31 October 2013
Last updated at 09:31
Households could be able to switch energy suppliers within 24 hours under proposals to be announced by Energy Secretary Ed Davey.
He said it was “completely ludicrous” that switching suppliers could take more than five weeks.
He will unveil more details later when he announces a review of energy competition and prices.
Labour said the review, which reports next spring, would do nothing to help with soaring winter fuel bills.
The government is under pressure to help people facing higher gas and electricity bills, with Labour calling for a price freeze.
The coalition’s answer has been to encourage households to switch suppliers – but Mr Davey has accused the “big six” energy companies of anti-competitive practices by “trying to make it more difficult” to do that.
He will promise in a Commons statement to put pressure on those six firms to speed up the switching process.
“My ambition is to try and get it down to 24 hours,” he told BBC Breakfast.
“We’ve got obviously work with the industry to deliver that but I’ve already talked to one of the leading independent suppliers, First Utility, who believe they can get it down to 24 hours.
“But we’ve got to make sure the other players are in there. So I am meeting, next month, three of the big six who have come forward, who are willing to work with me.
“And I really think we can make a massive change here and not before time. The big six basically have been trying to prevent people from switching, make it more difficult for them to switch. That is not acceptable.”
Smaller energy companies have accused the big six of ripping off bill-payers, particularly those who remain loyal to one firm.
Mr Davey said: “Some of them clearly are making too much on some of their consumers because that’s why they can make such big savings if they switch.”
Mr Davey is due to deliver the annual energy statement to the House of Commons from about 11:15 GMT, unless it is delayed by urgent questions or other statements.
The review, to be led by the regulator Ofgem, together with the Office of Fair Trading (OFT) and the Competition and Markets Authority (CMA), is expected to report annually on the state of the energy market.
Continue reading the main story
Cheaper energy bills
Advice from the Energy Saving Trust:
- Insulate your hot water cylinder. Could save up to £60 a year
- Get an eco-shower head. Some water companies are giving them away free; could save you up to £75 a year
- Swap halogen spot lights with new LED bulbs. Replacing all traditional bulbs with energy saving versions can save £60 a year
It will examine the barriers encountered by new suppliers entering the market, scrutinise prices and profitability, and evaluate how easy customers are finding it to switch suppliers.
The review is expected to be complete by spring 2014 and would help to bring “much more transparency” to the sector, according to Mr Davey.
Four of the UK’s six main energy companies have recently announced price rises, with an average increase of 9.1%, and the other two are expected to follow suit soon.
The firms say the rises are largely due to increasing wholesale prices, but Ofgem says these have risen by only 1.7% in the past year.
Wholesale costs – the price at which energy companies buy the gas and electricity they provide to customers – make up just under half of the energy bills paid by most customers.
Energy firms dispute Ofgem’s figures and say wholesale prices have risen by 4-8% in the past 12 months.
‘Stealth poll tax’
Appearing before the Energy and Climate Change Committee of MPs this week, some of the big energy companies blamed the government’s social and green policies for driving up prices.
Tony Cocker, chief executive of E.On, called such costs a “stealth poll tax” and said they should be paid through the main tax system, not as part of energy bills.
Mr Cocker also told MPs there should be “a very thorough Competition Commission inquiry” into the way the UK energy market operates.
But Centrica, parent company of British Gas, later said such an inquiry was “unnecessary”, adding: “There have been numerous inquiries into the energy market and none have found any evidence of anti-competitive behaviour.”
At Prime Minister’s Questions in the House of Commons on Wednesday, Mr Cameron clashed with Labour leader Ed Miliband on the issue of energy bills for the fourth week in a row.
The prime minister said the energy market needed “more competition and lower levies”, but Mr Miliband called him “the unofficial spokesman for the energy companies” and said customers needed to “switch the prime minister”.
Mr Miliband, who has pledged a 20-month energy bill freeze if Labour wins the 2015 general election, dismissed the government’s review.
“How will a review that reports next summer help people to pay their bills this winter?” he asked the PM.