£12 bill rise for energy upgrade

Ofgem has announced that bills are set to rise by an average of £12 a year to pay for a £24bn network upgrade. 300,000 more homes are likely to have been pushed into "fuel poverty" by Christmas, a campaign group has warned.

How to save money on household energy bills

Though household energy bills are set to rise by an average of £12 a year, there are a number of ways you can reduce your energy costs:

  • Compare energy suppliers on a price comparison website
  • Monthly direct debits, online accounts and dual fuel deals can be cheaper
  • Insulate your home's loft and cavity walls
  • Handheld energy monitors can estimate how much you're using in real time
  • Turn your thermostat down - just 1C could cut your bill by £55 a year
  • If you have an old gas boiler replace it with a new condensing model
  • Stop heating escaping through gaps in windows and doors

Energy saving tips care of the Which? website.

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Davey: Energy bills only raised in the public interest

Energy Secretary Ed Davey said he does not want to add "a single penny" to energy bills that isn't in the public interest.

Energy Secretary Ed Davey pictured speaking today
Energy Secretary Ed Davey pictured speaking today Credit: The Fair Energy Summit

Speaking at the Fair Energy Summit in London, Mr Davey said, "I'm quite frankly fed up with commentators suggesting the Government are deliberately increasing energy bills, when in fact we are doing everything we can to reduce them".

"The bulk of the cost we add to bills is for supporting low carbon technologies and energy efficiency ... I make no apology for ensuring that we meet our legally-binding carbon targets and renewable energy targets", he added.

£12 energy bills rise: A breakdown of the figures

Under Ofcom's revised proposals, household energy bills will rise an average of £12 per year between 2013 and 2021.

The amount is not cumulative as investment and costs "vary year-on-year".

Ofgem said energy bills are expected to rise from today's prices in the following manner:

  • 2013/14 - £8.50
  • 2014/15 - £7.30
  • 2015/16 - £11.20
  • 2016/17 - £11.60
  • 2017/18 - £13.30
  • 2018/19 - £14.50
  • 2019/20 - £14.20
  • 2020/21 - £15.10

The energy regulator said half the total average bill - £6.20 - is related to tax changes affecting the gas distribution network companies "that are outside Ofgem's control".

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Government defends fuel poverty strategy

Two million households will get help under the Warm Home Discount Scheme this year, including more than one million low income pensioners who will receive £130 off their bill.

We have also already announced our intention to launch a new fuel poverty strategy next year to make sure we are targeting help at those who need it most.

The Fuel Poverty Advisory Group has an important part to play in helping us assess our progress in this area and we will now carefully consider the recommendations set out in their annual report.

– Department for Energy and Climate Change

Millions 'to cut back on heating this winter'

Current Government plans for energy efficiency schemes are inadequate to deal with the scale of the fuel poverty problem.

Millions of older people, families and people with disabilities will be left living in cold homes and struggling to afford their bills unless extra measures are taken.

A much more ambitious energy efficiency programme is vital. Not only could this slash fuel poverty levels, it would also create economic growth, create thousands of jobs and cut carbon emissions.

– Mike O'Connor, chief executive of Consumer Focus

Government want 'four core tariff' energy plan

The Government announced proposals to require energy firms to provide just four tariffs for each fuel and to place all customers on the cheaper deals.

But critics have warned that the plans could see an end to cheap deals, stop consumers switching suppliers, reduce competition and push up bills in the long run.

The FPAG has said that there must be a "major step change" in the energy efficiency of housing, which could be achieved through the use of carbon tax revenues.

Over the next 15 years the Government will collect an average of #4 billion per year in carbon taxes.

Using a proportion of that revenue to fund a much more ambitious energy efficiency programme could start to tackle fuel poverty.

– Mike O'Connor, chief executive of Consumer Focus

What is fuel poverty?

Families are considered to be in fuel poverty when they have to spend more than 10% of their incomes on keeping their homes warm.

Fuel poverty is when you spend more than 10% on energy bills Credit: Martin Keene/PA Wire

Campaigning organisation the Fuel Poverty Action Group said that nearly half of the UK's fuel poor households are pensioners, a third contain people with some sort of disability or illness, a fifth contain a child aged five or under and one in 10 house someone aged 75 or over.

The Fuel poverty ratio is therefore defined as: Fuel poverty ratio = fuel costs (modelled consumption x price) ÷ income

In the calculation of this ratio, the fuel consumption is modelled, to ensure the household achieves the satisfactory heating regime.

Therefore, if the dwelling is actually heated to a temperature below the level defined as being satisfactory, the estimated bill for that household will be higher than the actual bill and vice versa.

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