Average energy bills fell £6 between 2016 and 2017, as increased efficiency and lower demand offset price hikes from the Big 6 and competitors, a report from the Energy and Climate Intelligence Unit (ECIU) has claimed.
However an accompanying survey of 100 MPs found that just 1% are aware bills are falling, with nearly two-thirds convinced the opposite was true.
MPs last month voted to authorise a price cap on domestic gas and electric bills, to be introduced in December.
ECIU’s findings about energy bills confirm a trend uncovered by the Committee on Climate Change (CCC) last year, which found that dual-fuel bills had fallen in real terms by £115 since the introduction of the Climate Change Act in 2008. Just 9% of the cost of dual-fuel bills is due to the cost of shifting to a low carbon electricity supply and levies that support efficiency improvements in UK homes. Most of the bill is from wholesale energy and network costs. Meanwhile, those efficiency improvements saw electricity and gas use drop by 23% and 17%, respectively, in UK homes between 2008 and 2016.
Increased efficiency and reduced demand have continued to trim energy bills, despite higher per-unit energy costs, the ECIU found. Its report reveals that the average UK domestic energy bills fell £6, from £1,167 to £1,161 between 2016 and 2017, when adjusted for weather conditions. Non-temperature adjusted data found bills were £36 lower in 2017.
Much of the reduction in bills is due to lower consumption. The ECIU found temperature-corrected gas consumption was down 5% in 2017, while electricity consumption was down 4%.
Media reports and even government commissioned reviews of energy prices have failed to take into account falling consumption, the ECIU said. The Department for Business, Energy, and Industrial Strategy (BEIS) continues to calculate energy bills as if use were unchanged. Their estimate for average electrical consumption by UK households, 3,800 kWh, is more than 10% higher than the 3,400 kWh the average home used in 2017.
ECIU director Richard Black said it was unsurprising MPs were in the dark about falling bills and said they had likely been misled by “the continuing furore over price rises.”
“But even though the Big Six’s tariff hikes are real and do create problems for vulnerable customers, this shouldn’t hide the wider reality that measures to cut energy waste work – reducing energy demand, cutting carbon emissions and driving energy bills downwards,” he added.
ECIU’s survey found that 73% of MPs back government financial support for efficiency improvements in homes, including insulation. More than half (55%) believe new homes should be built to zero carbon standards, a policy dropped by the government in 2015. 48% of MPs support the introduction of ‘green mortgages,’ which offer better rates for more energy efficient homes.
The ECIU notes that despite government inaction on energy efficiency, reducing energy waste remains popular among MPs and the public. The latest BEIS attitude tracker survey found that 78% of people give “a lot” or “fair amount” of thought to saving energy in their own homes, and an EICU poll last year showed that 85% of people support public subsidies for reducing energy waste.
