The unseasonably cold weather that marked the turn of the decade has lingered across much of Britain throughout January and February; in fact, current weather forecasts predict that snowy conditions may continue into March, which will cause concern for many people who are already worried about their winter energy bills.

New research produced by confused.com has revealed that 73% of British households are deeply concerned about the increased cost of energy bills that have resulted from the adverse weather. With energy bills already at peak levels in many parts of the country, fuel poverty has become a phrase with which many consumers are now associated; furthermore, with the exception of a temporary reduction in gas prices by British Gas, it is more than likely energy bills will increase substantially across all suppliers over the next ten years as a result of renewable energy measures and supply and demand factors affecting natural resources.

However, despite having faced the coldest British winter in 30 years and having to endure ongoing economic instability, the research has also revealed that 10% of British households are largely unfazed by their energy consumption habits. In fact, 1 in 10 households have admitted that they leave the central heating on at relatively high temperatures throughout the day – even when nobody is home; indeed, it would seem these consumers place the desire for a warm empty home above financial and environmental costs.

Regardless of the financial implications of leaving central heating systems blazing away throughout the day just so the occupiers can return to a warm home, the environmental issue ought not to be dismissed lightly. It is estimated that millions of tonnes of greenhouse gases may be unnecessarily released into the atmosphere during winter by energy inefficient households. This problem is compounded by houses that have not yet installed loft insulation, double glazing and cavity wall insulation. Nevertheless, financial concerns usually prevail over environmental issues at the domestic level, so if consumers are undeterred by higher energy bills as a result of inefficient consumption it is unlikely their habits will be changed any time soon.

The Department of Energy and Climate Change announced yesterday 54,578 vouchers under the Boiler Scrappage Scheme had been issued to households within the first six weeks of the project. In total, 125,000 vouchers were made available under the scheme, which is ultimately designed to reduce carbon emissions caused by the energy inefficient G-rated boilers thought to be installed throughout many households in the UK. Therefore, a little over 70,000 vouchers remain available under the Boiler Scrappage Scheme, which is worth around £28 million.

The level of interest attracted from households interested in availing of the scheme had initially surprised the Energy Saving Trust, which is responsible for administering the scheme. It was reported several weeks ago that the scheme’s popularity was such that thousands of applicants were forced to endure lengthy delays as a result of strained operations and limited resources at the Energy Saving Trust, which claimed to have received an average of 5,000 calls a day – almost 400,000 in total – at each of its regional advice centres. Clearly, the volume of interest in the Boiler Scrappage Scheme far outweighs its capacity to accommodate all potential applicants, however, the Energy Saving Trust has since doubled its staff numbers to more effectively cope with viable candidates. Ultimately, the news that over a third of all vouchers have been issued to households within the scheme’s first 6 weeks will be seen as a measure of its success.

Director of the Heating and Hotwater Industry Council, Roger Webb, agreed that: “The boiler scrappage scheme has injected new life into the domestic heating market. Installers are thrilled both existing and new customers are realising the benefits of this scheme and actually acting on the chance to replace their G-rated boilers. Normally a boiler purchase is a distress buy but customers are receiving their voucher and actually scheduling in an installation”. One reason for the unexpectedly high popularity of the Boiler Scrappage Scheme (at least at this early stage) is that all of the leading energy companies have moved to match the £400 on offer under the scheme, so total savings towards a more energy efficient boiler are now as high as £800.

Last week, British Gas made a bold yet popular move to reduce its standard household gas prices by an average of 7%. The cuts have been applied with immediate effect and are thought to benefit approximately 8 million households across Britain. British Gas also suggested the 7% reduction in prices will translate to an average saving of £55 over the year.

The price cuts made by British Gas have come as a surprise to many, as the market conditions are currently such that energy companies are expected to hike up domestic bills rather than reduce them. Factors such as the weakened economy and state plans to implement more renewable energy systems have conspired to produce a bleak outlook so far as domestic energy bills are concerned. Furthermore, a number of industry experts have suggested that Britain is now dependent on foreign gas imports to sustain the country’s energy requirements, as production rates have failed to keep pace with demand.

