How the new simple energy bills will cost the elderly MORE
NeW simpler energy tariffs may lead to up to a million pensioners and low users paying more for their gas and electricity.
this week, Npower became the latest big name to put out simplified tariffs ahead of tough new rules being introduced this summer.
in an attempt to force energy firms to be clearer and fairer, regulator Ofgem has said they must abandon the current complicated two-tier system whereby customers are charged a higher rate for the first units of energy they use.
instead, customers will pay a flat rate for each unit of energy used and a separate fixed standing charge to cover the cost of billing, metering and transporting gas and electricity to their homes.
Although the new rule will not come into effect until the summer, most firms have already started changing their prices.
Npower’s new tariff, t o be introduced on May 1, will apply to all existing customers.
British Gas and eDF have also said they will bring in simpler deals before the deadline. the only firm still to offer new customers a no-standingcharge option is Scottish Power.
Low users benefit from the twotier system because they pay only for the energy they use. When standing charges are made mandatory, they will have to pay the set administration fee regardless of how much electricity and gas they use.
People who live alone and those who only use gas for cooking are among those likely to lose out.
those with second homes used for only a few weeks each year may also be affected, as they will be paying a standing charge for two properties.
Ofgem does not have figures for the number of low-energy users in the UK, or how many could be left worse off.
Householders are under huge pressure to cut back on energy use to protect their pocket and the environment. the worry is that the new rule will reduce how much people can save by switching.
Ann robinson, of uSwitch, says: ‘By reducing the complexity of the energy market, consumers should find it easier to understand and compare deals and prices. ‘However, it’s important this greater clarity doesn’t come at a cost. it’s vital that households who make the effort to reduce energy consumption don’t end up falling foul of standing charges, otherwise where is the incentive to cut back?’ experts are warning of potential bill hikes this year. All the big suppliers have raised their prices this winter, increasing household bills by an average of £94.
Figures from uSwitch show average bills have rocketed from £522 a year in 2004 to £1,353 today —an £831 increase in just nine years.
those looking to protect them- selves against sudden increases can switch to Npower’s new fixed tariff. With prices fixed until December 2015, it is the longest fixed-rate plan on the market.
it will cost the average household using 3,300 kWh of electricity and 16,500 of gas £1,305 a year — cheaper than any of the big six suppliers’ standard tariffs.
However, it is £171 a year more expensive than the cheapest variable deal on the market. Scottish and Southern energy’s Discount energy Bonus May 2015 deal costs an average of £1,134 a year.
there is also a £50 early exit fee if you decide to switch supplier before the deal ends in 2015.
there are cheaper fixed-rate deals available. For example, OVO’s New energy Fixed deal costs £1,172 a year — £133 cheaper than SSe’s fixed plan, but you are protected from price hikes for only 12 months.
Ofgem’s reforms will also force energy firms to make bills clearer, introduce a cap on the number of tariffs they offer and enforce stricter customer service standards.