Age Scotland warns older Scots face huge energy bill overpayments despite price cap

The move first announced in August, comes amidst growing criticism that the the energy price cap brought in by the regulator was not doing what it was brought in to do - protect 11 million British households from rip-off gas and electricity tariffs.

Ofgem, which sets the maximum prices that can be charged for gas and electricity to those who have not switched suppliers and are on default tariffs set the new cap that could see households typically pay £75 less a year.

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But Age Scotland say that this is good news for many struggling with fuel costs, a "confusing system" could lead to older consumers being hit with higher bills than normal in the spring, when the charity says the price cap is likely to go back up.

More than half of single pensioner households and four in 10 pensioner couples live in fuel poverty, defined as spending more than 10 per cent of income on energy costs. Rural households are most likely to be affected.

And the charity is urging people to shop around and switch suppliers to get a more cost-effective tariff.

Energy suppliers have been accused by autoswitching service Migrate of blocking customers from their cheapest tariffs if they do not have a smart meter.

Age Scotland found that older people are less likely to have smart meters - often through a lack of awareness about the benefits or understanding how the technology works.

The cheapest deals available from the big six providers – British Gas, EDF Energy, E.ON, Scottish Power, npower and SSE – all have smart meter clauses attached, according to Migrate.

These clauses range from mandatory smart meter installation within a set time period to agreeing to be contacted about smart meter installation.

Smart meters are devices that automatically send meter readings to your supplier. They also allow customers to monitor their own energy use.

The government says smart meters will cut customers’ bills as they eliminate estimate readings.

However, many households have reported technical issues with their devices such as displays not working, devices ceasing to function entirely and first generation meters (SMETS1) losing smart functionality when switching provider.

Recent findings from Migrate showed the cheapest tariff from British Gas cost on average £949 per year. But have to book a smart meter installation appointment within three months.

This tariff would save the typical customer on a standard variable rate £230 a year.

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Age Scotland said there was further confusion when some suppliers offer cheaper online-only rates, meaning many older people can’t access them.

Across Scotland, 500,000 people over 60 do not use the internet, meaning they find it harder to shop around and find the best deals.

Brian Sloan, chief executive of Age Scotland, said of the tariff change: “While this is good news for many consumers struggling with fuel bills, they shouldn’t rely on price caps to get the best deal. This confusing system means they might think they have a better energy deal going into winter, only to get an unpleasant shock when rates rise in spring.

“It’s unacceptable that tens of thousands of pensioner households are struggling with fuel poverty, cutting back on essentials to pay their bills. Many are putting their health at risk by not heating their homes adequately.

“The Fuel Poverty Bill is a step in the right direction, but the Government and suppliers need to do more to eradicate fuel poverty and help ensure the most vulnerable can pay their bills.

“We’d urge everyone to see if they can save money this winter by switching energy supplier. "

Ofgem said when the cap was brought in in January, to be initially set at £1,137 per year for a typical dual fuel customer paying by direct debit, it said would bring household bills down by around £76 per year on average, saving over £830 million over a year.

But within a month, on February 7, the new cap raised typical UK default and standard variable gas and electricity tariffs by £117 to £1,254 a year from April 1 due to hikes in wholesale energy costs.

Experts had calculated that the energy price cap would then now cost those 11 million households £1.29 billion a year from April.

Perth-based SSE and Glasgow-based Scottish Power and the rest of the "big six" energy companies had raised its standard variable energy tariff to meet the raise in the price cap from April 1 brought in by Ofgem.