Two in five households rationed winter energy to afford costs

More than two in five (43%) households cut their energy consumption to be able to afford their bills, according to new research bycomparethemarket.com.

The survey of more than 4,000 people reveals that households were forced to ration their energy use this winter to cope with increased costs.

The impact on households with younger people, who make up the largest group of furloughed employees, was even greater. More than one in two (54%) of those aged between 18-34 reported rationing their energy use this winter, compared with 19% of those aged 65 and over.

A recent study from the company showed that households typically consume almost 30% of their annual energy in the first three months of the year, making it the most expensive quarter. The extra costs caused by spending more time at home and the cold snap from Storm Darcy, left households facing a shock bill of £113 more than usually expected for this period.

Nearly six out of 10 (58%) households are worried about the impact the colder weather and the combination of lockdown has had on their energy costs. The concern is highest among those aged between 25 and 34, with nearly seven in 10 (68%) people in this group worried about costs. Concern about costs falls when looking at older households, and over 75s are the age group who are least worried about costs (28%).

Nearly three in 10 (29%) households say they cannot meet these additional costs. A third of people aged 5-25- 34 years old (33%) say their finances cannot stretch to a rise in bills, compared with 18% of 65–74-year-olds

If energy bills were to rise sharply, more than a third (34%) of respondents say they would consider cutting spending on food to cover their costs. A quarter (25%) say they would have to dip into their savings and 11% would use a credit card to pay their bills. Two fifths (41%) of young people aged 25-34 said they would cut down on food shopping to cover their energy costs and they were the most likely age group to use a credit card (14%).

With lockdown restrictions lifting and temperatures rising, the pressure on energy costs should be easing. However, Ofgem recently increased the default energy price cap by an average £96 per year to £1,138, which will hit households on their energy supplier’s variable tariff. This includes an additional £23 that the regulator has allowed suppliers to recover from unpaid bills from households in financial difficulties during the pandemic. There are currently estimated to be 15 million households on variable or default tariffs, and the survey found that 67% believe it is unfair that those who are least able to afford energy bills are on the highest tariffs.

Peter Earl, Head of Energy at comparethemarket.com said “The pandemic has had far-reaching consequences, with household finances in a fragile position as a result. The double hit of a cold winter and increased energy usage with more people spending time at home has been particularly strenuous for households that were already struggling financially. With spring now upon us and warmer weather approaching, usage will drop off, easing the strain on finances.”

“However, it is disappointing that given the position we are in, the regulator pushed ahead with its significant increase to the energy price cap, forcing up costs even further for households on a supplier’s variable tariff. ”