Household Energy Consumption Drops But Energy Companies Counter by putting up Prices

The amount of energy consumed by the average household is reputed to have dropped dramatically since 2005, with the Office for National Statistics indicating that the drop in energy consumption between 2005-2011 in particular was substantial: almost 25% for electricity and 29% for gas.

Those overall falls have come, many say, in response to consistent price rises from energy providers. But with energy companies claiming that their prices are rising due to falling demand and a requirement to protect their profits in turbulent times, it is a case of which came first; the chicken or the egg?

As well as the price rise argument, commentators have attributed the decline of energy consumption to improvements in the efficiency of new properties, particularly with regard to modern insulation and sustainability requirements, and the upgrading of older properties. Much of the latter is down to the Government’s efforts under the Energy Companies Obligation (ECO) to force providers to fund substantial, energy reducing renovations – like internal and external wall insulation. The Government, of course, has stressed this as a major factor.

In addition, many homeowners have been converted to the ‘green conscious’ ranks and substantial numbers are using a little less heat and energy as a result.

Concerns have been raised, however, that it is the rising of prices to untenable levels that has cut demand, reflecting the inability of many households simply to pay the bills. Some sources are reporting that energy bills have overtaken mortgage repayments as a typical UK household’s biggest concern.

Cynics have suggested that the price rises from the big energy companies are actually well above the wholesale price increases necessary to protect the energy companies’ profits.

Richard Lloyd from the influential consumer group Which? said:

“Energy Efficiency measures may have played a part in the fall in Energy usage, but the fact is many consumers will have cut back in order to save money in the face of spiralling prices and squeezed incomes.”

“We need simple energy pricing….and for all energy policy costs to be scrutinised by the National Audit Office.”

Whether the National Audit Office has the teeth and influence to reduce the potentially unjustified price increases from (increasingly foreign) energy companies is debatable.  After all, how many of our essential water and energy companies are still British?

Over the last few weeks Npower has announced it is to raise its prices.  It is the fifth of the six big energy companies to do so.  The price rises are 7.2% for electricity and 15.7% for gas, which both commence from 1st October 2013.

 —

Chartered Surveyors of the PropertySurveying.co.uk network can and do create Chartered Surveyors’ Reports under the ECO scheme mentioned in this article. These are required to secure funding for insulating Hard-to-Treat cavities, amongst other things. Don’t hesitate to contact the Survey Desk to find out whether one of our members can assist you:

 0800 880 6264
www.propertysurveying.co.uk

SJ / LCB                                                                                                                       19/08/2013