UK power consumers to be offered energy saving products

25 November 2003 – A pilot scheme in the UK to amend switching rules could see consumers benefiting from lower bills through the use of subsidised energy saving devices. Customers will be able to sign up to longer contracts with energy companies through a new pilot project announced by government ministers Monday.
Under existing rules, consumers can switch energy suppliers after just 28 days. New rules will allow them to choose a longer contract, and in return receive energy efficient products and services from their supplier – such as house insulation, energy efficient boilers and domestic appliances, or low-energy light bulbs. Up to one million households could benefit under the pioneering scheme.
The pilot scheme has been developed by the Energy Services Working Group (ESWG), set up following Energy White Paper proposals, with representatives from government, the regulator Ofgem, consumer body Energywatch and industry.
Trade and Industry Secretary Patricia Hewitt said: “Just as consumers choose to sign up for longer contracts when they buy mobile phones and receive free kit and extra services, we want to see if there is a market for longer contracts in return for lower electricity and gas bills achieved through energy efficiency.
“This new pilot scheme could provide benefits all round. With the right consumer safeguards in place, consumers will benefit from lower gas and electricity bills, energy companies will benefit from more committed customers- and the environment will benefit from reduced CO2 emissions through improved energy efficiency.
“I hope that consumers and suppliers will rise to this challenge. Not only can consumers now save money by switching easily between suppliers – as thousands do each month – the new proposals mean they can opt for even cheaper bills by signing up for an energy efficiency package deal.” Environment Secretary Margaret Beckett added:
“I am delighted that the interim report of the Energy Services Working Group gives a boost to the government’s priority on energy efficiency. Our Energy White Paper set out our commitment to cutting carbon emissions to help combat climate change, and a big part of the reduction needed must come from better energy efficiency.
“Almost one third of all the energy we use is consumed in our homes, so there are significant savings to be made if we can increase household energy efficiency. Too often energy efficiency is low on the list of household priorities, despite the best efforts of government and industry.
“We want to encourage consumers to use energy more efficiently as a way to cut their bills and cut carbon dioxide emissions at the same time. This new pilot scheme will help to show us if there is a market for longer term contracts in return for lower gas and electricity bills achieved through energy efficiency.”
Suppliers have said the ’28 day rule’ rule has stopped them offering energy efficient products because of uncertainties over whether their relationships with consumers will last long enough to recover costs. Domestic consumers have also been historically reluctant to invest in energy efficiency.
Duncan Sedgwick, Chief Executive of the Energy Retail Association which represents energy suppliers said: “We welcome this initiative and I am sure our members will be seeking to bring forward innovative services for their customers to help even more people take advantage of the latest energy efficiency ideas.”
Ofgem has agreed to consult on a two year relaxation of the ’28-day rule’ to allow energy suppliers to carry out large-scale pilot projects, to sign up to 4 per cent or 50 000 of their customers on energy service contracts lasting longer than 28 days.
This could lead to up to one million households benefiting from energy services in the pilot phase. The impact of the pilots will be reviewed after the first year and a wider evaluation later.

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