Half of all homes will switch off heating by 2016, claims report

HOUSEHOLD energy will be “unaffordable” in less than three years’ time, according to new research that forecasts the average yearly energy bill will break the £1,500 barrier by 2015.

The rise will force many more households into fuel poverty – with six in ten going without adequate heating and almost four out of ten switching their heating off altogether.

Analysts say greater transparency from fuel firms is necessary as energy prices hurtle towards crunch point, forcing people to make tough choices about how much heat they can afford.

According to research by price comparison website uSwitch.com, energy bills have doubled in the past eight years.

If this continues, bills could reach £1,582 a year by 2015 and £2,766 by 2018.

The research identifies £1,500 a year as the point at which most households will begin to ration energy, with 77 per cent expected to reduce energy use, 59 per cent to go without adequate heating and more than a third (36 per cent) switching off their heating entirely.

Almost a third of consumers (32 per cent) say household energy is already unaffordable in the UK.

If bills rise above £2,000 a year – which the forecast suggests could happen by 2016 – significant numbers of people could begin to compromise their health and wellbeing.

At that point, almost nine out of ten households (88 per cent) will ration energy use, three-quarters (75 per cent) will go without adequate heating and more than half (55 per cent) will turn their heating off altogether.

Ann Robinson, director of consumer policy at uSwitch.com, said: “The UK is hurtling towards a cliff beyond which the price of household energy will become unaffordable.

“Once the average bill hits £1,500 a year consumers will be forced to compromise on their comfort, health and wellbeing.

“Time is running out. If pricing trends continue we will hit ‘crunch point’ in less than three years, and that is without factoring in the cost of current energy policy.

“The government has to understand that affordability is a huge concern to consumers and has to be given equal footing with security of supply and decarbonisation.

“Bills are already £248 or 17 per cent short of the £1,500 ‘tipping point’ at which consumers will be turning down and switching off. While we all have a responsibility to use energy carefully and sparingly, we also have a right to enjoy a safe and warm home. This will be compromised if bills rise much further.

“At the very least, consumers have the right to know what the impact of energy policy could be on their bills. This will give them time to adapt accordingly by ensuring they are paying the lowest possible price for their energy and are using energy efficiency measures to protect themselves against higher prices.”

According to uSwitch, the average household energy bill is £1,252 a year – £248 below the “affordability ceiling”.

Suppliers are hinting the rises could be even greater than predicted. Centrica, parent company of British Gas and the UK’s biggest supplier announced this month that customers could face higher bills by the autumn.

The company’s statement said: “UK wholesale gas costs are around 15 per cent higher for next winter than last, and non-commodity costs are expected to add a further £50 to the cost of supplying the average household this year.”

Analysts predicted that the combined cost of the £50 in transport costs, coupled with the 15 per cent rise in raw materials, would mean an average increase of £130 a year if the costs were passed on to the consumer.

The uSwitch calculations also fail to take into account the cost of subsidising renewables, which could send bills soaring even higher.

According to a recent report by consumer watchdog Which?, energy bills are one of the greatest causes for concern among householders. It said paying soaring energy costs was one of the key factors driving people to take out high-interest payday loans – leaving themselves facing huge interest payments.

Campaigners say big energy companies need to be more transparent about the way they present bills to customers.

Shadow energy minister Tom Greatrex, MP, said: “These are startling figures. Households all across Scotland are struggling to keep their heads above water as it is. Further energy bill increases could be the tipping point for many.

“We need transparency about how our energy market works – the cost of generating and distributing energy, exactly how much money energy companies are making from consumers, and where these bumper profits are going.

“The UK government recently published a draft Energy Bill that proposes nothing to make the energy market work in the best interests of consumers. Rather than standing on the sidelines as energy companies rack up record profits, it is time for government to act.”