Perhaps the rollout of the new smart meters will enable consumers to save money on energy usage, but even reduced prices have shown that households and businesses still spent more on energy this winter than in the previous year. Oddly, this was despite the winter being milder than any within the past ten years and an overall decrease in the amount of energy consumed.
According to the consumer group, Consumer Focus, the higher energy bills were the result of cuts offered by the ‘big six’ midway through the winter. Although their data pertains largely to households, it is evident that businesses suffered the consequences of high electricity and gas as well. Cuts were not instituted until January and only provided approximately a 5% reduction in price to the consumer – but those cuts were after a yearlong period of heavy price increases. To this extent, prices remained significantly higher even with that small 5% decrease.
Both Citizens Advice and Consumer Focus believe that higher bills are forcing consumers into what they are calling energy debt. This is based on the fact that energy suppliers increased prices by 21% which averaged out to about £224 for the year between December 2010 and the end of 2011. In the end, the groups found that on an average, a dual fuel bill equaled approximately £1200 for a household. Those hit hardest by increased prices were those on fixed incomes which were low, families and older people receiving benefits and businesses struggling to survive a double-dip recession.
After all the hype from the big six over reduced rates for gas and electric, higher bills cam as a complete shock to almost everyone. The chief exec of Consumer Focus, Mike O’Connor, finds that consumers really did expect much lower bills because of the mild winter along with the price cuts. Household (domestic) accounts can contact Consumer Focus or their energy supplier if they are at a breaking point in their budgets and of course both businesses and households are free to shop around for cheaper prices.
Households and businesses throughout the UK are making plans to reduce the amount of money being spent on gas and electric in a number of ways. Primarily they are shopping around to compare the best rates available but also looking for innovative ways to reduce consumption. In other words, televisions, radios and computers are being used less and left unplugged when not in use. Others are cutting back on food and entertainments whilst others are foregoing new fashions to allocate more money towards electricity and gas. Companies are enforcing strict energy policies to cut back on consumption as well.
Consumer Focus found that as many as one of every seven households will cut back on groceries whilst an astounding 33% of households will not be able to pay for energy once their bills go over £30 and greater than 50% would not be able to afford a £50 bill. Prices have been reduced, but bills are still higher than last year and conservation appears to be the best way to keep prices low.