London, U.K. — (METERING.COM) — January 16, 2008 – At a time when rising prices are pushing average bills well over the £1000 ($2000) mark, energy watchdog energywatch says that measures which offer direct assistance with the cost of energy reach only 1 in 15 of the four million British households living in fuel poverty. A report commissioned by energywatch reveals that Britain’s energy supply companies currently spend 0.11% of their £24 billion ($48 billion) turnover on measures to assist the poor.
energywatch commissioned the report ‘Proportionality of social tariffs and rebates’ from independent consultants Cornwall Energy Associates after the government announced in the Energy White Paper that it would study energy suppliers’ efforts to help their vulnerable customers before deciding whether it was necessary to include legislation in this week’s Energy Bill empowering the government to require companies to offer social tariffs.
In analysing what the companies currently deliver, as well as what they have promised to do in response to the government’s challenge, energywatch has uncovered massive differences in the approach, commitment and investment of Britain’s ‘Big Six’ suppliers.
With rising prices being singled out as the reason for the rise in fuel poverty, the energywatch report focuses only on those initiatives – socially oriented tariffs and bill rebates – that offer direct assistance with the cost of energy to fuel poor households.
The watchdog focused on the proportion of turnover to be spent by each supplier, the number of customers being helped, and the generosity of companies’ social tariffs when compared with their cheapest available tariffs.
Proportion of turnover (if and when suppliers fulfil their voluntary commitments)
|E.ON UK Powergen||0.16%|
|Scottish and Southern Energy||0.07%|
“British Gas clearly outperforms all other suppliers in this category,” said Richard Bates, Social Policy Analyst at energywatch. “At the other end of the scale Npower and Scottish and Southern Energy’s investment is meagre.”
energywatch has calculated that if the other five suppliers matched BG’s 0.49% of turnover, an additional £72.3 million would be being spent on direct help.
Scale of social tariffs offered as proportion of customer base (if and when suppliers fulfil their voluntary commitments)
|British Gas||4.67% (750,000)|
|E.ON UK Powergen||2.28% (180,746)|
|EDF Energy||1.14% (59,979)|
|Scottish and Southern Energy||0.34% (26,000)|
“Again, when comparing on a like for like basis that means market share doesn’t distort the picture, British Gas fares best as it helps the highest proportion of its customers, with the others lagging well behind,” said Bates. “Even if all these promises are fulfilled only 1 in 6 fuel poor households will receive assistance with their energy bills.”
Generosity of social tariff (compared with sum of lowest priced gas and electricity offers)
|EDF Energy||£151 cheaper|
|Scottish and Southern Energy||£71 cheaper|
|ScotttishPower||£19 more expensive|
|Npower||£26 more expensive|
|British Gas||£96 more expensive|
|E.ON UK Powergen||not applicable|
“It’s good to see the social tariffs from EDF Energy and Scottish and Southern Energy significantly undercut the lowest open prices they have on offer,” said Bates. “However none of the other suppliers passes the key test of making social tariffs cheaper than any offering. Customers on social tariffs must be assured that they are on a company’s lowest rate, regardless of who their supplier is. This is particularly important as those customers are unlikely to be able to switch to the supplier’s or a competitor’s cheapest online tariff.”
The energywatch report takes a generous view of suppliers’ actions by including investment in all announced initiatives, including some that have yet to be delivered.
Richard Bates said: “Even on the assumption that suppliers will fulfil their commitments, it is clear that the assistance offered will fall well short of the response needed to mitigate the impact of high energy prices on Britain’s most vulnerable households.”
With suppliers claiming they are feeling the pinch and struggling to protect profit margins as a result of increased wholesale costs, energywatch is concerned that those companies who have shown a genuine commitment and are doing the most could reduce their investment if they feel they are being put at a competitive disadvantage by the suppliers doing the least. There is no guarantee from suppliers that these schemes are here for the long run, as pressure on margins may see them whittled away to nothing
Bates added: “To create a proportional and level playing field, the government now needs to require suppliers to offer social tariffs that meet minimum standards. Without enforced standards there is always the possibility that protection for vulnerable consumers will be levelled down or even removed, resulting in inadequate provision rather than the bar being raised to ensure consumers get the effective social tariffs they need if they are to have access to affordable energy and escape fuel poverty.
"The reaction of the Prime Minister and the Chancellor to the latest price rises suggests that they have been as surprised as everyone else by the sheer scale of the increases. And with our report clearly evidencing the inconsistent and inadequate response by most suppliers, energywatch wants the government to recognise the shortcomings of the Energy Bill and amend its own legislation."