From the TUC

Energy bills rise by four times inflation rate

21 Oct 2013, by in Environment

Fuel graph

Gas and electricity prices have increased by four times the rate of inflation over the past 10 years, according to a new TUC analysis. Energy costs rose by 152% from September 2003 to September 2013, the RPI by 38%. TUC General Secretary Frances O’Grady will say at today’s TUC climate change conference that “Energy chiefs tried to blame green obligations for the size of consumer bills. Bills have been sky-rocketing for years, and the British people are fed up with it.” Evidence also shows fossil fuel subsidies far higher than support for environmental policies.

With evidence also showing people suffering the longest real wage squeeze in over a century, the latest bill increases from SSE and British Gas will widen the gap further.

Fuel poverty affects 2.39 million households in England, according to the government’s new low income/high energy cost indicator. Commentators such as The Sun campaigns to scrap home energy efficiency support schemes. But if successful, this will hit the poorest families hardest. Low income, fuel poor households lived in some of the UK’s least energy efficient properties:

  • 706,000 households (56%) lived in uninsulated properties.
  • 1.3 million households (57%) lacked loft insulation.
  • 1.4 million relied on non-condensing boilers, which are more costly and less efficient than modern condensing boilers.

A household spending more than a tenth of its income on fuel is in fuel poverty.  The aggregate cost of the fuel poverty gap to all households low incomes is £1.05 billion – the fuel poverty gap is the reduction in energy costs needed to lift a household out of  fuel poverty. The average poverty gap per household was £438 last year  and is forecast to reach £494 in 2013.

BG and SSE have published widely different versions of the costs of green taxes, some of which provide for mandatory investment in energy efficiency measures like home insulation – paid for by consumers through their energy bills since public funding  was curtailed. The Ofgem chart shows what really propels prices:

Ofgem breakdown of dual fuel bill

The government is apparently reviewing so-called “green taxes.”

Meanwhile, fossil fuels have been receiving three times the levels of ongoing subsidies than available to renewables. Whilst much media attention has focussed on “green levies” on consumers’ bills, in 2010-2011, gas, oil and coal industries  were subsidised by £3.63bn, according to the OECD, whereas offshore and onshore wind received £0.7bn that year. As a whole, renewables in the UK benefited from £1.4bn government support over the same period, according to data from the Department of Energy and Climate Change.

Latest figures show that in 2011, government support for fossil fuels increased by £510 million to £4.3 billion, according to the OECD.  The figures cover financial benefits fossil fuels get from a whole range of government energy policies. Natural gas receives the most support through tax breaks and contributions for infrastructure development, at £3.6 billion. It also had the largest increase in support, with £532 million more in 2011. That increase was offset by a £31 million reduction in government support for coal power. The government is also promising further support to the shale gas fracking sector.

Scrapping energy efficiency investment would hit fuel poor households the hardest, of course, but it would also mean tens of thousands of lost jobs in the homes insulation industry and its UK supply chain; missed EU renewable energy and efficiency targets; and the fines that come with them. One thing the government can do immediately to help hold down energy bills is to invest more in energy efficiency, as the Energy Bill Revolution argues.


3 Responses to Energy bills rise by four times inflation rate

  1. Bill Courtney
    Oct 21st 2013, 4:24 pm

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  2. Blaming green energy for price rises doesn’t add up | Utilities Scotland
    Oct 21st 2013, 10:47 pm

    […] to a new TUC analysis gas and electricity prices have increased by four times the rate of inflation over the past 10 […]

  3. Cory Boehs
    Oct 25th 2013, 1:17 am

    Wow, I knew the prices had risen, but I had not realized to what extent.