Letter from the Rt Hon Alan Johnson MP,
Secretary of State for Trade and Industry to Peter Luff MP, Chairman
of the Trade and Industry Select Committee
I appeared before the Select Committee yesterday
to talk about the Energy Review. I would like to take this opportunity
to expand upon the information I provided with regard to savings
available from switching energy supplier.
The figure of £46 I mentioned was the average
annual saving if a British Gas standard credit customer switched
their gas supply to a different supplier. Further annual savings
of £22 on average are possible if the same customer switched
their electricity supply from the incumbent supplier to another
supplier. Furthermore, if the customer was to then switch to paying
their bills for both fuels from standard credit to direct debit
a further annual saving of £32 is possible. It is therefore
the case that a customer who has not previously switched can save
on average £100 annually on their energy bills. These are
the average levels of bill reduction and in many cases greater
savings will be possible if a consumer spends more time shopping
around. Maximum savings possible by switching supplier and payment
method are of the order of £200, representing a reduction
of around a quarter in an annual bill.
There is still huge potential for switching
supplier, with more than half of gas and electricity customers
still with British Gas or their incumbent electricity supplier.
We are continuing to encourage switching where appropriate and
are working with energywatch and Ofgem to ensure that switching
supplier is as straightforward as possible.
Alan Johnson
8 February 2006
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