Households told to ditch loyalty as profits-per-customer rocket from £15 a year to £125

Letters are to be sent to millions of British customers offering them advice on how to reduce their energy bills.

They will be told how to lower costs by switching to different payment methods and taking advantage of free or subsidised insulation.

They will also be encouraged to check whether their supplier's rivals offer better deals - and will be given information on how to switch.
Energy firm bosses agreed the measures, aimed at reducing household energy bills, after a summit meeting at which David Cameron told them action was 'absolutely vital'.

Chief executives of the 'big six' suppliers were brought together with consumer groups and watchdog Ofgem to discuss concerns over price rises with ministers.

The Prime Minister told them it was 'absolutely vital' that consumers struggling already with rising food and petrol prices were not also hit by higher fuel bills.

Ministers were determined to be seen taking action on the issue after Labour leader Ed Miliband made tackling the 'rigged' energy market one of his key policies.

Mr Miliband said at the weekend that firms should use soaring profits to cut 'crippling' bills after figures suggested annual profits per customer had risen to £125 - from just £15 in June.

Those figures, produced by Ofgem, were disputed by suppliers. Among the measures agreed at the summit, held at the Department of Business, Innovation and Skills with Energy Secretary Chris Huhne, were:

• Letters to be sent to eight million consumers who could save £100 by switching from the quarterly credit billing system
• Government letters to four million vulnerable households - paid for by energy firms - informing them they were eligible for free insulation
• A campaign to encourage people to consider switching supplier and a commitment to provide energy use data in electronic form to aid making comparisons
• A report by Ofgem before the end of the year recommending ways to improve conduct and transparency in the industry

Speaking afterwards, Mr Cameron said: 'We are making energy companies be competitive.

'They're permanently being watched by Ofgem to make sure it is a competitive market, and we are making them make their energy available so that others can come in and provide customers with a good service.

'We're also writing to millions of customers today to encourage them to shop around to get the cheapest possible deal they can for their energy.
'So this is about the Government, about the Citizens Advice Bureau, about other organisations, all working together to help people to keep their energy bills down.'

The summit came as environmentalists said an over-reliance on fossil fuels could push up household bills by around £300 a year by 2020.
It also came on the day that Energy Secretary Chris Huhne said householders in Britain were enjoying 'relatively good electricity and gas prices' compared to other countries.

Mr Huhne also reminded consumers, before the meeting, that energy companies 'are not the Salvation Army, they are trying to make profits for their share-holders'.

In remarks sure to anger cash-strapped householders who are paying higher energy bills than ever before, he said he wanted a clearer, fairer and much more competitive retail market to enable customers to switch tariffs easily and benefit from better deals.

His comments come a few weeks after he pointed the finger at lazy consumers who he said 'do not bother' to hunt for bargains on gas and electricity.
Before the meeting, Prime Minister David Cameron said he would 'read the riot act' to Britain’s energy giants which he summoned to Downing Street to drive down prices over the winter.

He said he would unveil the four-point plan to help cash-strapped consumers.

He stepped in after regulator Ofgem found widespread overcharging and a lack of transparency about which of the dozens of different tariffs each household should be on.

However, Labour leader Ed Miliband accused the Government of 'engaging in window dressing and not real change'.
Figures last week showed annual bills have now risen to £1,345 a year for the average household – double the £740 of five years ago.

A report published today by green group Friends of the Earth says if gas and coal costs rise in the coming decade by the same amount as they did between 2000 and 2010, the nation would face an additional bill of £8billion a year by 2020 to generate electricity, costing the average householder an extra £300.

Electricity bills rose by 30 per cent in real terms between 2000 and 2010, while gas bills jumped 78 per cent. The rises were largely due to increased costs of coal, which rose by 71 per cent, and natural gas, which rose 90 per cent, in the decade, Friends of the Earth said.

Mr Huhne told the BBC earlier today: 'At the moment we've had some very big increases in electricity and gas prices, principally because of the very sharp increases in prices on the world markets.

'But consumers are not powerless. They can save up to £200 by switching, and that's absolutely key to try and help them make the market more competitive, because the best guarantee that you're getting value for money is to have more people bidding for your business.'
He said the Government is working with Ofgem to simplify 'dramatically' the number of tariffs.

'I'm determined that we have a much clearer, fairer and much more competitive retail market so that consumers can switch more easily with simpler tariffs and get better deals, and so we get new entrants into the market and that's what we're doing with the electricity market reform to bring new competition into the market,' he said.

'These companies are not the Salvation Army, they are trying to make profits for their share-holders, and that's important that we in the Government work with Ofgem to make sure that these are genuinely fair and competitive markets.'

The Prime Minister said he would pile pressure on the Big Six – British Gas, EDF, Eon, Npower, Scottish Power and Scottish & Southern – to ensure consumers know about the potential savings they could make from checking they are on the cheapest energy deal and switching supplier.

He said he would demand that they sign up to an agreement to provide prompts on how to find the cheapest tariffs, to appear on all bills within weeks.

Mr Cameron also said he would insist that free or heavily subsidised insulation, delivered by the energy companies, is available to the most vulnerable households this winter.

Under government plans, a £120 energy bill rebate will be paid this year to more than 600,000 of our most vulnerable pensioners, on top of the winter fuel payment and cold weather payments.

The Prime Minister and Mr Huhne said they would also spell out how they will
give regulator Ofgem power to quickly implement reforms that will vastly simplify tariffs, so customers know which deal works best for them. Ofgem will also attend the summit.

However, Mr Miliband called on Mr Cameron to tell the power firms that they should not go ahead with 'crippling price rises' that will hit individuals and businesses.

18/10/2011 - dailymail
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