However, the major energy companies in Britain have attracted considerable criticism from Ofgem, which has argued falling wholesale costs have not always been passed on to consumers. As such, the leading energy companies have secured massive profits during recent years as a result of passing costs but not savings on to consumers. Consequently, the price cuts by British Gas are likely to have surprised many industry experts and rival suppliers, which has led to fresh hopes that a new price war will emerge in an era of increased costs and fuel poverty.

British Gas has sought to remind customers its most recent price drop is the third of its kind within the past 12 months. In a statement to the media, the company said: “At British Gas, we know household budgets are stretched and our customers are concerned about the effect the recent cold weather will have on their winter fuel bills. The latest price cut means, no matter where you live in Britain, British Gas is offering, on average, the cheapest standard gas, electricity and dual fuel prices – beating all other major suppliers”. Nevertheless, Ofgem maintain a 25% rise in domestic energy bills is likely by 2020.

Ofgem, regulator of the gas and electricity markets in Great Britain, has sounded a further warning over the cost of energy bills facing domestic consumers. Speaking to BBC Radio Four, Alistair Buchanan, Ofgem’s Chief Executive, claimed energy bills could rise by as much as 25% in the years leading to 2020.

Mr Buchanan said: “The higher cost of gas and electricity may mean increasing numbers of consumers are not able to afford adequate levels of energy to meet their requirements”. The announcement follows growing concern within Ofgem that the unprecedented combination of environmental targets, dependency on gas imports, closure of defunct or ageing power stations and the global economic crisis will further hike up prices for consumers.

Furthermore, there is increased speculation the availability of oil will reduce sharply within the next few years. According to Sir Richard Branson, the “next five years will see us face another crunch – the oil crunch… Our message to government and businesses is clear: act. Don’t let the oil crunch catch us out in the way that the credit crunch did”. Independent oil consultant, Chris Skrebowski, who prepared a portion of the report for Sir Richard Branson, said that Britain is particularly vulnerable to the issue of peak oil, which “is likely to put pressure on the UK balance of payments and also likely to put a downward pressure on the valuation of sterling”. In other words, as Britain has shifted from an exporter of oil and gas to an importer, the country is much more dependent on external market factors and more vulnerable to price changes.

Ofgem’s renewed warning about domestic energy bills is also partly based on its proposed £200 billion upheaval of the energy sector, which it argues is required to produce a more efficient, effective, sustainable and affordable energy network. However, whilst it is thought that Ofgem’s £200 billion proposal will add £300 to the predicted £2,000 per year energy bills consumers can expect by 2020, the energy comparison website uSwitch has estimated energy bills could top £4,000 by this date if events continue to conspire against the UK energy market.

A recent report published by Ofgem further highlights how leading energy suppliers have reaped huge profits despite falling wholesale fuel prices. In light of the freezing weather that has continued to affect Britain throughout February, the failure by all but one of the so-called ‘big six’ energy companies, which comprise British Gas, E.ON, EDF, nPower and Scottish Power, to lower their domestic fuel bills has caused concern and attracted disapproval from Ofgem and the UK Government.

Although British Gas has moved to reduce its domestic gas prices, it is feared prices will soon return to peak levels and beyond. The unfortunate combination of inflated domestic energy bills and the coldest weather experienced by Britain in 30 years has led to increased fears fuel poverty will strike yet more households across the country.

According to Ofgem, the leading energy companies are making an average profit of £105 per year from every dual-fuel customer – a figure that has increased by 40% over the past three months. Although most of the big six energy companies can hide their UK profits in international business, British Gas is expected to reveal profits of more than £500 million later this week. Once again, it would appear all of the costs and none of the savings are being passed on to consumers. Secretary of State for Energy and Climate Change, Ed Miliband, has entered the discussion by stating: “Ofgem’s report shows energy companies need to cut their prices. British Gas’ recent cut was a welcome first move, but we need to see all suppliers passing on the full benefits of lower wholesale prices”.

