East Anglian homes could save money on energy bills
Hundreds of thousands of households in East Anglia could save money on their bills thanks to a new agreement which will see energy companies write to customers every year telling them the best deal for their household.
After years of eye-watering price hikes, Britain's six biggest energy firms have agreed to offer customers the best deal in a move cautiously welcomed as helping cash-strapped consumers of gas and electricty.
Deputy prime minister Nick Clegg will announce the agreement today in a speech in which he will say the Government wants people to save money on bills while becoming more switched-on to the idea of saving energy through green measures to make further savings and protect the environment.
Mr Clegg will say: 'We have secured a landmark deal with the six big energy companies which cover 99pc of customers, to give customers a guaranteed offer of the best tariff for them.
'Right now, seven out of 10 customers are on the wrong tariff for their needs, so are paying too much. Yet people rarely switch, despite the fact some families could save up to �100 a year.
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'There are currently over 120 different tariffs, making it very difficult to know where to start. That is going to change.
'As of this autumn, your supplier will have to contact you with the best tariff for your needs – and if you call them, they'll have to offer you the best deal too.'
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The agreement will mean the big six – EDF, E.On, British Gas, Southern, Scottish Power and NPower – will write to customers every year to specify what the best tariff is for them and how to get it. Vulnerable customers – those assisted by the Warm Home Discount scheme – will be contacted twice a year.
Phil Wells, chief executive of Age UK Norwich, said it was 'welcome as a little step' but felt it was a step in the wrong direction, as it did not address some of the major concerns around energy pricing.
He said: 'It's a good small step but it does leave untouched some of the bigger questions.
'We're particularly concerned people on low incomes and low volume users tend to pay more per unit than people on high incomes and high users, and that's a major problem for older people on low incomes.'
All the big six suppliers announced earlier this year they were cutting either gas or electricity prices, not both, by around five per cent. Yet this was on the back of up to 19pc hikes on both in late 2011.
Ann Robinson, director consumer policy at Uswitch, a switching service which helps consumers to compare gas and electricity prices, said to get the best possible tariff, customers should still compare prices between the energy companies and consider switching.
She said: 'I'm really pleased about this and I think it's a good thing to do as it will make it a lot simpler for consumers.'
But she voiced concern that the 'best tariff' for a customer as chosen by a company might not necessarily be the cheapest, and she would want to see consumers offered the cheapest tariff, as well as given a choice of one or two other deals of interest.
She added: 'While for an awful lot of people this will be enough, we would really encourge them to take that information to make a better comparison across the whole market. At the moment we are in serious danger of the competition seizing up completely.
'Only 15pc of us switch on a regular basis, so how do we really know if this market is truly competitive?'
Energy regulator Ofgem welcomed this latest move, saying its recent retail market review showed that the energy market was too complex.
A spokesman said: 'Since we have published this analysis many suppliers have admitted that they need to change their ways and some are beginning to try and address the problems Ofgem's review identified.
'Ofgem's reforms include proposals to open up the electricity market and make it easier for consumers to choose the tariff that is right for them. They also set out tougher standards of conduct so suppliers treat customers fairly. We urge suppliers to back our reforms as a first step in re-building customer trust in energy suppliers.'
Consumer Focus's director of energy Audrey Gallacher said alerting customers to the best deal was 'long overdue'.
But she added: 'While any move to help energy customers to get the best deal is welcome, it has to be the right method to reach people and the benefit must outweigh the cost.
'This needs to be more than a one-off mail shot and part of a wider strategy to help people overcome the burden of having to navigate hundreds of complex tariffs to get a decent price. Unfortunately, people don't trust energy firms and previous mail-outs have not always had the best take-up.'
Mr Clegg is also expected to announce a new scheme where companies will print barcodes on bills, allowing customers to scan the code on their mobile phones, linking them to the best energy tariffs.