Survey by Which? shows that households that use least energy pay disproportionately high charges
People who use small amounts of gas and electricity are paying up to 30% more for their energy than those who use more units, according to a Which? survey.
The organisation analysed standard dual fuel tariffs and discovered that although the government has encouraged people to reduce their consumption of gas and electricity, those most successful in cutting their usage are penalised for their efforts by disproportionately high charges.
Npower was the worst offender for differential gas prices last year, charging low gas users 35% more per unit than those who use a lot. Its current standard gas charges are 8.276p per kWh for the first 4572kWh, followed by a price of 3.079p per subsequent kWh. However, it was the only company to keep the percentage difference in prices for electricity to single figures, charging low users 3% more in 2011 and 4% more in the first few months of 2012.
The higher prices are most likely to hit those on low incomes, who comprise 57% of low energy users – defined by Ofgem as those in the bottom 25% of energy users. Although energy swallows up a large amount of their household budget, they are still likely to spend less on energy because they simply don’t have the money to use more gas and electricity.
EDF was the best for gas, with a 13% higher charge for those who used low amounts. E.ON was the worst for differential electricity costs, with a 34% higher charge per unit for low users.
Which? also found that the differentials in gas prices from E.ON and Npower had widened significantly during the past eight years
Energy companies blamed the price differences on the fixed cost of getting energy to a customer’s house, regardless of how much they use. To cover this cost they set up tariffs with either a daily standing charge, or with two tiers – where the initial units used are more expensive. This results in disproportionately higher charges for those who use few units.
But Which? said: “This doesn’t explain why it costs some companies more than others, or why for some companies it’s worse than it used to be.”
The Which? survey, published in the October magazine, also found that the premium charged for not paying by direct debit has risen at a far greater rate than inflation. In 2004 if you chose to pay by cheque you could expect to pay an extra £20 to £50 a year. Now it can be as much as £100.
The government is consulting on plans to tackle fuel poverty by measuring it in a new way, based on recommendations by Prof John Hills. He suggests a household should be considered fuel poor if it had fuel costs that were above average but its income was below the average poverty line.
Edward Davey, energy and climate change secretary, said this would enable the government to target those who needed help the most.
But Mark Todd of energy comparison website Energyhelpline said: “On the surface, the proposed change to the definition of fuel poverty looks like a government ruse to reduce the number (of people in fuel poverty) without doing anything. If fuel poverty is only defined as when fuel costs are above average but household income is below the poverty line then most fuel poor people will be immediately ruled out.”
Daniel, a single parent from Folkestone, has tried to cut energy consumption because he suffers from Gardner’s Syndrome, an incurable form of cancer, and is unable to work.
“My boy is 11 and we still share a bath – he hops in after I’ve finished. And we have a couple of fleeces to throw over ourselves when we’re watching TV rather than turning the heating on. Because I’m on benefits, Carl gets a free school meal and we tend to eat snacks in the evening that don’t need cooking,” he said.
“But I’m still paying more per unit than those who are less careful. It would be fairer if they had one price across the board.”
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