Liberal Democrats energy spokesman, Simon Hughes, said: “Energy companies clobbered households even as they struggled through the cold snap. Cynical price cuts now won’t disguise bumper profits made on the back of grossly unfair fuel bills. Firms should be forced to show how much profit they make on every pound they charge at the bottom of every fuel bill”. Michelle Mitchell of Age Concern and Help the Aged added: “The increase in energy companies’ profit margins comes at a time when many older households are worrying about how to pay costly post-freeze heating bills”.

Having come under fire from opposition parties – most notably the Liberal Democrats – the incumbent Labour Government has finally announced revisions to its proposed feed-in tariffs (FITs). The tariffs are available to any household, business or community that generates electricity from various renewable sources, such as solar panels and wind turbines.

Essentially, this means money is paid to those who produce so-called ‘green’ power which can be fed back into the National Grid. Secretary of State for Energy and Climate Change, Ed Miliband, claimed the new feed-in tariffs demonstrate Labour’s ambitiousness in bringing small-scale low-carbon electricity generation online. Predictably, however, the proposed feed-in tariffs have attracted strong criticism on a number of fronts.

The new feed-in tariffs offer fixed prices for a set period of time. In terms of numbers, retro-fitted solar photovoltaic panels (PV) will attract the highest feed-in tariff of 41.3p/kWh, whilst micro-wind turbines will be subject to a tariff of 34.5p/kWh. According to Mr Miliband, the plans “represent a significant level of ambition and are comparable to countries that are leading in this area”; in fact, Mr Miliband also claimed a typical domestic installation of a 2.5 kilowatt peak photovoltaic system would earn the household £900 each year and save £140 on its annual electricity bill. Whilst these numbers may seem appealing, there remains a degree of uncertainty as to how realistic they are, which clouds the issue of return on investment. Based on Mr Miliband’s £900/year prediction, the ROI is likely to fall somewhere between 5 and 8%, which is considerably short of the Renewable Energy Association’s target of 10% (which happens to be the typical level in Germany).

Perhaps the most contentious issue surrounding the Government’s new feed-in tariffs is that of its ambitiousness in terms of overall production; indeed, despite the increased tariffs, Mr Miliband has stressed the aim to produce 2% of the country’s electricity via small-scale low-carbon systems (or ‘microgeneration’) by 2020 remains unchanged. Campaigners claim that a 6% output is realistic, which may appear insignificant but is actually the equivalent of two Sizewell B sized nuclear power stations. Therefore, it would seem microgeneration is not a top priority for the current Labour Government.

British Gas have today announced it’s cutting its standard gas prices by an average of 7% – this makes British Gas the cheapest electricity and gas supplier at time of writing. Customers can sign up online to British Gas WebSaver 6 online tariff or choose the standard tariff. The full announcement released this morning is as follows:

BRITISH GAS CUTS STANDARD GAS PRICES BY AN AVERAGE 7% – IS NOW THE CHEAPEST GAS AND ELECTRICITY SUPPLIER THROUGHOUT BRITAIN

British Gas, the largest residential energy supplier in Britain, has today cut its standard gas prices by an average 7%.

The price cut, which will benefit 8 million households, takes effect immediately and makes British Gas, on average, the cheapest supplier of standard gas and electricity right across Britain – no matter which way customers choose to pay. The change will save the average gas customer £55 a year.

This is the third time British Gas has cut prices in the past 12 months – cutting a total of £187 off the average annual dual fuel bill.

Last year, the company cut both standard gas and electricity prices by an average 10%.  The electricity price reduction in May 2009 made British Gas on average the cheapest supplier of standard electricity across Britain; it has remained unchallenged by any major supplier in this position ever since.

Today’s price cut means the company is now also the cheapest major supplier of standard gas at average consumption – and therefore of dual fuel – right across Britain.

Announcing the gas price cut, British Gas Managing Director, Phil Bentley, said:

“At British Gas, we know household budgets are stretched, and that our customers are concerned about the effect the recent cold weather will have on their winter fuel bills.

“I’m pleased we’re able to offer our customers some extra help with this gas price cut – and that we’re able to do this while it’s still winter, allowing our customers to really feel the benefit.

