Gas and electricity: We’re using less but paying more

Consumers are paying an average of �410 more a year for energy compared to a decade ago despite using significantly less.
Consumers are paying an average of �410 more a year for energy compared to a decade ago despite using significantly less.
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Consumers are paying an average of £410 more a year for energy compared to a decade ago despite using significantly less, a watchdog claims today.

Which? said its analysis of Office for National Statistics figures had found yearly spending on energy had rocketed by 52 per cent over and above inflation from £790 in 2003-4, a figure it adjusted for 2012 prices, to £1,200 two years ago.

Meanwhile, domestic energy consumption figures from the Department of Energy and Climate Change showed a drop of 17 per cent over the same time frame.

This meant households were spending an extra £410 a year on average on their energy bills, nearly double the increase of £210 a year in housing costs such as rent, mortgage and maintenance over the same time period.

The price of gas and electricity had outstripped inflation since 2003-4, with an average increase of 137 per cent compared to 27 per cent.

Over the same period, water supply costs had gone up by 67 per cent and food by 43 per cent.

Almost three-quarters of people were worried about energy prices, according to surveys by the consumer group.

Which? said such a “massive” rise in energy bills over the last 10 years showed significant reforms were needed to restore confidence in the sector and guarantee fair prices.

It had previously called on the Competition and Markets Authority to investigate the best way for the regulator to establish a “price to beat”, so that consumers could trust that the price they paid was fair, and for suppliers to use pricing similar to petrol pump displays to allow consumers to easily compare tariffs.

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.”

Shadow energy secretary Caroline Flint said: “Under David Cameron’s Government, Britain is facing an energy bill crisis, with millions of people struggling to heat their homes. Labour has already set out radical plans to freeze energy prices until 2017, saving the average household £120, and fix the energy market for the future, with a tough new regulator to curb rip-off bills.

“But one of the main reasons our energy bills are so high is that our homes are some of the least energy-efficient in Europe - leaking heat from their roofs, walls and windows. That’s why Labour has set out plans to freeze energy bills, reform the energy market and upgrade at least five million homes over 10 years. Our plans will mean cheaper bills and warmer homes for millions.”

Trade association Energy UK said tariffs had been simplified and bills made clearer and easier to understand. “Energy prices are influenced by a number of factors including wholesale prices, network costs and government levies. This means four fifths of the average bill are outside of suppliers’ control.”

Energy Secretary Ed Davey said: “We want an energy market that works for consumers which is why we ordered an annual competition assessment that has seen the whole sector referred to the Competition and Markets Authority for the first time.

“In the meantime Government is making it easier and quicker for people to switch energy suppliers, and has acted to cut household bills by an average of £50 this year.”