Consumer group Energywatch has reported that the UK’s most vulnerable gas and electricity customers are likely to face the highest price rises. Those households that use prepayment meters can expect to pay an average of around £320 more than those who pay for their energy via direct debit arrangements or internet deals.

This disparity in pricing affects some of the UK’s poorest people who have opted to pay by meter because they do not have access to a bank account or cannot afford to make monthly bill payments. It has been estimated that over 5.8 million British homes have gas and electricity prepayment meters.

The research also revealed that the average energy customer who uses a prepayment meter pays around £1,337 a year whilst those who pay by direct debit pay £1,178.

It was also found that of all the major power providers British Gas was the worst when it came to addressing the difference in prepayment and online tariffs. The company’s customers have to pay an extra £570 if they opt for prepayment meter use.

However, British Gas said that around 360,000 of its poorest customers could sign up to their ‘Essentials Tariff’ which offers the same rates as their direct debit option.

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Political think-tank Chatham House has released a report which warns that the UK may face economic and political blackmail if it extends its reliance on Russia for its gas and electricity supplies.

The report stated that Britain’s security is vulnerable and under threat because the government has no control over factors that affect the country’s economy. The report also predicted that consumers can expect to face even higher energy bills because North Sea Oil reserves are being depleted.

If Britain fails to plan for the forthcoming energy crisis it will have no other option than to increase its requests for gas from Russia. Worryingly, it has been forecast that by 2020 the UK will have to import 80% of its gas supplies.

Russian Prime Minister, Vladimir Putin, has already stated that Russia will use its gas reserves as a tool to shape foreign policy relationships. Over the last three years countries such as Estonia and the Ukraine have had their supplies interrupted when they were said to have upset Moscow

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An energy expert has predicted that the UK will suffer from a series of power cuts by 2014 if the government fails to take action. A report compiled by Fells Associates states that the country’s current energy situation will snowball into severe economic problems if the UK’s power supplies are not secured. The report also cast doubts on whether too much time and effort was being spent on pursuing green energy goals.

However, Energy Minister, John Hutton said that the report was too focused on the risks and did not take into account the energy policies that the government has already adopted.

Candida Whitmill, a co-author of the report, said that unless the government adopted serious energy measures to combat the oncoming power shortages the current credit crunch will pale into insignificance.

The government is already facing criticism for the shortcomings of its $1 billion energy efficiency package. Various charities have stated that the proposed energy saving measures will not address the huge gas and electricity bill price increases that have been imposed on British consumers.

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The governments £1 billion rescue package for people who are having difficulty paying for their gas and electricity bills has come under fire from Energywatch. The energy watchdog stated that the package is woefully insufficient and does not go far enough in tackling fuel poverty.

A spokesperson for the organization also said that the governments measures were simply not bold or urgent enough to have an immediate impact on those households that are already suffering from the financial pressures of the current credit crunch. In addition, the government has not attempted to address the issue of extending winter fuel payment programme for those who are most in need.

Meanwhile, Age Concern has also criticized the governments proposed energy saving recommendations and says that the proposed measures, although welcomed, will not help a large proportion of British pensioners.

The charity also commented that the government had not taken the opportunity to review energy pricing structures which would have been far more effective in reducing energy bills

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The government’s £1 billion package which is designed to help consumers cope with soaring fuel bills has already run into problems as gas and electricity providers said they could not rule out passing on the costs of the government project to their customers. The scheme, which was unveiled yesterday, will require energy firms to finance a large swathe of energy efficiency measures. The government has said that the adoption of these measures can trim around £300 from the cost of annual household energy bills.

A spokesperson for the Association of Electricity Producers ( AEP) commented that whenever costs have been imposed on the industry, the customer has always found that this has been added to their bill. He added that suppliers will attempt keep costs down because of government recommendations but the energy scheme will not pay for itself. The AEP’s members include Centrica EDF, E.ON and Scottish and Southern Energy.

Previously, Prime Minister Gordon Brown had said that power companies should not pass on the costs of the energy project to consumers.

