Consumers paying more but using less energy

New Which? research for our Fair Energy Prices campaign has revealed we are paying, on average, £410 per year extra on our energy bills after inflation compared to a decade ago, despite using less energy.

Seven in ten (72%) people are worried about energy prices, and our consumer tracker consistently sees it rank as one of the biggest financial concerns. Our analysis shows yearly spend on energy has rocketed by 52%, over and above inflation, from £790 in 2003/04 (adjusted for 2012 prices) to £1,200 in 2012 while the energy we use has dropped by 17%.

This means households are shelling out, on average, an extra £410 per year on their energy bills, nearly double the rise we’ve seen in housing costs over the same time period (from £6,380 to £6,590, an increase of £210 per year).

The price of gas and electricity has outstripped inflation since 2003/04, with an average increase of 137% compared to 27%. Over the same time frame water costs have gone up by 62% and food by 42%.

With such a massive rise in energy bills over the past decade, big reforms are needed to restore confidence in the energy industry and guarantee fair prices.

As part of our Fair Energy Prices campaign, we are calling for:

·         The Competition and Markets Authority (CMA), as part of its current investigation into the energy market, to investigate the best way for the regulator to establish a ‘price to beat’, so that consumers can trust that the price they pay is fair.

·         Require energy suppliers to use simple, directly comparable pricing, similar to petrol pump displays, so people can more easily compare prices and make the best choice if they switch.

Which? executive director, Richard Lloyd, said:

“At a time when rising energy prices are consumers’ number one concern, it is shocking that people are paying more despite using less.  That’s why it is all the more urgent that regulators and government act to give consumers confidence that the price we are paying for our energy is fair.

“Major reforms are needed now to restore trust in the industry and to guarantee fairer energy prices for consumers.”

Notes to editors:

1.    Yearly energy spending statistics sourced from Which? analysis of the Living Costs and Food Survey; 2012; (Office for National Statistics)

2.    Energy consumption statistic sourced from Energy Consumption in the UK, domestic data tables; 2014 (DECC)

3.    This graph illustrates the difference in inflation in the price of essentials and other items:

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4.    Which? Consumer Insight Tracker: Populus, on behalf of Which?, interviewed a representative sample of 2251 UK adults online between 17th and 18th September 2014.  Data were weighted to be demographically representative of all UK adults. Populus is a member of the British Polling Council and abides by its rules.

5.    Definitions:

  • Energy spending includes all expenditures on Electricity, Gas and other domestic fuels.
  • Housing costs as defined by Which? include: rent; mortgage interest; mortgage capital repayments; housing benefit; stamp duty; moving house; housing related insurances; maintenance and repair of dwelling
  • Historic spending data from the LCFS were adjusted into 2012 prices based on the overall Consumer Spending Index (ONS).

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