Winter warning for Welsh heating bills

This week is crunch time for winter energy costs.  The Chancellor is delivering the Autumn Statement on Wednesday 22^nd November, followed by Ofgem’s decision on the energy price cap on Thursday 23^rd November. Victoria Winckler, Director of the Bevan Foundation, asks what can we anticipate?

Last winter, with gas and electricity prices at unprecedented levels, the Bevan Foundation found that four out of ten (39%) of people in Wales were forced to cut back on heating.  Summer warmth and a small drop in energy prices brought some respite, with the numbers of households cutting back on heating falling to 27% – still more than one in four but down on previous results. The summer may well have created a false sense of security. 

The months ahead are set to be at least as tough as last year.

First, the cost of heating remains high.  Energy prices are more than 50 per cent higher now than in 2021/22. The cost of gas in Oct – Dec 2023 is 7p per kWh while electricity is 27p kWh.  This makes the bill of a typical household – using the same amount of energy as in previous years – £1,923 a year, or around £37 a week. Disingenuously, Ofgem has dropped its estimate of the typical household bill, to £1,834 a year, on the grounds that households have cut back on consumption.  This is a sleight of hand that might play well in headlines but does not fool gas and electricity users.

Second, the outlook is tough as prices look set to rise again.  Ofgem will announce the price cap for January to March 2024 on 23^rd November, with many forecasting unit costs will go up. Cornwall Insight is predicting that prices will rise by five per cent, to £1,931 (using new consumption figures) from 1 January 2024, and that they will stay high for the rest of the year.

To rub salt in the wound, the analysts are also forecasting a steep increase in electricity standing charges from April next year, as a result of a review by Ofgem.  If they are right, households could be paying 61p a day – or £4.27 a week – simply to have an electricity supply to their home, before they have even used one unit.

And third, although prices remain high, the Energy Bills Support Scheme, which gave £400 per household off their bills last winter, has gone. There is some help for pensioners, through the Winter Fuel Allowance, as in previous years but for people of working age there is nothing.

People in Wales face a triple energy crisis. 

Energy prices are among the highest in the UK, particularly in north Wales. Wales’s homes are among the least energy efficient, mainly because of their age. And yet people in Wales are least able to pay for the energy they need, as household incomes are some of the lowest.   As a result, too many people in Wales will be cold this winter, affecting their everyday lives as well as their health and well-being. It is a deep injustice that people in an energy-rich nation – one that produces nearly twice as much electricity (27.1 TWh) as it consumes (14 TWh) – are the least able to afford to heat their homes.

So far, prices for the next quarter are just speculation – it remains to be seen what Ofgem will announce on 23^rd November or if the Chancellor will, unexpectedly, provide some respite in the Autumn Statement on 22^nd. 

Join us, along with Ben Saltmarsh of National Energy Action Cymru and a representative of OVO Energy, at our webinar to find out more about the implications and, crucially, what can be done.