Almost nine in 10 Brits have no idea where their energy bill spend goes

A poll of 5,000 adults found only 14 per cent accurately named each of the different areas, such as operating, network, and policy costs that add up to form what households spend each month.

Many also severely underestimated the percentage paid to each, for example believing that network costs – to do with maintaining and running energy networks – comprise a much smaller portion (12 per cent) of their total energy bill than it actually does (28 per cent).

Supplier profit margins were significantly overestimated, with respondents putting them at 13 per cent, despite the fact they make up less than three per cent of the average bill. However, estimates on wholesale costs - the actual costs of energy itself - were also underestimated.

In reality, these make up 38 per cent of a standard energy bill, compared to the nation’s guess of 19 per cent.

It also emerged 56 per cent had no clue they were helping to pay off the nation’s domestic energy debt, which now stands at around five billion pounds, via their monthly bills.

Even more (60 per cent) were unaware they are regularly helping to pay policy costs, which fund government schemes that energy suppliers are required to collect money for through customer bills, rather than being paid for through general taxation.

Bill Bullen, CEO of Utilita, which commissioned the research to raise awareness of its Fairer Energy campaign, said: “We want the nation to better understand what is pushing up energy bills, and what needs to change to bring down costs for households and create a fairer way to fund the energy transition.

“We estimate that funding network upgrades through government bonds, rather than levies on bills, would save every household at least £108 per year by 2031.

“And by ringfencing VAT from energy bills to fund a meaningful social discount – as part of a reformed Warm Home Discount scheme – every bill payer could save a further £42, while those most in need could receive discounts of up to £450.”

When asked the main reasons for rising energy prices, 39 per cent blamed geopolitical factors, such as wars and trade deals, while 21 per cent believe it’s down to inflationary pressures. Whereas, in reality, non-supplier costs such as network, policy, and debt contribute almost as much to a bill as the actual cost of energy – and are continuing to rise.

When it comes to who should be keeping these costs under control, as well as supporting those who are currently struggling, the responsibility clearly fell on the government’s shoulders, according to 48 and 49 per cent, respectively.

Seven in 10 (69 per cent) also feel if people cannot afford the energy they need, this is a symptom of incomes not keeping pace with the costs of essential services, at which point the government should step in (70 per cent).

This is also reflected by the 56 per cent who think it’s unfair that the cost of the Warm Home Discount – a scheme that provides £150 to eligible low-income and vulnerable households to help with winter energy costs – is funded by all customers through their bills rather than by the government.

A large part of rising costs which there is a lack of awareness about is the transition to a low-carbon energy system. While 52 per cent are currently in favour of the transition, this support waned when asked if they would still back it if it meant their energy bills rising further.

Support dropped to 34 per cent for an increase of between six and 10 per cent, 17 per cent for an 11-20 per cent increase, 12 per cent for a 21-30 per cent increase, 10 per cent for a 31-40 per cent increase and nine per cent for any increase over 41 per cent.

More than half (53 per cent) also think lower-income households are being left behind in the transition to a low-carbon energy system.

The research also explored the nation’s impressions of how fair other parts of the current energy system are, with only 28 per cent believing low-carbon technologies which can reduce their bills, like rooftop solar, electric vehicles, and batteries, are currently affordable for the majority of households.

While only 18 per cent believe it’s fair some wider policy costs, including subsidies for renewable energy generators and financing new nuclear projects, are added to people’s energy bills, rather than being paid for through general taxation.

Two thirds (66 per cent) also don’t believe the government is transparent enough about the non-energy and non-supplier costs added to their energy bills, according to the OnePoll.com data. This is demonstrated by the fact 63 per cent are not aware £108 will be added to household energy bills per year by 2030 to fund upgrades to Britain’s gas and electricity grids.

Bill Bullen, CEO of Utilita, added: “Better understanding of where our energy costs are coming from is just the first step to bringing them down. Following from this, there are clear and actionable steps that could be taken to ensure everyone is better off.

“Simple things like unlocking access to low-carbon technology installations for low-income households and moving the costs of government schemes off bills and into general taxation could help bring down energy costs – which is what we are calling for.”