Energy price hikes add over £560 million to household bills
Pre and post-Christmas energy price hikes have added a staggering £560 million onto household bills says uSwitch.com, the independent price comparison and switching service. In total, 24.6 million customers have been affected by price rises, with the average annual bill now going up by £56 or 4.7% to £1,250.
The grim tally comes after E.ON becomes the latest and last supplier to hit customers' bills. Its increase - 3% or £19 for gas and 9% or £42 for electricity - comes into effect on 4th February. It means that five of Britain's big six energy suppliers have pushed prices up, with just EDF Energy making a stand by freezing its prices until March 2011. It is the first general price hike since 2008 and all the increases will have hit customers during the winter when energy usage peaks.
Worryingly for consumers, this hike in prices also raises questions about the balance between price increases and subsequent price cuts. In 2008, energy prices rocketed by an eye watering 42% or £381 taking the average household energy bill from £912 a year to £1,293. During a subsequent lull, suppliers cut their prices by 8% or £99, bringing the average bill down to £1,194. But, with this round of increases, the average bill will move up again to £1,250, almost wiping out the benefit of earlier price cuts. Consumers will be left facing household energy bills that are 37% or £338 higher than in January 2008.
Following this round of price hikes the difference between the cheapest energy plan in the market and the most expensive standard plan is now £370 a year. This gives consumers a real incentive to use the competitive market to cut their bills by almost a third, just by ditching old fashioned and expensive standard tariffs and moving to a competitive online energy deal instead.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "To see the real impact of energy price hikes you have to look at the collective picture - and it isn't pretty. This increase has hit 24.6 million customers, added over £560 million onto our energy bills and taken the average household energy bill to £1,250. It is a painful reminder that while households are attempting to rein in costs their essential bills are being pushed up, often through no fault of their own.
"The fact is that suppliers pushed through a 42% or £381 increase in 2008 that caused bills to rocket from £912 to £1,293. Price cuts took off just 8% or £99 and now prices are on the rise again. This general increase has already wiped out much of the benefit seen from previous cuts and has left consumers with bills that are now 37% or £338 higher than at the beginning of 2008.
"Importantly though, this price hike has opened up an opportunity for consumers to turn the clock back on their energy bills and take them almost back to pre-2008 levels. The difference between the cheapest and most expensive plan in the market is £370 - I would urge anyone who hasn't yet ditched their old fashioned and expensive standard tariff to do so and move to a competitive online plan instead. It's the equivalent of saving almost a third off your bill and this substantial saving can be further boosted by adopting sensible energy efficiency measures. In a time of rising prices our best defence is to use less energy and to pay the lowest possible price for what we do use."