“This latest price cut means that, no matter where you live in Britain, British Gas is offering on average the cheapest standard gas, electricity and dual fuel prices – beating all other major suppliers.

“But, at British Gas, we know that cutting prices is just part of the picture in helping our customers cut their fuel bills; we’re also doing more than any other supplier to help our customers use less energy.  As well as cutting prices three times in the past year, we have been helping our customers improve their energy efficiency and cut their energy use by 7%.”

British Gas has also removed the price ‘differential’ for gas pre-payment meter accounts.  This means British Gas’ pre-pay gas customers are now paying, on average, the same for their energy as customers who pay by cash or cheque.  British Gas has, for some time, been working to become more efficient, improve customer service and cut costs for its pre-pay customers.

Since the UK Government announced its Boiler Scrappage Scheme, which provides homeowners with £400 vouchers (one per household) to replace their existing G-rated boilers with A-rated alternatives, the plan has attracted praise and criticism in equal measure.

On the one hand, the Boiler Scrappage Scheme has been lauded as the answer to the nation’s domestic energy efficiency problems (at least where homeowners and central heating systems are involved) whilst, on the other, the scheme has been derided as too costly, impractical and largely pointless. Although opinion is usually divided on any measure introduced by an incumbent government, the Boiler Scrappage Scheme is coming under increased fire as its finer points are picked apart and analysed in detail. Therefore, it comes as quite a disappointment to the Government the scheme is now beset by extensive delays.

The organisation responsible for the administration of the Boiler Scrappage Scheme, The Energy Saving Trust, claimed last week its operations have been overwhelmed by an unexpectedly high demand from homeowners who wish to avail of the scheme. As of Monday last week, the trust had received some 160,000 calls in response to the scheme, which had been converted to approximately 36,000 applications. Unfortunately, there are only 125,000 vouchers available under the Boiler Scrappage Scheme, so it is somewhat obvious the trust would have been hit by a deluge of calls and applications in its earliest operative months. Nevertheless, whilst the Energy Saving Trust failed to anticipate such high demand, it has already implemented measures to ensure its backlog of applications is cleared.

A Spokesman for the Energy Saving Trust said: “People applying now should expect to receive their vouchers within 10 days. People who called earlier have not been forgotten about. The call centres are working their way through logged calls in chronological order”. The trust has also stated it has doubled the number of staff in its call centre to cope with the increased demand. Fraser Winterbottom, Chief Operating Officer, Energy Saving Trust, added the trust was some “three or four days behind” schedule, but would soon return to normal service.

The recent spell of Arctic cold weather may be a forgotten memory for most – even if there is still a chance that the adverse weather will hit the UK again before the winter is over – but for others the period of snow, ice and freezing temperatures continue to cause problems.

According to a survey conducted by Which? Switch, approximately 65% of people have given more attention to their winter energy bills, whilst 38% – almost 4 out of 10 people – are worried about whether they can actually afford the bill. Furthermore, 14% of people surveyed admitted they had dipped into their savings – or, more worryingly, those of their children – to ensure they were able to pay for the increased demand of gas and electricity, whilst 18% of people had made other financial sacrifices, such as cancelling gym membership, in order to meet the increased fuel costs.

It has also been made clear over the past couple of weeks heat loss in homes and offices has become a major factor of the inflated fuel bills. Research undertaken by Faithful & Gould, part of the Atkins Engineering Design Group, has suggested an additional £1.2 billion of heat was lost during the two-week period that saw the UK gripped by extreme cold in comparison to a normal or average winter. This figure, which is based on 26 million homes and 2 million offices in the country, is likely to cause deep concern amongst those who have been campaigning for improved insulation and more energy efficient central heating systems.

The steps required to resolve the problem of heat loss can only be addressed by improving the energy efficiency of homes and offices. Achieving this is by no means a secret, as the Government and Energy Saving Trust have long been lauding the virtues of loft insulation, cavity wall insulation and double or even triple glazing. Furthermore, replacing old boilers with more energy efficient condensing boilers and technologically advanced heating controls can reduce the amount of fuel used to heat a home which could result in an annual saving of £235 according to the Energy Saving Trust.