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Sir John Bourn, Head of the National Audit Office, today welcomed Ofgem’s efforts to help vulnerable consumers, such as the elderly or those on benefits. He encouraged Ofgem and the energy suppliers to build on the Social Action Plan to allow more vulnerable consumers to take advantage of the competitive energy market. He also reported that energy efficiency programmes have led to energy savings being made but warned that these savings may have been overstated.

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Many low income consumers use pre-payment meters even though they are the most expensive method of payment. 3.5 million consumers pay for their gas and electricity by pre-payment meter. A person using pre-payment meters for gas and electricity is paying on average £63 a year more than a direct debit customer. Some consumers prefer to pay by pre-payment meters because they help them budget. But separate research carried out by Ofgem, energywatch, and suppliers from 1999 to 2002 has shown that a significant proportion of consumers do not realise that they are paying more.

Working with suppliers, Ofgem has developed a scheme to help pre-payment meter customers in debt switch supplier and enjoy cheaper bills. This scheme is just starting and the report recommends that Ofgem review the scheme next year with a view to expanding it to include consumers with debts over £100 – subject to this being in the public interest and the benefits to consumers outweighing the costs to suppliers.

Suppliers so far have met their targets under energy saving schemes, which are expected to improve household energy efficiency by two per cent per year. However, research into one scheme for disadvantaged gas-heated homes showed that energy savings were 10 per cent lower than expected. Defra is undertaking monitoring and research to improve understanding of the issues involved.

To help meet the Government’s targets for reducing carbon emissions by 2010, its Energy Efficiency Action Plan envisages a near doubling of activity under the Energy Efficiency Commitment. For suppliers to achieve this, customer demand for energy efficiency measures will need to increase considerably.

"Ofgem’s actions are to be applauded both in its attempts to help vulnerable consumers and in its attempts to increase energy efficiency. It is important now to continue to improve awareness among vulnerable consumers of the ways in which they can benefit. It is also important that we all take further steps to improve our energy efficiency. To these ends in addition to my report I am issuing a pamphlet to inform consumers of the ways that they can improve their household’s energy efficiency."

Sir John Bourn


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