Why We Should All Get Used to High Household Energy Bills
Kevin Peachey, Cost of Living Correspondent
Getty Images
Energy bills may have been a distant concern through the sweltering summer. Clothes on a washing line have been drying in minutes, and cold showers have felt more tempting than hot ones. But recent news and forecasts on gas prices will bring a renewed sense of worry and urgency to families, as well as government ministers.
Energy Prices on the Rise
Energy prices are set to increase by nearly 4% for millions of households in October. Even more striking is a prediction from the respected consultancy Cornwall Insight of a further 9% surge at the peak of winter in January. With ongoing volatility in the wholesale gas market, sparked by events in the Gulf region, the energy sector expects high prices to persist. EDF suggests bills will remain "stubbornly high" at their current levels for at least the rest of this decade.
The Impact on Households
High bills have significantly bitten into household budgets. Energy prices are a central factor in the cost-of-living squeeze. The typical household's dual-fuel bill is now 70% higher than it was at the start of 2021, before Russia's invasion of Ukraine. That amounts to around £600 more each year than pre-crisis levels, according to industry body Energy UK.
Inevitably, many people have struggled to pay their bills. Unpaid energy debt of more than three months is now at a record high, according to regulator Ofgem. Suppliers, who track debt levels for missed payments of one month or more, estimate total unpaid bills and charges to have reached £6bn. By the end of the year, they expect this figure to rise to £7bn.
The average household in debt, without a repayment plan, owes more than the typical annual bill. And even if you're not in debt, you still pay—covering the cost of others' unpaid bills adds about £60 to the average annual bill. Baringa estimates everyone could be paying an extra £100 by year-end to cover these costs. For someone who pays their bill on demand every three months (rather than a monthly direct debit), this typically amounts to £150 a year to cover others' debt.
Increasing Pressure on the Government
The government faces increasing pressure to help those most in need. Ofgem has proposed a debt relief scheme, while campaigners urge ministers to implement it and introduce a discounted tariff for those who need it most, based on benefits, health, and income data. Energy UK estimates such a targeted plan would cost £1.9bn—a fraction of the £40bn committed to protecting everyone.