Energy bills to rise ~£800m after Winter Fuel Payment cut

~10m customers, who previously received the Winter Fuel Payment, will collectively face an additional ~£800m in energy bills this winter compared to last.

While the government is set to save around ~£1.5bn by withdrawing the Winter Fuel Payment, the financial burden on affected households is significant.

Key Insights from Our Analysis

Expected Costs Without Withdrawal

Customers in receipt of the Winter Fuel Payment would have expected their energy bills to average £469 this winter, benefiting from reductions in wholesale energy prices reflected in the price cap.

Actual Costs After Withdrawal

With the payment removed, these households will now face an average bill of £619.

Year-on-Year Increase

This represents a ~15% rise compared to last winter’s average of £539, resulting in an overall increase of ~£800m for affected households.

Affordability Challenges Persist

Whether you feel removing the Winter Fuel Payment is right or wrong, these figures show that affordability remains a pressing issue in the energy sector.

The impact will be even more severe for prepayment customers - many of whom are disproportionately affected by fuel poverty. Unlike other payment methods, prepayment customers cannot defer costs, exacerbating financial strain during the winter months.

Additional support credits are available to support these customers via suppliers, but with ~600,000 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."

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