Huge rise in energy bills: Cost to soar as firms axe cheap fuel tariffs

October 6, 2013 by  
Filed under Green Energy News

Scottish Power would not be drawn on whether its similar Fresh Start deal, which serves 50,000 customers, would also be axed.

However, a spokesman said “everything is under review”, adding: “The market is going through a change set out by the regulator. We have to bring our structures into line with it.”

The remaining four “Big Six” energy companies said they did not have equivalent deals, although some tariffs include discounts.

The new regulations are part of a raft of measures by Ofgem to make the energy market “simpler and fairer” for customers.

Charge breakdowns must be simpler while bills will carry a Tariff Comparison Rate aimed at helping customers to see whether they are on a good deal.

The controversial TCR has drawn criticism from lobby groups who say it does not take into account different levels of usage and could mislead millions.

Mr Todd added: “Ofgem’s reformed four-tariff structure, while noble at heart, is beginning to have the unintended consequence of cheap, discounted, variable tariffs being scrapped. Green tariffs and those that help charities and the elderly could also go.

“We’ve seen the sparks already with E.On’s withdrawal of its StayWarm ­tariff for over-60s this week.

“This is just the first ember. Expect the fire to rage over the next few weeks as suppliers are forced to slash and burn some of their cheapest tariffs.”

He warned the next wave of annual price increases was “just around the corner” with bills set to rise by between five and 10 per cent.

Households could be forced to find an extra £140 with the average annual fuel bill, currently £1,420, rocketing to almost £1,600. The energy crisis follows news this week that millions could face winter gas shortages due to a reduction in exports from Europe.

Technical problems at Norway’s giant Troll gas field will reduce production by 28 per cent this year. That will put pressure on British gas supplies which rely heavily on Norway and could force companies to use more expensive ­Russian gas.

The field’s operator Statoil expects the lower production level to continue into next year.

Spokesman Morten Eek said the firm expected “somewhat reduced capacity into the winter at the Troll field due to technical issues”.

Oeystein Michelsen, Statoil’s head of development and production, said: “We have a reduced flexibility on Troll for the time being and it will take a long time to get back to full flexibility.”

Ian Fells, emeritus professor of energy conversion at Newcastle University, warned that millions were already struggling to heat their homes.

He said the number of people in fuel poverty – where 10 per cent of the family income is spent on fuel – was set to rise this year.

“It is inevitable that the price of energy will rise and I blame this on the huge investment in renewable energy,” he said. “If the Government pursues this expansion of green energy, it will cost the bill payer.”

A spokesman for Ofgem said: “We know that customers are confused by the vast number of tariffs in the market.That’s why we are giving them the simplicity

we know they want, through the biggest reforms to retail market since competition began.

“Our rules state that by the end of this year suppliers will be restricted to offering up for four core tariffs per fuel only. We have never told suppliers which tariffs they have to close to comply with this rule, as that is a decision for them.

“Once our rules are in place suppliers will have to make sure that any customers affected by their decisions to close tariffs are given details of the cheapest offer their supplier has.

” We have been clear with suppliers that they can keep social tariffs (which for example offer discounts to customers who have difficulty paying bills) under our rules. And after announcing the closure of its Staywarm tariff, EON has confirmed that it will continue to offer its Age UK tariff for over 60s, as one of its core tariffs under our reforms.”

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