British Gas reduce their prices by 10% for gas but for the poor it will make no difference

Gas prices have risen and risen and risen again, and in the past few months the natural gas whole price has fallen and the United Kingdom’s six energy suppliers (I know there are a few more than six but six have 98% of the market) have come under pressure to reduce consumer gas prices. British Gas, one of the big six, has announced that it will cut its standard tariff gas prices by 10%, which is much less than the increases in 2008. British Gas put their standard prices up by 35% in 2008. Being aware of the commercial position, British Gas will introduce the price cut from 19th February.

For those of you on quarterly billing you may want to check your meter at this date and provide the gas company with a reading, otherwise you might lose out when they apportion the price decrease over a single billing period.

The price decrease is being given after the worse effects of winter will be over. The longer day light hours in March will mean that households need less heat.

Slightly less than two thirds of an average gas bill, taken over a whole year, pays for space heating. The remaining one third is for water heating. Cooking usually covers less than 5%.

British Gas is owned by the Centrica group. It calls itself Scottish Gas in Scotland. It raised its gas prices by a 35% in 2008, while the other five companies raised prices for gas by “only” 20%. The price decrease is only for gas; it does not affect dual fuel or electricity customers of British Gas. The average gas bill paid by British Gas customers is £884, and for working people this has to be found out of taxed income, so you have to earn around £1200 each year before tax and national insurance just to pay your gas bill, if you are a standard rate tax payer. I have tried to find out the average United Kingdom wage, but the statistics and variations on them are as confusing as an energy supplier’s tariffs. Probably around £28,000 seems to be the best estimate, although I guess that in the recession wages will actually fall, and with them the average wage.

If you earn £28,000 a year and have to use £1200 of that to pay your gas bill and another £1200 to pay your electricity bill, you are sailing perilously close to fuel poverty, which is defined by English Law as having to spend more than 10% of your gross income on energy. Thus the statutory definition is a matter of accounting, figuring out percentages against income.

Of course fuel poverty is not about percentages or even income.

Fuel poverty is a state where people cannot afford to maintain decent standards of warmth, so they suffer from hypothermia; it is a state where people have to wash in cold water, because they cannot pay for hot water. It is a state where people are frightened when the fuel bill arrives, because they might not afford it, and do not know how to read the meters or argue with the energy supplier about their consumption; it is a state where people are too proud to ask for help, and eschew charity, having given charitably all their lives and paid their taxes, not understanding that accepting help is no more accepting charity than accepting your old age pension, because you have already paid for it. Fuel poverty affects the old and vulnerable, those who are financially vulnerable.

You might have found it, like me, hard to talk to an energy supplier’s call centre, get sense out of their replies to your points, and found the conversation confusing. You might have agreed something only find that your agreement has been ignored. You have probably found it frustrating to quote your account number and query to five different people as you are passed from pillar to post in the call centre. Just imagine just how difficult you would find it if you were eighty five years old, with limited means and scared of being cold, unused to using the telephone for business matters and had to talk to an energy company’s call centre.

British Gas, in common with all energy suppliers has “social tariffs” but many poor people have prepayment meters which not only require payment in advance, but also charge at higher rates. Every time energy prices rise the Governments say that they will do something about the poor, who generally create the fewest carbon dioxide emissions per capita, having to pay more per unit of energy than the rich.

I do not expect a modest fall in gas prices to change tariffs on pre payment meters and I do not expect the energy companies to change their tariffs on prepayment meters without legislation requiring them so to do. Indeed i expect energy prices to rsie slightly in the next year, afetr a further modest fall, as the effect of a strenthening US dollar feeds its way into UK energy prices, becasue the raw fuel is always priced in dollars.

4 Responses

  1. You are very lucky to phone a utility company and the call is answered! I think you waited a long time?! Maybe the call was confusing at best because the call was in Mumbai! To confuse customers is a good way to keep them quiet and thus make more profit!

  2. Robert the figure you give £28,000 is the wage of a local government worker in a fairly senior position in my local council. I think the average ‘Mode’ amount is a lot lower than that. You maybe have to think not to include as well people who may be big distortion to the Mean average figure such as CEOs because their wages are often 50 times the £28,000 and then look at the Mode average and Median average. Also how many earning the ‘Average’ in an household. The government is very skilled at massaging the figures there are a lot of people in ordinary jobs struggling to pay for fuel.

    Because of the ecconomic situation I would not be suprised to see a repeat of events of the thrugh-out the 1970s trade Union Strikes and power cuts. The legislation used to contain single unions/strikes may finally be unable to control general strikes.

  3. If we continue to put all of our eggs in one basket we will be in danger of going bankrupt very quickly, thee is a saying that heat is half meat, meaning if you keep yourself warm you can survive on less food.

    If we let our old people get cold during the winter months, they will need more food in order of their bodies burning that extra fuel in order of keeping warm, the older body is les efficient at keeping warm in this way, so they are going to become an extra drain upon the health services with more and more stays in hospital,
    if we treat the cause we save money overall, but the quick fix British ways do not want to work for the future long term problems.

    Our problems are only just begining because as other countries populations grow, they will need any energy they produce for themselves, especially the colder countries, who will simply keep what they have for themselves and we will be at the bottom of the list for exports and spare reserves.

    When north sea oil has been depleted we are then at the mercy of others who have energy left, the price will rocket way out of control and real alternatives will have to be secured in order of surviving the colder months.

    The word utility is a dirty word who ever is at the other end of the phone, its rather ironic that the people who now own the energy companies and service centers do not really need them as their climates are quite warm,

    When the oil starts to run out, if those English nationals do not have a passport other than English, they will have nowhere else to go to, and another mass exodus will come to pass, NOT possible you say, well lets see what time brings.

    We are already starting to pullour wings back in, the car will go at the end of this year, the TV will go when they go digital and a solid fuel stove and free flood wood is the name of the day for cooking and heating our water, we don’t know how long this is going to last but many are already doing it or thinking about it.

    We are luckier than most, we work and live from home and don’t really need transport as the local shops are still quite good, as a couple we can keep warm together at night, single customers will suffer much more and end up another statistic.

    As time goes by more and more people will save and cut back, this will mean that others who waste will have to pay more for their energy and the prices will rise once again, a vicious endless circle of have and have not will go round and around until we are all on the bread line being thumped in the guts for being responsible.

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