Energy prices continue to put strain on finances
October 13, 2008
Over recent months being in charge of the household finances has become an unenviable task, as most households have found that their budgets have been overstretched, making it very difficult to make ends meet. A number of factors have contributed to these financial difficulties, such as rising borrowing costs, tighter credit conditions, soaring petrol prices, rocketing food prices, and increasing bills. And, as has been the case quite often over the past few years, it is energy bills that are causing major problems when it comes to most household budgets.
In 2006 energy prices were rocketing, with the major suppliers blaming increases in the cost of wholesale energy for them having to increase energy usage costs for consumers. However, last year consumers enjoyed a brief respite, with a drop in wholesale energy prices resulting in the energy giants cutting their energy usage costs for consumers. Unfortunately the joy was short lived, as late last year the suppliers began to announce that energy prices would increase again at the start of this year, and were quick to live up to their promise of increasing rates.
With consumers already trying to cope with other soaring living costs the energy hikes couldn’t have come at a worse time, but this was not the end of the matter. A number of energy firms have now hiked up rates for a second time this year, and recently other energy giants have announced their intention to increase the cost of energy usage once again. E.on and Scottish and Southern are two of the energy suppliers that have most recently increased their energy usage costs.
There are now grave concerns over how these huge hikes will affect consumers finances, especially for more vulnerable consumers such as the elderly and lower income families. It is feared that many could be pushed into fuel poverty by the end of this year, which is where 10% or more of the total household income is being spent on energy bills. The government has recently announced a scheme that could see millions of people getting vouchers of £50 or £100 towards their fuel bills, but opposition MPs have stated that the taxpayer should not have to pay for the huge hikes that the energy giants keep applying to energy bills.
One senior official from E.On said that the firm had tried to keep the increases as low as possible, stating: “I’m very aware of the effect that today’s announcement will have on our customers and I recognise that this is a very tough time for everyone.” The director of Scottish and Southern added: “The world is experiencing an energy shock of a kind not seen since the early 1970s. Energy suppliers have to take steps towards covering their costs and I am sorry that we cannot delay these price rises any longer.”
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