Homes rated band F on the Energy Performance Certificate (EPC) system are set to have a gas bill £968 higher than a home rated EPC band C, according to analysis published by the Energy and Climate Intelligence Unit (ECIU) on 10 August 20221. The finding rests on Cornwall Insight estimates for the October 2022 and January 2023 price cap, with the dual fuel price cap forecast to reach £3,958 this winter1.
The average home in the UK is rated band D, and ECIU says these homes will pay £420 more for their gas this winter than an EPC band C home, the Government's target for 20351. Taken together, gas and electricity bills leave those in the worst rated homes paying almost £2,000 extra compared with band C, and the average band D home almost £600 extra1. ECIU states that wholesale gas costs are set to have added around £2,500 to energy bills during the gas crisis, including electricity, because high wholesale gas prices have a knock-on effect in the power market where some electricity is still generated from gas1.
| EPC band | Annual electricity bill 2022/23 (estimate, £) | Annual gas bill 2022/23 (estimate, £) | Annual total energy bill (estimate, £) | Extra annual bill payments compared to EPC band C (£) |
|---|---|---|---|---|
| EPC C | 2,070 | 1,806 | 3,877 | |
| EPC D | 2,249 | 2,226 | 4,474 | 598 |
| EPC E | 2,605 | 2,581 | 5,186 | 1,309 |
| EPC F | 3,080 | 2,774 | 5,854 | 1,978 |
| EPC G | 3,258 | 2,322 | 5,581 | 1,704 |
ECIU notes that EPC band G homes have lower energy bills than EPC band F because of the way in which the EPC is calculated, and that band G homes often use other secondary sources of heat such as biomass1.
Jess Ralston, Senior Analyst at ECIU, said:
"These stark differences between highly insulated and poorly insulated homes show the real-world impacts insulation could have in time to dent exorbitant bills this winter. The most vulnerable, such as the elderly, tend to live in colder homes and these are the groups that are being placed at risk by inaction from the government on energy efficiency."
ECIU states that the ECO insulation scheme has worked well and is knocking at least £600 a year off the bills of fuel poor households, and that energy efficiency schemes such as ECO have contributed to savings of £1.2bn per year under current prices1. It has been reported that the Government recently decided not to go ahead with doubling the ECO scheme, a proposal developed by the energy industry1. An industry survey by Gemserv found that 80% of installers say they have capacity to take on 25 to 50% more work, and 96% expect job creation from an ECO Plus scheme1.
Why it matters for households
The gap between bands is a gas bill gap, and it is set by the fabric of the home rather than by the tariff a household chooses. A band F home and a band C home on the same tariff face very different annual costs, because the F home needs more gas to reach the same indoor temperature. That difference sits outside the price cap, which limits unit rates and standing charges rather than the volume of energy a property consumes, so a household can be within the cap and still face a bill well above the cap figure for its region and payment method. The mechanics of that are set out in why a bill can be higher than the cap.
For energy independence at the level of an individual home, the EPC band is the measure that determines how much of each winter's spending leaves the household and how much gas the property draws from the grid. ECIU's figures put the annual difference between band C and band F at £1,978 across gas and electricity, and the difference between band C and the average band D home at £5981. The insulation savings and payback figures cover what measures change a band and by how much. ECIU also states that deploying heat pumps and insulation is the fastest and most effective way to permanently reduce gas demand, gas imports and heating bills, as opposed to drilling for more UK gas, which it says would not cut demand for gas or the price1.
What happens next
The analysis is based on Cornwall Insight estimates for the October 2022 and January 2023 price cap1. ECIU states that the Government recently decided not to go ahead with doubling the ECO scheme1. No date has been reported for a decision on an ECO Plus scheme. ECIU has published an updated version of the release1.