Will a £50 Cut in Your Fuel Bill Make a Difference this Winter?

December 2, 2013 | Fuel Poverty

A number of energy companies have announced a cut in fuel bills today in the wake of the changes being made to the Energy Company Obligation (ECO) and the Warm Homes Discount. The result of extending ECO and moving the Warm Homes Discount into general taxation will be a £50 saving on the average £1400 annual dual fuel bill.

Energy customers may not be feeling great about this “saving” given most of the energy companies have recently increased their prices by between 3 and 10 percent.  A typical dual fuel bill from British Gas owner, Centrica, has risen by £123 this year so this new price cut, which will take place in January, of £53 will result in customers still having to pay £70 more than they did last year. Hardly anything to celebrate particularly when some of the green levies will be moved into general taxation meaning customers will still end up paying for the changes rather than the energy companies.

Not all energy companies have announced their plans yet. Some suppliers like Npower and EDF have said they would not raise prices again until spring 2015 but added the caveat that this would only be if wholesale costs don’t go up.

Whilst householders won’t turn up their noses at a cut in their fuel bills, however minor, the more serious and possibly dangerous aspect of this change in green levies could be the delays in improving the energy efficiency of low income households under the Energy Company Obligation scheme.

This could mean householders struggling for longer in poorly insulated homes without the necessary funds to make improvements that could cut their energy bills by several hundred pounds a year.

More Funds Available to House Buyers

As part of these changes, the government has also announced a new fund of £1000 available to house buyers to help them make their new home more energy efficient.

Again, this strategy has been questioned given many householders suffering from fuel poverty live in rented accommodation because they are unable to afford to buy.

Jenny Saunders from National Energy Action stated: “This plan doesn’t help the poorest households who live in the least energy-efficient homes”.

Amendments to the Energy Bill

Amendments to the Energy Bill that re-define fuel poverty will mean that far fewer households will be considered to be fuel poor. It is estimated that changes to the definition of fuel poverty will mean a drop from 3.2 million to 2.4 million households considered to be in fuel poverty.  This will no doubt look good for the government but won’t do anything to help poorer households.  Chairwoman of the Commons Environmental Audit Committee said: “The Government is shifting the goal posts.” The Energy Bill will also be changed to remove the commitment by Government to eradicate fuel poverty buy 2016.

Give us Your Thoughts

What do you think about the cuts in your fuel bill? Will it make a difference to you this winter? Leave us a comment below.

 

For more information

Some alternative ideas for how the government could reduce energy bills – read our “how energy bills could be reduced in the UK?” blog

Fuel bill cuts will follow energy policy change – BBC article

 

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