Millions of households are set to ration their energy usage this winter out of worry that they cannot afford their energy bills. According to new research by comparethemarket.com, nearly a third (31%) will ration their heating during the coming months to combat rising household bills as a result of the second national coronavirus lockdown.
Rising usage is leaving households worried about how they will afford the additional cost. As many as 49% say they are worried about the possibility that being at home more will lead to higher costs this winter. Younger people – nearly 60% of those aged between 16 and 34 – are even more concerned than older generations about their ability to meet this potential cost.
29% of all households say they are probably not in a financial position to be able to meet the cost of higher energy bills this winter.
Aside from rationing how much heating they use, some households would consider cutting down costs in other areas such as food shopping and luxuries (27%); dipping into savings (19%); going into debit on their energy bill account (12%); asking family or friends for support (7%), or using a credit card (7%).
Ofgem, the regulator, has strengthened protections for customers struggling with energy bills this winter, with new measures coming into effect from 15th December. The protections include requiring suppliers to provide more support for customers struggling to pay their energy bills and extra help for prepayment customers. Whilst those in financial distress will get some breathing space, the regulator has made it clear that ultimately all customers need to pay for the energy they use.
The bill shock many households could face this winter could be exacerbated when the next default price cap comes up for review in 2021. Ofgem has recently proposed a £21 increase to the maximum amount average consumption households can be charged for their energy on a standard variable tariff as a way for energy companies to partly recoup losses during the pandemic. A £21 COVID-19 hike could put additional financial pressure on households least able to afford it.
Peter Earl, head of energy at comparethemarket.com, said “The pandemic continues to put considerable pressure on household finances, with many people experiencing squeezed budgets. Temperatures are dropping, and with more people at home as a result of the pandemic, many households could face a nasty bill shock this winter. It is highly concerning that so many households are worried about their ability to pay their energy bills – especially as a relatively mild November could give way to a colder December and January.”
“Energy is an essential utility, and anyone concerned about their ability to afford their energy bills should speak with their supplier. Whilst it is welcome that the regulator is putting further protections in place for those struggling with their energy costs, any increase to the price cap next year is likely to hit those who can least afford it the hardest.”