the ‘big six’ were charging a good deal more to those on a standard or default tariff. They charged between £1,196 and £1,257 a year to a dual fuel medium user. In January, the price cap reduced the bills of 11 million customers by £76 a year on average, or up to £120 for those on the most expensive tariffs. The new price cap in April, however, will see it rise to those precap prices, with a medium user paying £1,254 per year. That’s like paying for over 1 month extra, annually.
Is switching still important?
Switching is still important for those wanting to save money. Even more so, as if you switch before the cap increases, you could bag a better deal. Saving up to £458 a year.
Those on standard or default deals are often on the most expensive, so while you might assume the cap is in some way protecting you, what you need to be doing is searching out the special deals through comparison websites where you’ll save even more money.
The cap protects you from being overcharged but does not ensure you get the best deal. To find the most beneficial deal for you, you’ll need to compare all the ones that suit your circumstances.
Your energy company must also give you 30 days’ notice period if it is going to increase prices. This will give you time to shop around, and you don’t have to pay exit fees to leave a standard or default tariff.
The best energy companies in February 2019
As of Feb 2019, there are 71 active suppliers competing in the domestic energy market. 23% of the gas suppliers are from small and medium companies and 22% of the electricity suppliers are from small and medium suppliers.
Recognised brands are likely to cost more and may have poorer customer service. In a recent Which? report, providers were rated on the following criteria;
- Bill accuracy and clarity
- Customer service (phone and online)
- Complaint handling
- Advice on energy consumption reduction
- Value for money
The top 10 suppliers
- Octopus Energy - 80%
- Robin Hood Energy - 78%
- So Energy - 78%
- Tonik Energy - 76%
- Ebico - 76%
- Ovo Energy - 74%
- Utility Warehouse - 73%
- Bristol Energy - 72%
- Bulb Energy - 72%
- Ecotricity - 72%
The bottom 10 suppliers
- Together Energy - 60%
- SSE - 58%
- iSupply Energy - 57%
- EDF Energy - 57%
- Eon - 57%
- British Gas - 56%
- Scottish Power - 54%
- NPower - 54%
- Spark Energy - 52%
- Solarplicity - 44%
You can save money, have a good level of customer satisfaction and keep your service uninterrupted if you choose to research and compare deals and find the one that suits you best.
If you are looking to switch your provider, be mindful of any penalties for leaving or joining another, as these may negate any savings you might make.
Written by Robert Bester
Updated on 7th May 2020
Published on 19th November 2018