City A.M. Reporter
COUNTRIES could save £1bn (£1bn) by the end of next year if they stopped charging for what they previously had for ordinary customers, energy regulator Ofgem said yesterday.
A study into rates, bills and energy efficiency found that 59% of households were still being charged for energy they didn’t need, which was a product of “over-supply”.
The cost of energy for most of the 1000 households analysed was £450 for an average tariff, or £4.30 a day for every £100 of energy.
That was 6.5% of the total consumer budget and had an impact on the average consumer savings predicted by Ofgem of £460.
“It is likely to increase consumer power and leverage demand for discounts, which will provide huge savings for households,” said Marcus Jones, chief executive of energy company Direct Line.
Ofgem is targeting households with a big monthly bill to have no energy usage in excess of 20% – with the figure restricted to a customer’s average daily use, which is around 120kg.
The study estimated that between 2017 and 2022, retailers could be saved between £1bn and £1.25bn by taking this restriction into account.
Ofgem also estimated that, in the absence of this restriction, rates would drop from between £4.30 and £4.45 a day, to between £4.15 and £4.50 a day, which was 9.5% of the average daily household bill, the average fuel bills cut, compared with savings expected from the current arbitrary restrictions and reductions of up to 5% off or £15 a year less for the average household from end of June 2019.