Households to receive £225m to pay energy bills

Up to 100,000 households could receive assistance paying their energy bills after the UK’s six biggest energy companies pledged help reduce fuel poverty.

The initiative, unveiled by energy secretary John Hutton, will see an extra £225 million made available for “fuel poor” households struggling with the cost of warming their homes.

Centrica, EDF Energy, EoN, Npower, Scottish & Southern and Scottish Power agreed to provide the cash following Alistair Darling’s Budget pledge to increase the winter fuel payment.

The money will be provided over three years, with £100 million raised in 2008/09, £125 million in 2009/10 and £150 million in 2010/11.

The Department for Business, Enterprise and Regulatory Reform (BEFF) says the money will be targeted at households on low incomes who are most vulnerable to fuel poverty including the elderly, families with children and disabled people.

But it warns that the impact on number of people suffering fuel poverty will depend on how the money is directed.

It says that it equally distributed among the poorest households and used to offset the cost of energy then it could benefit up to 100,000 households.

However, if it is used to introduce energy efficient measures then the number of people to benefit will fall.

And Ann Robinson, a director at, warns that the extra money will not offset the 500,000 additional households plunged into fuel poverty by the 15% increase in energy bills this year.

She said: “If [the money] was spread across the whole 4.5 million households in fuel poverty it would amount to less than £18 a year, which is a drop in the ocean when consumers are facing average fuel bills of £1,048 a year.”

John Hutton said: "I do not underestimate the difficulties and anxiety that rising energy prices can cause but I believe that this extra cash, coupled with ensuring we have the most competitive market possible, will help us toward our goal of eradicating fuel poverty in the UK."

A fuel poor household is one that spends more than 10% of its income to heat its home to an adequate standard of warmth.

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