The ~10m customers losing their Winter Fuel Payment will pay an additional ~£800m in energy bills this winter vs last.
Whilst the government is set to save ~£1.5bn this winter by withdrawing the Winter Fuel Payment, those affected will need to pay a combined £800m extra this year compared to last.
Our analysis shows:
- Customers in receipt of the Winter Fuel Payment would have been expecting a bill of £469 this winter as the reductions in wholesale costs flowed through the price cap
- However, with the removal of the payment, customers will now pay an average of £619
- This is ~15% higher than the £539 they would have paid last year, totalling an £800m increase
Whether you feel removing this payment is right or wrong, this shows that affordability remains a key topic in the energy industry.
This will be felt even more by prepayment customers, a group already over indexed in terms of fuel poverty, who don’t have the flexibility to defer payment until later.
Additional support credits are available to support these consumers via suppliers, but with ~600k prepayment users in receipt of a winter fuel payment, that could carry an extra burden of up to £50m which would have to be met somehow.
Rachel Littlewood, Director at BFY Group, said:
"More news of rising bills for vulnerable customers has emphasised the scale of ongoing affordability issues in the energy sector, and the lack of solutions forthcoming.
"The impact of this winter's increase will be felt even more keenly by the 600k prepayment customers previously in receipt of the Winter Fuel Payment, who would have been expecting lower bills this year and are already at higher risk of fuel poverty."
More news of rising bills for vulnerable customers has emphasised the scale of ongoing affordability issues in the energy sector, and the lack of solutions forthcoming.
Rachel Littlewood
Director
For more on the implications of our analysis, and supporting vulnerable customers this winter, contact Rachel Littlewood.
About BFY Group
BFY Group are one of the fastest growing consultancies recognised for leading and delivering exceptional results for clients across the energy industry.
- Founded in 2004
- Headquartered in Nottingham
- Independent, privately owned UK company
- Expertise in Energy & Utilities
- Work with around 75% of UK Energy suppliers
- Recognised as one of the UK's Leading Management Consultants by the Financial Times
Rachel Littlewood
Director
Rachel leads our Financial Optimisation work streams, working with leaders to improve profitability & cashflow
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