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Despite the government's energy price guarantee, tomorrow households across the UK will feel the impact of the leap in energy bills with costs almost twice what people were paying last winter.

Under the new price guarantee, a typical household can now expect to pay about £2,500 a year. This is based on a household which uses 12,000 kWh of gas a year, and 2,900 kWh of electricity a year.

But few households are typical. Many factors, such as the number of people in a house, the type of property and how much they use their heating, make a difference. Larger households will pay more than £2,500, whilst people who use less energy will pay less.

Soaring energy bills have also fuelled rampant inflation, which breached 10% last month and is forecast by some economists to climb to 18% from January. These indirect effects will further reduce the money UK households have to spend in 2022. The IMF analysis takes account of people reducing their energy use as prices rise.

In fact, the energy crisis is unprecedented. Last October, 4.5 million UK households were in fuel poverty. Now National Energy Action predicts this will rise to 6.7 million (1).

Projections for 2023 mean we are in for an even greater cost of living crisis. Based on wholesale prices for natural gas (which is burned both to heat homes and to generate electricity), consultancy Cornwall Insightforecasts (2) that bills will rise to £449 in January and £551 in April. Think-tank The Resolution Foundation states that in January households with pre-payment meters, which are usually poor, may face average bills of more than £600 (3).

The energy crisis will deeply affect all sectors, from families and independent business owners to wider-ranging impacts on the economy, such as the increase in oil prices. But it offers the opportunity to develop renewable energies. Oil reserves are decreasing, which has the effect that toil prices rise steadily.

In the face of the spiralling cost of energy, businesses and individuals are becoming more aware of the true cost of waste. Further research by the digital energy services company eEnergy reveals that UK businesses are wasting enough energy to power London for seven years, with 30% of all energy that is currently wasted coming from commercial buildings across the UK. In context, wasted energy is costing UK businesses nearly £33.9 billion annually (4).

Households also waste costly electricity via devices which are plugged in although switched off, adding almost £300 to households’ energy bills. According to British Gas, 23% of the annual electricity wastage is coming from so-called ‘vampire appliances'. Some of these ‘vampire appliances’ are games consoles, laptops, TV, coffee machines and microwave ovens. With this increase, these electronics could add a total of £453 to an annual energy bill (5).

Components of a typical energy bill

The October to December 2022 price cap, consists of:

  • 70% wholesale costs of energy
  • 10% network costs
  • 5% operating costs
  • 4% policy costs (levies to support low carbon generation, energy efficiency and vulnerable customers)
  • 5% VAT
  • 2% assumed suppliers (profit) margin
  • 4% other costs

Effective energy management is an essential tool in helping to reduce carbon emissions, improve efficiency and save money, which is why Rio Learn is offering a FREE How to make Energy Quick Wins at Home course as part of our Energy Efficiency series.

E-mail  to get access to your FREE copy today. 

                         JL                     Unknown-1  

While we offer free courses for individual learners, we also work with businesses and corporations to develop bespoke learning content. Working with the Energy Institute, we have recently developed an online training course with The John Lewis Partnership, available for their Partners as part of its pledge to be a net zero business by 2035. The course looks to help reduce energy consumption, energy use and carbon emissions in their home and working lives. 

 Nadia Hartley, Partner & Commercial Analysis Manager, Utilities & Carbon says:

“This is a timely training tool given the tumultuous state of energy markets in 2022. Not only do we wish to support Partners at home in the face of these trials, but also support the behaviour change in our properties.

 “The training in partnership with the EI allows the Partnership to embed these skills with all Partners in line with our net zero commitments.”

The EnergyAware tool is quick, interactive and fun for staff to complete. It is adaptable to suit any workplace environment and incorporate company branding and sustainability messaging. It provides a customised checklist of actions to implement and certification on course completion.