Thousands of domestic users moved to a new energy company because their supplier has gone bust stand to pay nearly £30 more per month, a consumer watchdog claims.
Citizens Advice’s analysis is released today as Whitehall’s job-supporting furlough ends after eighteen months. Yesterday Ofgem confirmed the failures of ENSTROGA, Igloo Energy and Symbio Energy has robbed 230,000 home accounts of their immediate supplier. Only a handful of business accounts are affected.
CA analysed deals offered by the five largest failed suppliers so far, against the price increase which customers typically experience when switched to a default tariff at another supplier.
With a squeeze on family finances underway, Citizens Advice is calling for urgent targeted support to avert a ‘cost of living crisis’ this winter.
The energy price cap is due to rise by £139 for people on default tariffs and £153 for people on prepayment meters from 1 October. As of this week, more than 1.5 million people had been affected by energy supplier failures.
People on low incomes will be hit the hardest
|Type of customer
|Squeeze on budget
|Customers whose supplier goes bust and who are moved onto a default tariff with another supplier.
*£14.70 a week including higher living costs due to inflation (source)
|£6.70 a week worse off*
|Customers moved to a new supplier who lose their Warm Home Discount, and face higher living costs due to inflation
|£17.40 a week worse off
|Customers moved to a new supplier who lose their Warm Home Discount, face higher living costs due to inflation, and see their Universal Credit cut
|£37.40 a week worse off
Analysis: Citizens Advice
The charity voiced special concern about poorest consumers facing a triple whammy of financial hardship: rising energy costs, a planned cut of £20-a-week to their Universal Credit, and a higher cost of living due to inflation.
As the nation’s statutory watchdog on energy, Citizens Advice voices concerns that the 1.1 million low income households in receipt of the Warm Home Discount would lose out.
Its analysis shows that including the increased cost of living with inflation, they stand to lose £17.40 a week if the Warm Home Discount is not carried over when they’re moved to a new supplier.
People in this situation, who are also on Universal Credit, stand to lose £37.40 a week if the planned cut is implemented, the charity calculates.
Frontline advisers say they fear many will be left facing ‘desperate choices’ due to fuel poverty this winter, including turning off their fridges and freezers, relying on hot water bottles for warmth and requesting support to buy extra duvets and blankets.
‘I’m terrified thinking about how I’m going to cope this winter’
The charity cites, Shaun, a single father from Northumberland with a son in primary school. He previously worked in fishing but has had to take time off due to health issues. While his supplier has not gone under, he’s worried about how he’ll pay his bills this winter.
“I’m terrified thinking about how I’m going to cope this winter. If my Universal Credit is cut and bills go up, I just won’t have the extra to pay for any increase on my gas and electric.
“It’s starting to get colder and I’ll need the heating on for my son. I’ll just have to wrap up when he’s at school, so I can put it on when he gets home. Even then I’ll only be able to have it on for a couple of hours, not the whole evening.”
Higher bills are weighing on people’s minds
Citizens Advice’s polling found that 35% of people are worried they’ll struggle to pay their energy bills this winter. This rises to 45% of people earning less than £21,000 per year, and households with children (44%).
The group is calling on the government to reverse its planned cut to Universal Credit and introduce emergency winter grants for those on the lowest incomes. These could be delivered through local authorities in the same way covid winter grants were last year.
Dame Clare Moriarty, the consumer body’s chief executive, warned, “Overnight price hikes will be a shock for more than a million households whose energy companies have gone bust.
“We’re particularly worried about those who’ll face desperate choices this winter because of the cumulative impact of soaring bills, the planned cut to Universal Credit and inflation.
“The government and Ofgem must guarantee that the Warm Home Discount will be continued for people moving to new energy suppliers. People on the lowest incomes should be able to access emergency winter grants so they can stay warm in the cold months ahead.”