Poorest Homes in Britain Hit Hardest by Coming Energy Bill Rise

(Bloomberg) --

Some of the poorest households in the U.K. will see the biggest spike in their energy bills come April, with costs going up by as much as 708 pounds ($960) a year.

The higher prices that utilities can charge the 4.5 million households using prepayment meters will be offset by about half because of government measures announced Thursday. Even with that help, though, consumers will pay more starting in April than they are now.

Britain's Big Gas Squeeze to Drag 10% Into Energy Poverty

The government will help reduce bills by 350 pounds for some households through a 200-pound upfront discount to be paid back later; a council tax rebate that won't be repaid; and some extra funding for people on low incomes. The raft of measures totals 9 billion pounds, Chancellor Rishi Sunak told lawmakers Thursday.

Industry regulator Ofgem lifted its cap on the amounts suppliers can charge customers in response to a surge in gas prices that has pushed dozens of utilities out of business.

The increase is “disastrous,” according to the charity Fuel Poverty Action. The government's proposal to “heat now, pay later” burdens households with more debt that they'll struggle to pay back, co-director Ruth London said.

The price cap for pay-as-you-go customers on prepayment meters will increase to 2,017 pounds, compared with 1,971 pounds for people on standard tariffs. The poorest households tend to use these meters because they haven't been able to pay their bills in the past.

When there's no credit on the meter, there's no power: the fridge stops, the lights go out and the plug-in heater becomes useless.

©2022 Bloomberg L.P.