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According to research that has been released by the National Housing Federation ( NHF ) nearly 6 million homeowners will be forced to spend around 10% of their total income on energy bills by the end of next year. The unwelcome news adds to the considerable economic woes that are being faced by British consumers.

The report has estimated that by 2010 annual gas bills will rise by approximately £900 and electricity bills will increase by around £500. Unfortunately, those who are on the lowest incomes will suffer most from the price hikes that have taken place in the energy market.

Consumers who pay by prepayment metre will be paying an average of £65 more than those who pay by quarterly billing. The NHF commented that the report has outlined the fact that the UK is facing a major energy crunch and requested that the government be proactive in taking the necessary action to prevent millions of Britons from falling into fuel poverty. Furthermore, the government should compel energy companies to use their huge profits to help to tackle the energy crisis

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Gordon Brown has indicated that the government will seek to impose a windfall tax on energy companies if they pass on any extra costs to customers. The Prime Minister is expected to face calls by the Trade Unions Congress ( TUC ) to take urgent action on behalf of gas and electricity consumers who are facing fuel poverty after a succession of large price hikes.

Previously, the government had appeared reluctant to force power providers to pay the one-off tax. However, the energy firms have not responded to the Prime Ministers requests that they consider issuing £100 a fuel voucher to the most vulnerable households.

It is thought that energy companies will find that if they continue to pass on costs to the lowest income families, the government will be left with no other option than to enforce the windfall tax irrespective of any excuses that these companies provide. Gordon Brown wants a commitment of £900 million from these firms over a 3 year period to help with energy saving practices such as home insulation.

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An alliance of charities and consumer based groups has requested that the government provide an outline of how it will assist those householders who are most at risk from falling into fuel poverty.

The much publicized increases in gas and electricity bills have caused organizations such as the National Energy Association and Age Concern to group together and call for government intervention in the energy market.

The coalition has said that power providers and the government are not doing enough to advertise the cheapest tariffs and this has resulted in many homeowners not being able to cope with the rise in energy bills. In addition the group stated that the majority of social tariffs are dearer than the cheapest energy offerings.

The government should hold talks with energy firms in an attempt to restructure how social tariffs are priced. The current system does not benefit the poorest families and it will take government strategy and action to bring some kind of relief to those who have been hit hardest by enormous energy price hikes.

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Coming hot on the heels of the news that around 70 MPs have signed a petition that endorses a windfall tax on the UK’s gas and electricity providers, the Local Government Association ( LGA ) has weighed in with its contribution to the ongoing energy debate.

In the LGA’s opinion energy suppliers should be forced to make payments towards a national home insulation project, as this would help to take over half a million people out of fuel poverty.

An LGA spokesperson said that the UK has around 10 million homes that are suffering from a deficiency in basic home insulation. If these homes were to be brought up to standard a total of £2 billion could be trimmed from fuel bills. This will assist those struggling families that are reeling from the impact of the current credit crunch.

Whilst the government is said to have a lukewarm view of a windfall levy against energy suppliers it is thought that senior officials might give some serious consideration to the LGA’s suggestion. However, insiders suggest that the government is adopting a wait and see policy to ascertain whether there are any other ideas that can be implemented that will not involve asking energy providers to contribute any of their profits.

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Nearly 12 million UK consumers were on the receiving end of even more bad news from the energy industry as Npower revealed that it will raise its gas prices by an average of 26% whilst its electricity customers found that they would be hit by a 14% price increase.

Shortly after Npower announced its latest energy pricing restructure Scottish Power said that it too would be increasing the cost of its customers’ fuel bills. Gas consumers can expect to see an average 34% price hike and electricity consumers will have to pay an extra 9%.

Both energy companies were quick to lay the blame at the door of the increase in wholesale costs. Similar reasons for huge price hikes were given by British Gas, Scottish & Southern Energy, E.On and EDF.

Industry analysts said that gas and electricity consumers were in a postion where they were unsure of how many price increases will be imposed before the end of the year. The prospect of millions of British people falling into fuel poverty now looms on the horizon.

The use of price comparison websites such as SaveOnBills.co.uk are effective tools in helping to cut energy costs.

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