Families already struggling to make ends meet were yesterday warned they face another huge rise in power bills next year.
Many pensioners and less well-off households are having to choose between heating and eating this winter after electricity and gas charges reached an all-time high.But, as the cold weather bites and power firms report record profits, customers were told there is likely to be more pain to come – with a further 5 per cent rise in tariffs.That would add nearly £70 to the typical bill, taking the total for millions of families to around £1,420 a year.
Consumer groups said prices could rise by even more – possibly by as much as 15 per cent or around £200 over the next 18 months.Ann Robinson, of uSwitch.com, said: ‘Affordability is becoming a huge and growing concern. The days of cheap energy are over.’The average household energy bill has risen £94 or 7 per cent this year and £251 or 23 per cent since January 2011. In 2004, the typical bill was £522 a year, which means customers have seen a rise of £830 or 159 per cent in less than a decade.
The Office for Budget Responsibility, which publishes official forecasts for the Treasury, is predicting another 5 per cent rise in energy bills next year.It said it expected suppliers to respond to higher oil and wholesale gas prices as well as increased costs associated with the Government’s green agenda.Robert Chote, chairman of the OBR, told MPs on the Treasury Select Committee that families should be prepared for another ‘bigger than normal’ increase next winter.
Graham Parker, who sits on the OBR with Mr Chote and Steve Nickell, said he hoped next year’s price hikes will be the last to outstrip inflation. ‘We have another above inflation rise for the end of 2013 but then I think we are assuming we will not see any above normal inflation rises,’ he told MPs.But uSwitch.com said inflation-busting increases could keep coming.
‘We expect further price increases next year and would not be surprised if households see increases of as much as 15 per cent in the next 18 months to two years,’ said Mrs Robinson.It also warned that around nine in ten households expect to ration their energy use this winter to save on gas and electricity bills in a dangerous game of ‘Russian roulette with their health and well-being’.Mrs Robinson said: ‘A cold snap can easily add an extra £1 a day on to the cost of heating a home. We have reached the point where people are potentially compromising their health and wellbeing rather than risking higher energy bills.’
German owned E.on this week became the last of the major energy suppliers to jack up prices this winter in a move that adds £110 to bills for its customers.The ‘big six’ suppliers – British Gas, SSE, Npower, Scottish Power, EDF and E.on – have all announced price increases of between 6 per cent and 11 per cent in recent weeks. Soaring energy bills have piled pressure on household finances as a cocktail of rising prices and muted wage growth eat into family budgets.
Inflation remains stubbornly above the 2 per cent target and continues to outstrip pay rises for the majority of workers.It was hoped 2013 would finally see pay rise faster than prices – with average earnings going up 3.1 per cent and inflation falling to 1.9 per cent.But last week the OBR said it now expects inflation of 2.5 per cent in 2013 compared with wage growth of 2.2 per cent.
Michelle Mitchell, of Age UK, said there are now 3.5million elderly people living in fuel poverty – which means they pay more than 10 per cent of income on fuel.’With energy price rises showing no signs of abating, this figure is set to rise,’ she said.Last month British Gas was on course to deliver a 10 per cent plus increase in profits this year. It is expected to make around £575million in 2012, a performance which is thought likely to help its parent company Centrica to pre-tax profits of around £2.8billion, up by £400million.It refused to comment on ‘speculation about prices’.Scottish & Southern Energy, the UK’s second biggest supplier, made £397.5million in the six months to the end of September – up 38 per cent on the same period last year. – Dailymail