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Last Updated: Friday, 9 May, 2003, 13:33 GMT 14:33 UK
Customers miss energy savings
Teenager playing a video game
Ofgem says customers have a choice of better deals

Many electricity consumers have had little benefit from energy price cuts in the last few years, because they have failed to switch suppliers, a government watchdog has found.

The National Audit Office said that almost two-thirds of households in England and Wales had stayed loyal to the company that supplied their electricity before the market was deregulated.

But if they did now switch to a rival they could cut their bills by up to 22% - an average saving of about 50.

The NAO said one explanation for the failure to take advantage of savings was "customer inertia".

People who had changed suppliers at least once since 1998 had cut their bills by up to 17%.

Big electricity customers, such as businesses, schools and hospitals had seen even better savings.

Bills for industrial and commercial customers fell 25-30% between April 1998 and March 2002.

Choice of deals

The spending watchdog was looking at how a new electricity trading system, introduced in 2001 and designed to cut wholesale prices, had affected customers' bills.

It is too much hassle to change

But it found that most of the savings had come after the market was deregulated rather than when the new trading arrangements began.

The NAO recommended that the energy regulator Ofgem should look at why electricity suppliers had not passed on more savings to those customers who had not switched suppliers.

Callum McCarthy, chief executive of Ofgem said: "Domestic customers can benefit from the fall in wholesale prices by switching suppliers and cutting their electricity bills by up to 50.

"Today every customer who has never switched has at least five better deals available."

"Getting ripped off"

Edward Leigh MP, chairman of the House of Commons Public Accounts Committee, said he was concerned about vulnerable communities.

The issues raised [in the report] are of vital importance to energy consumers.
Ann Robinson, Energywatch

"The situation becomes disturbing when you consider that among those less likely to switch are some of society's most vulnerable. Is Ofgem [the gas and electricity regulator] doing enough to make sure that these people are not getting ripped off."

Ann Robinson, chair of gas and electricity watchdog Energywatch, said the report confirmed the consumer group's concerns that customers were not benefiting from cheaper wholesale prices.

Saving energy

"The issues raised [in the report] are of vital importance to energy consumers and are ones which we have been expressing concerns about for some considerable time," she said.

The Energy Savings Trust which promotes energy efficiency said that people should realise they can also make savings - and cut pollution - by insulating their homes.

A spokesman for the trust said: "While further price cuts are of course ultimately of benefit to the consumer, we must not lose sight of the bigger picture in terms of climate change and the impact our consumption of energy at home has on the environment."

Installing cavity wall insulation could save a household 70 - 100 a year, he added.

The BBC's Rory Cellen-Jones
"It isn't hard to switch"

Q&A: Switching energy supplier
09 May 03  |  Business
Energy switching: Your comments
09 May 03  |  Business
Energy watchdog says switch to save
03 Dec 02  |  Scotland

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