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We face £5,000 a year energy bills

Jun 23, 2009

There is probably a large percentage of us that think we are already paying more than enough on our energy bills…

…but how would you feel about paying nearly £5,000 a year?!

Don’t panic though, as the rise won’t happen straight away, but we will end up paying that amount in the next decade.

The reason we face such a hefty figure for our energy is because energy prices are estimated to rise by 42% cent annually.

Let’s be honest, all this will do is force thousands more of us into fuel poverty.

Uswitch points out that the average energy bill for a typical household has more than doubled since 2005 to £1,243 from £580. They conclude that on current trends, the bills would reach £4,185 by 2020, compared to £1,243 at present.

On top of that, the government’s commitment to securing the UK’s longer-term energy supply, allowing them to roll-out smart meters in homes, will cost us the taxpayers an additional £548 a year, meaning the cost of energy to each household could be as high as £4,733 within a decade.

Ann Robinson, director of consumer policy at uSwitch.com, says:

‘This is a wake-up call for us all. The £5,000 a year energy bill may seem like an outside -possibility, but we have to remember that energy bills doubled in the past five years. The fact is we are entering a new era of high cost energy and households will have to adapt their behaviour accordingly.’

These increasing costs come as the UK becomes more dependent on energy. Our aging population and the growing number of electrical gadgets per household mean that more power is used now than ever before.

But campaigners insisted that families should not be forced to fund the rising investment costs of energy firms.

Audrey Gallacher, from Consumer Focus, the campaign group, said: ‘Companies don’t have a blank cheque and consumers cannot be expected to pick up the full tab.’

Michelle Mitchell, charity director for Age Concern and Help the Aged, said: ‘With more than one in three pensioner households already in fuel poverty, any further price rises could have serious consequences.’

Read: Energy companies use our money as interest free loans

The uSwitch.com analysts also believe that the eventual end of the recession (which they predict will happen in 2011-2012) will see a global increase in energy demand, driven by rising economies such as China and India, which will put even more upward pressure on prices.

Robinson says that while the government has been banging the drum for energy efficiency for a while now, we the consumers have been reluctant to spend money on these measures. She said:

‘As a result, energy efficiency has been massively under-performing even though it is one of the biggest defences we have against escalating energy costs.

‘We also have a competitive energy market, and yet less than 5 per cent of consumers are on the most competitive energy plans – most people are paying far more than they have to for the energy they use.

‘This has to change. My advice to consumers is to invest in making your home more energy efficient, reduce the amount of energy you use and make sure you are paying the lowest possible price for it. Big projects such as a new energy efficient boiler or home insulation can be expensive, but the savings you make through cutting the price of your energy could be reinvested into energy efficiency measures so that you reap even greater rewards in the future.’

Garry Felgate, chief executive of the Energy Retail Association, said it was ‘impossible’ to accurately predict prices over the next 10 years and we should all do our bit to help keep costs down, saying:

‘What we do know is that the best way customers can keep energy costs down now and in the future, is by using less energy. This is why the major suppliers are investing around £4 billion over the next three years in energy efficient measures – like free and low-cost insulation and home energy audits – helping their customers use less gas and electricity and cut their fuel bills.’

Read: Is the new energy meter a smart idea?

In something that won’t shock any of you, here in the UK, we currently have the highest energy price rises in Western Europe. Figures released earlier this year showed that fuel costs had remained high despite the fact that countries such as France and Germany had seen falls.

According to the OECD’s Consumer Prices Index, UK energy inflation was at 12.1% in the past year. By contrast there were falls of 0.8% in Germany, 6.5% in France and 7.2% in Spain.

Most of Britain’s energy suppliers are now owned by German, French and Spanish firms, raising suspicions that they are picking the pockets of us consumers here in the UK while keeping prices low in their own countries.

British Gas, owned by Centrica of Britain, recently announced a 10% cut on gas and Scottish & Southern Energy has also promised to cut its bills.

However, foreign rivals have so far failed to follow suit. nPower and E.on are both German firms, while EDF is owned by the French and Scottish Power by Iberdrola of Spain.

5 Responses to “We face £5,000 a year energy bills”

  1. Lisa Says:
    Jun 25, 2009 at 8:35 am

    I’m crippled by my [b]46 pounds a week[/b] I have to pay to Eon. I have 5 kids, 2 of them disabled, and we rent, so we have no choice in the fact we do not have a combi boiler. We use a lot of energy in washing, I don’t have a tumble drier, and we switch off the electric at 10pm every night. Hot water is our other main energy need. Last winter my disability got worse as when kids weren’t at home I used no heating, to keep the bills down. Eon [b]don’t [/b]have a social tariff. I can’t switch as I owe them over 1000 pounds, and pay them just my usage, as above. I can’t afford to pay any more – I suspect I am not alone.

  2. Nigel Brooks Says:
    Jun 25, 2009 at 11:53 am

    This article is pure hype.

    I am still paying about 10p + VAT for our electricity, [b]the same price as 20 years ago[/b], when I was a student living in house shares. I remember because the relative cost in those days was higher, and we had to split bills up between people.

    The reason people’s bills are higher now, is that they use more electricity for appliances, PCs, gadgets etc. Power should cost more, to deter us from wasting it. It cost much less now in real terms than 20 years ago !

  3. beingsalt Says:
    Jun 25, 2009 at 3:00 pm

    good point monsieur brooks

    i agree with you although that’s only electricity. I believe it’s gas that has soared (and looks set to continue doing so…)

  4. Mark Dawson Says:
    Jun 25, 2009 at 8:44 pm

    British gas is foreign owned too. It is owned by Centrica which is Spanish. There is nothing British about it.

    The last remaining British company of the larger ones is Southern.

  5. G Kinnear Says:
    Jun 25, 2009 at 9:41 pm

    I look at prices across europe and I am not surprised when I see Foreign gas companies charging British consumers more than they do their kinsmen back home. Despite European competion rules no other country would allow key tactical / important industries like fuel, gas or nuclear power to fall into foreign hands. Now that France has control of our nuclear generating industry it will not be long before electricity starts to become expensive as we pay for the next generation of French powerstations. We have decided that energy should be expensive! Maybe so; but surely no more than in other countries or are we happy that our industries are totally disadvantaged in this competitive world.

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