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Pensioner energy bills double in seven years

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Over 65s paid £687 more in 2012 than they did in 2005. And it's a similar story for other age groups.


Pensioners paid twice as much on energy in 2012 compared to 2005 according to Office for National Statistics data.

But analysis by Saga has found that the increased expenditure on electricity, gas and fuel as a proportion of income has more than doubled for all age groups.

Let’s see how the information breaks down.

The findings

2005 income and fuel spend

 Age of household reference person

Under 50

50-64

65+

Average weekly disposable income (2005)

£522.02

£548.75

£305.32

Average weekly expenditure on electricity gas and other fuels (2005)

£12.65

£14.99

£12.87

 2012 income and fuel spend

 Age of household reference person

Under 50

50-64

65+

Average weekly disposable income (2012)

£615.83

£665.72

£392.71

Average weekly expenditure on electricity, gas and other fuels (2012)

£23

£29.03

£26.08

Percentage changes between 2005 and 2012

 Age of household reference person

Under 50

50-64

65+

% increase of average weekly disposable income since 2005

15.2%

17.5%

22.2%

 

% increase of average weekly expenditure on electricity, gas and other fuels since 2005

 45%

48%

51% 

% increase in expenditure on electricity, gas and other fuels as a share of disposable income since 2005

55%

63%

57.5%

Source: Saga, ONS Family Spending data and CEBR analysis

Even though they have the most disposable income, the worst hit group are those in the 50-64 age range.

Someone who was 52 in 2005 paid on average £14.99 a week on energy. Seven years later, and with just a 17.5% rise in disposable income, the same person would be paying 48% more at £29.03 a week. That represents a 63% change in expenditure on energy as a share of disposable income.

It’s bad news for pensioners too. Although the data shows that the average weekly income for those aged 65 and over has risen more rapidly than other age groups (22.2%), their energy bills have also grown at a faster rate of 51%. The average spend on energy last year by an over 65 was £1,355.90, which has more than doubled from £669.98 in 2005.

In total the UK’s 12.85 million pensioners spent £17.4 billion on energy in 2012.

Fuel poverty

This research highlights how a growing number are approaching fuel poverty.

The Department of Energy & Climate Change defines fuel poverty as being when a household needs to spend more than 10% of its income on fuel to heat a home.

The group closest to this definition is the over 65s, who in 2012 on average spent 6.6% of disposable income on electricity, gas and other fuels.

Saga said that older people are often faced with lump or fixed incomes, so struggle to adjust to energy costs that outpace any income increases - ending up spending more of their income on fuel or resorting to dipping into savings to cope.

And it’s only going to get worse for households in 2013.

Rising energy prices

Towards the end of 2012 we reported on a raft of planned energy price hikes starting with SSE in August followed by British Gas, npower, Scottish Power and EDF  in October, finishing the year with E.ON announcing a rise in December.

A combination of increasing oil prices and wholesale gas prices, as well as the cost of maintaining the network and going green, has forced our bills up. For more read: Why energy bills have trebled in eight years.

All of the price hikes are now in force apart from E.ON’s 8.7% increase which will come into effect on the 18th of January 2013.

What can we do?

This year Saga is again supporting the Community Foundation Network’s Surviving Winter Campaign to help prevent any unnecessary illness or death during the colder months.

The campaign is encouraging donations and wealthier pensioners to recycle some or all of their Winter Fuel Payment to help those in fuel poverty. Donations are matched by local Community Foundations..

Big names like Stephen Fry and David Jason have already pledged their support.

Last year the campaign raised £2.5 million, all of which went on to help 20,000 people to survive the winter. Community Foundations across the country were able to help those at risk with energy bills, insulation or repairs and gave practical help like providing hot meals.

You can donate using the website: www.survivingwinter.org.uk.

Top ten cheapest tariffs

According to Energyhelpline there is only one deal targeted at the over 60s that fixes prices for one-year and has no cancellation policies or tie-ins. The E.ON Age UK Fixed One-Year v3 is only for the over 60s and costs £1,231 a year on average, which represents a £169 saving on a typical dual fuel bill. But there are better savings to be had elsewhere.

Here are the top ten cheapest tariffs available at the moment:

Supplier

Tariff

Average cost

Savings *

Type

Notes

Cancellation penalties

first:utility

isave v14 (with Paper Billing)

£1,150

£250

Discounted variable

Prices fixed for three months then variable

£30 per fuel until end of three-month fix then no penalty

Co-op Energy

Pioneer

£1,157

£243

Standard

Includes recent price drop

None

first:utility

isave Fixed v6

£1,170

£230

Fixed

Prices fixed until 30 April 2014

£30 per fuel until end of fix

OVO Energy

New Energy Fixed

£1,172

£228

Fixed

Prices fixed for 12 months

£30 per fuel until end of fix

EDF

Blue +Price Promise June 2014

£1,182

£218

Fixed

Prices fixed until 30 June 2014

None

npower

Energy Online August 2014

£1,182

£218

Fixed

Customers on this tariff are guaranteed at least 2% lower bill than npower’s current Standard (off-line) variable prices until 31st August 2014

There is a £60 cancellation fee for this tariff (£30 for electricity & £30 for gas) if customers switch away before the end date.

BG

Online Variable February 2014

£1,193

£207

Discounted variable

6% discount against Clear & Simple prices until 28th February 2014

£30 per fuel until end of discount period 28/02/2014

Sainsbury's Energy

Online January 2014

£1,193

£207

Discounted variable

6% discount against Clear & Simple prices until 31/01/2014.

£30 per fuel until end of discount period 31/1/2014

ScottishPower

Online Fixed Price Energy September 2014

£1,195

£205

Fixed

Prices fixed until 31st August 2014

None

E.ON

Energy Discount

£1,222

£178

Discounted variable

E.ON's Energy Discount prices are discounted for 12 months beginning on the day E.ON starts supplying your energy

There is a cancellation fee of £10 if you switch away before the end of the guarantee period

* based on typical gas and electricity bill for someone who has never switched costing £1,400

All calculations are for an average usage dual fuel household paying by monthly direct debit. Average usage as defined by OFGEM is 16,500 kWh pa of gas.

Source: Energyhelpline 8/1/2013

More on bills:

Ten ways to save on energy

10 weird ways to save money on your household bills

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