Customers Face £30-a-Month Price Hike When UK Energy Companies Go Bust

Customers Face £30-a-Month Price Hike When UK Energy Companies Go Bust
A general view of a gas hob burning in a file photo dated Nov. 10, 2013. (PA)

Consumers who are moved to a new energy firm after their supplier goes out of business stand to pay almost £30 ($41) a month more, Citizens Advice has found.

The energy watchdog warns people will face “desperate choices” this winter after finding that customers of the five largest failed suppliers are set to pay £6.70 ($9.17) more a week when moved on to the default tariffs of a replacement firm.

The energy price cap is due to rise by £139 ($190) for people on default tariffs and £153 ($209) for people on pre-payment meters on Oct. 1.

As of Tuesday Sept. 28, more than 1.5 million people had been affected by energy supplier failures.

Citizens Advice said it was particularly concerned about those on the lowest incomes who could be hit by rising energy costs, a planned cut of £20 ($27) a week to their Universal Credit, and a higher cost of living due to inflation.

Those who lose their Warm Home Discount if it is not carried over when they are moved to a new supplier could be £17.40 ($23.8) a week worse off, it warns.

People in this situation who are also on Universal Credit stand to lose £37.40 ($51.2) a week if the planned cut is implemented.

Frontline advisers at the charity said they feared many would be left facing “desperate choices” due to fuel poverty this winter, including turning off their fridges and freezers, relying on hot water bottles for warmth, and requesting support to buy extra duvets and blankets.

A survey by the advisory service found 35 percent of people are worried they will struggle to pay their energy bills this winter, rising to 45 percent of those earning less than £21,000 ($28,700) per year and 44 percent of households with children.

Citizens Advice is calling on the government to reverse its planned cut to Universal Credit and introduce emergency winter grants for those on the lowest incomes.

Chief executive Clare Moriarty said, “Overnight price hikes will be a shock for more than a million households whose energy companies have gone bust.

“We’re particularly worried about those who’ll face desperate choices this winter because of the cumulative impact of soaring bills, the planned cut to Universal Credit, and inflation.

“The government and Ofgem must guarantee that the Warm Home Discount will be continued for people moving to new energy suppliers. People on the lowest incomes should be able to access emergency winter grants so they can stay warm in the cold months ahead.”

By Josie Clarke