Price cap would be £675 higher without past efficiency gains

The most recent price cap on energy bills would have been £675 higher without the energy efficiency improvements undertaken over the last several decades, according to analysis by Eon.

The figures, seen by Utility Week, show that average household gas consumption has fallen by 32% from just under 18,000KWh to around 12,000KWh since 2005. Over the same period, it shows that average household electricity consumption has fallen 24% from 3,800 KWH to 2,900 KWh.

If this drop in consumption had not taken place as a result of energy efficiency improvements, according to Eon’s analysis, the current price cap would be £2,646, compared to the figure of £1,971 set by Ofgem.

The analysis is based on data from the Department for Business, Energy and Industrial Strategy (BEIS), the Climate Change Committee and the National Energy Efficiency Data-Framework.

“It’s a clear proof point that energy efficiency is the absolute foundation of lower bills today, tomorrow and into the next decade,” said an Eon spokesman.

The figures emerged last week during a meeting last week at the House of Commons of the All Party Parliamentary Group on Energy Costs.

Brian Tilley, head of external affairs at Eon, told the meeting the analysis reinforced the company’s argument that energy efficiency is the “silver bullet” that can cut bills across the board and not just for those “fortunate enough” to enjoy upgrades to their own homes.

“Much greater investment in energy efficiency is the best protection from volatile energy prices whatever happens in the future,” he said, adding that Eon had been “extremely disappointed” that the government had missed a “huge trick” in its recently published energy security strategy by not committing more funding to this area.

On Tuesday (24 May), Ofgem chief executive Jonathan Brearley informed MPs on the BEIS Committee that the price cap looks set to spiral above £2,800 when it is next updated in October.

Wednesday also saw the publication of new analysis, carried out by the Energy and Climate Intelligence Unit (ECIU), which showed the impact of a delay to the start date for the next round of the ECO (Energy Company Obligation) scheme.

The regulations for the ECO4 scheme have yet to be laid in Parliament, nearly two months after it was due to come into force.

If the legislation is not introduced until after Parliament’s summer recess, the ECIU estimates that up to 56,250 households could miss out on energy efficiency improvements funded by the scheme.

With each of these households set to save an average of £580 under this year’s high gas prices, the total missed bill savings could be more than £32.6m this year alone, the ECIU said.