Research suggest most households are unclear what they’re paying for in their energy bills as Utilita says ‘non-supplier’ charges are now almost as big as the cost of energy itself.
Almost nine in 10 Brits have no idea where the money in their energy bill goes, according to research commissioned by Utilita.
A poll of 5,000 adults found only 14% could correctly identify the main parts of an energy bill, such as operating, network and policy costs. When asked why prices are rising, 39% blamed geopolitical factors like wars and trade deals, while 21% pointed to inflation.
But Utilita said ‘non-supplier’ costs — including networks, policy charges and bad debt — now account for almost as much as the energy itself and are continuing to rise.
Respondents believed network costs made up about 12% of their bill, when the research said the true figure is closer to 28%. Supplier profits were also widely overestimated at 13%, despite accounting for less than 3% on average. Wholesale energy costs were underestimated too, with the public guessing 19% compared to a reported 38% in reality.
The survey found lots of households don’t realise they’re paying for other extras too. More than half (56%) didn’t know customers are contributing to domestic energy debt through monthly bills – which Utilita claims totals around £5bn. And 60% were unaware they’re also paying policy costs for government schemes that are added to bills instead of being funded through general taxation.
The research was commissioned to raise awareness of Utilita’s Fairer Energy campaign. CEO Bill Bullen said: “We want the nation to better understand what is pushing up energy bills, and what needs to change to bring down costs for households and create a fairer way to fund the energy transition.”
He added that Utilita estimates funding network upgrades through government bonds rather than levies on bills would save households at least £108 a year by 2031. He also claimed ringfencing VAT from energy bills to fund a social discount could save bill payers a further £42, with discounts of up to £450 for those most in need.
Nearly half of respondents said it should be the Government’s job to keep costs under control and support households struggling to pay. What’s more, 66% said they don’t believe the Government is transparent enough about the non-energy and non-supplier costs added to bills.
Utilita said the lack of clarity is underlined by the claim that 63% of the public are unaware £108 will be added to household energy bills annually by 2030 to fund necessary upgrades to Britain’s gas and electricity grids.
Addressing those concerns, Mr Bullen added: “Better understanding of where our energy costs are coming from is just the first step to bringing them down. Following from this, there are clear and actionable steps that could be taken to ensure everyone is better off.
“Simple things like unlocking access to low-carbon technology installations for low-income households and moving the costs of government schemes off bills and into general taxation could help bring down energy costs — which is what we are calling for.”
