How much will this extended winter cost UK homes and businesses?

posted on 08/04/2013 09:16:43 by Scott Byrom

The unusually long winter has brought extra, unexpected expense for the UK's homes and business - but exactly how much is the drawn-out cold snap likely to have cost?

Icy means pricey: The long winter of 2013 has cost UK homes and businesses hundreds of millions in extra energy costs

Cold weather is a hot topic at the moment - and understandably so. Mercifully, the coldest March since 1962 has come to an end. I'm sure I wasn't alone in thinking that the month seemed all the more freakish because the sizzling March of last year, when temperatures reached 23 degrees Celsius, is still fresh in the memory.

I remember feeling good about switching off my heating last March and getting off the sofa and out in the sunshine. This year it's the opposite. I've been thinking, "I'm indoors, the heating's on, the home appliances are getting maximum use - how much is this going to cost me?"

And it's not just me. How much is it going to cost other UK households and businesses, who will need to adjust their budgets accordingly because of the unseasonal weather?

Well, throw in the price rises that have happened in the last year and we think households are going to be spending £30 more on energy this March than they did last March - that's an increase of around 28 per cent. Multiply that by the number of households in the UK, and we're looking at an unexpected spend of about £27m a day. Or £837m in the month of March alone.

Households are going to be spending £30 more on energy this March than they did last March, which means an unexpected country-wide spend of around £837m in one month alone

Still, the extended winter will cost some households more than others, because they're on standard tariffs that charge more per unit for gas and electricity. The way out of this is to switch - and then energy customers can be comfortable in the knowledge that every time the TV goes on or a radiator warms up, they're not paying more than they have to. With the cold weather continuing into April - and goodness knows for how long - it's all the more important to get that unit price down.

And what about the UK's businesses?

Well, there are around four million small and medium-sized businesses in the UK. Their levels of consumption vary hugely, but let's say it's three times as much as an average household's. That would mean they're overspending by £3 a day - which amounts to £93 over the course of the month.

Multiply that by the number of businesses, and we're looking at an extra £372m of expenditure. That's extra profit for energy companies of around £18.6m, not to mention a bumper pay day for the Treasury.

Like homes, some businesses pay more for energy than others - and because the consumption is generally higher and the price-per-unit range is even wider, the disparity in money spent can be much more dramatic.

Naturally, this comes into sharper focus when the weather is cold. Imagine two identical businesses consuming 5,000 units of gas and 500 units of electricity in March. The one on attractive acquisition rates will pay in excess of £100 more than the one that has rolled over onto their supplier's standard rates. If a third identical business is on deemed rates, which happens when they're new to a premises and they haven't actively agreed a new energy contract, the difference is more like £150.

When those sorts of figures are eating into profit over the course of just one month during tough economic times, it's easy to see why business owners - just as much as home energy customers - need to ensure they are not feeling the full force of the extended cold snap and paying any more for gas and electricity than they need to.

Image credit: geograph.org.uk

Scott Byrom

Scott has worked in the energy sector since 2006 and is a regular commentator on consumer issues in the industry in the UK media. Scott joined Make It Cheaper and its sister company UK Power in 2012 to use his passion and expertise to empower UK consumers to spend less and use less energy in their homes.

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