Page last updated at 12:20 GMT, Thursday, 11 September 2008 13:20 UK

Will fuel bill plans make a difference?

By Ian Pollock
Personal finance reporter, BBC News

A gas ring
How many more people will pay less for their fuel is uncertain

The key word peppering the government's official announcement on energy bills is "could".

Its energy saving package "could" save households £300 a year on energy bills.

Extra funding from the energy firms "could" benefit up to two million households, while about 600,000 customers "could" gain from cheaper tariffs.

And the new Community Energy Saving Programme "could" lead to 100 local advice schemes around the country.

In other words, it is not quite clear exactly how many people will benefit from the package of increased spending and advice, or to what extent.

Alan Asher of the consumer organisation Energywatch took a dim view of the way the energy firms might be allowed to pass on the cost of the energy saving measures to customers.

"Currently, the CERT (Carbon Emissions Reduction Target) scheme is entirely funded by consumers, not government nor industry," he said.

"Every penny raised through CERT is a penny on consumers' bills.

"A single pensioner on pension credit receiving £124.05 per week will contribute the same amount as an energy company chief executive on a £1,000,000 salary," he added.

More cash

It is worth noting that the supposed "one billion pound" boost to the government's existing energy saving initiatives is in fact a £300m a year package, running for each of the next three years.

The Government's aim is the insulation of all Britain's homes, where practical, by 2020
Defra statement

Even so, the various plans should still continue to help quite a lot of people.

Prime Minister Gordon Brown said that five million homes had already benefited from previous spending on energy saving measures and lower "social" tariffs for gas and electricity.

And he said that two million homes had been insulated, 1.5 million had gained energy saving devices, and pensioners and the poor were paying lower bills than would otherwise have been the case.

Getting the message

Trumpeting your plans on TV and the radio is one thing, but making sure the people who can benefit actually do so is another.

So one key feature will be the way that £350m of the new money will be spent over the next three years.

This cash, which has been squeezed out of the energy suppliers and electricity generators, will be spent on public advice campaigns.

Aimed at 100 deprived areas, and run by councils, charities and energy firms, they will urge people to get their homes insulated, or to switch to cheaper "social" tariffs, and will pay for checks on the energy efficiency of people's homes.

People will be advised - on the street and in their homes - on how exactly how they could gain from the rest of the government's measures.

Overall its aim is bold: "insulation of all Britain's homes, where practical, by 2020".

Government cash

The government is also launching its own advertising campaign too, to make sure we all get the message.

This should ensure year on year benefit from energy saving measures which will help cut everyone¿s fuel bills, most importantly the fuel poor
Jenny Saunders, NEA

And it has announced that cold weather payments will be put up this winter from £8.50 a week to £25 per week.

This can be claimed by, among others, pensioners, the disabled, the unemployed and families with young children, if local temperatures are an average of nought degrees or less for seven days in a row.

An extra £74m is also being allocated to fund the government's Warm Front scheme in the next two years, which lets pensioners and the poor claim up to £2,700 for the cost of installing central heating and insulation.

All this was welcomed as "great news" by the charity National Energy Action (NEA), which said that local campaigns were a very good way of getting the message across.

"NEA warmly welcomes the focus on long term energy efficiency," said spokeswoman Jenny Saunders.

"This should ensure year-on-year benefit from energy saving measures which will help cut everyone¿s fuel bills, most importantly the fuel poor."

Big deal?

The government has now cajoled the various energy companies into spending £3.7bn between them over the next three years to help cut fuel bills.

That is obviously a large sum.

But it is small compared to the roughly £33bn that all domestic energy users will be spending in the next 12 months on their gas and electricity bills, thanks to the large recent rises in fuel tariffs.

What will really cut energy bills, and make life easier for customers, is if those fuel prices come down again.

The price of oil, which the energy firms argue largely determines gas prices, has slipped from more than $145 a barrel in the summer to about $100 now.

As Hilary Benn, the Environment Secretary, told the BBC: "As we see the oil price reducing, and as that feeds in, we hope over time, in a reduction to some of the wholesale prices, the people will be asking, are we going to see the bills going in a downward direction?"

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