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Page added on May 22, 2013
Energy bills ‘could overtake mortgages in five years’
Energy bills are rising so steeply that they could overtake mortgage repayments in parts of Britain in just five years’ time, the chief executive of supplier, First Utility, has claimed.
Ian McCaig issued the stark warning as he said energy policies must be reviewed to minimise the impact on bills and said consumers should think about turning down their heating to reduce costs. Critics have said that the Government’s environmental policies on windfarms and energy efficiency schemes, for example, are adding unnecessarily to the cost of bills.
“If things continue as they are, or even get worse, for some consumers in some parts of the country we will see energy bills overtake many other bills we have traditionally thought were the biggest items of non-discretionary spend,” Mr McCaig said.
“In fact, given that interest rates are low and look like staying that way it could easily be the case that over the next five to 10 years we’ll see energy bills even overtake mortgage costs for some consumers.”
Analysis by First Utility shows that UK dual-fuel bills have risen by an average of 8.5pc a year over the last five years to reach current levels of £1,420.
If they keep rising at the same rate, then by 2025 they would reach £3,761 – higher than current average annual mortgage repayments in places such as Stoke-on-Trent and higher than average repayments in Liverpool by 2029.
In Norwich and Birmingham, energy bills will outstrip mortgages of £5,100 and £4,990 a year respectively by May 2030.
Mr McCaig said First Utility has an “entirely different mindset” from other suppliers because “it wants consumers to actually use less energy”.
“People use heating really inefficiently,” he said. “We want to use consumption data to help customers use less.” He said he believed consumers could save 5pc to 20pc of their heating bills “just by being cleverer and not running the house hot”.
“When did we all start thinking it was all right to walk around our houses in the middle of winter with our shorts and T-shirts on? When did that become a sensible activity?” he said.
He said customers could save money by turning down their heating. “You have to be able to say, ‘Making that choice, this is how much that costs you’,” he said.
He stressed that he was not suggesting people should go back to being “huddled together” for warmth, and recognised that there were consumers in fuel poverty who could not just turn down their heating.
First Utility, which has about 125,000 customers, said last month it was raising its leading tariff by 18pc, citing a series of rising costs outside its control.
There is widespread agreement that energy bills will rise significantly to pay for hundreds of billions of pounds of new power plants Britain needs, but estimates vary as to how much.
Government figures suggest household energy bills will be about £76 higher by 2020. However, the official figures assume major reduction in energy consumption as a result of schemes such as the Green Deal scheme offering households loans to make homes more efficient.
“The Government is saying the impact of [added costs] will be alleviated by the measures that are being implemented to make the housing stock more efficient. It’s a big ask,” Mr McCaig said, describing the interest rate for the Green Deal as “pretty high” and suggesting alternative schemes may be needed. He also said the “archaic” energy market required reform as it was “not competitive enough” and left consumers paying too much.
“Bills are going up and there’s a bunch of stuff that can be done at a macro level to mitigate the impact of that. But, at the end, consumers are going to have to focus on the fact that maybe behaviours are going to have to change.”
8 Comments on "Energy bills ‘could overtake mortgages in five years’"
Arthur on Wed, 22nd May 2013 12:41 pm
Britain gets part of its gas and oil from continental Europe in an amount that is expected to grow in the coming years with every new pipeline from Russia built. Now if Britain wants to really see its energy prices skyrocket, it should leave the EU, as not few seem to contemplate, assuming that any gas or oil will reach Albion at all in such an event.
BillT on Wed, 22nd May 2013 12:45 pm
The age of cheap energy is over. Get used to sweaters and wool underwear in the winter. And 15C homes in winter and 30C in the summer.
Arthur on Wed, 22nd May 2013 1:22 pm
I am too lazy to become a millionaire, but here is how to do it:
http://deepresource.wordpress.com/2012/04/21/electric-clothing/
You can stay as warm as you want for merely 3$/month.
Throw away your expensive heating. You do not need to heat 500 m3 air, walls and windows (the Universe, basically). It is enough to heat the few millimeters between your skin and clothing.
Kenz300 on Wed, 22nd May 2013 6:19 pm
In a world of $20 oil, transportation costs are incidental. But … when oil costs $100 a barrel, importing everything you consume from some place half way around the world just because the labour is so much cheaper can quickly become penny-wise and pound-foolish.”
The case for optimism about a renewable energy future – MIT News Office
http://web.mit.edu/newsoffice/2013/the-renewable-energy-future.html
ceph on Wed, 22nd May 2013 7:14 pm
I live at 16-17°C in winter and it is comfortable. We do not need AC in our climate, so summer heat isn’t a problem.
My heating bills are very low. 16-17°C to the usual 22°C makes a HUGE difference…
Norm on Wed, 22nd May 2013 8:19 pm
There is solution to all this
. Its called a wood stove. Try it you will like it. Walk around in shorts and bare feet inside, when its zero F outside. Or is somebody gonna tell me it will never work.
BillT on Thu, 23rd May 2013 1:39 am
Oh, it works Norm, IF you own a big wood lot and use it sparingly. But if everyone that has cold winters burned wood, it would be a world wide Easter Island in a year or two.
Norm on Thu, 23rd May 2013 6:24 am
not to mention the smoke. koff koff ! aaahh chew !! (although there are clean-burning efficient wood stoves. Such a rarity, there’s some engineering involved to have such an appliance, so shut it down, lay ’em off and discontinue it.
i have often been intrigued with the merit and value of an electronic automatic air draft control (to limit unnecessary oxygen into the box) you think the masters will allow even a simple thing like that to be developed? bwaaa haa haaa haaaa !