The Government has introduced a scheme to provide free cavity-wall and loft insulation for low income households and pensioners and 50% discounts for everyone else. It is estimated that up to 6 million people could benefit from this discount.
One of the problems is that more than half the £910 million required for this programme is to be raised from energy suppliers.
The problem is that energy suppliers pass on these costs to consumers in the form of increased rates and fees.
The irony is that cavity insulation does not deliver massive initial savings, it typically takes 10 year to recoup the £3000 it can cost to make a house more energy efficient. Or about 5 years with the 50% subsidy.
Consumers can frequently save more than this amount per year just by switching supplier and by paying by direct debit.
Electricity companies are allegedly using several tactics to charge the highest possible prices to consumers and recoup their costs, these include:
1. Announcing energy price changes with immediate effect thereby denying consumers time to switch to other suppliers with lower prices.
2. Illegally charging consumers much more for paying by cheque than is justified. Technically, suppliers are only meant to charge the extra cost that they have to pay for collecting payment by cheque, but frequently, suppliers charge much more.
3. Increased prices more for those who pay by Direct Debit.
4. Introducing steep exit penalties if customers decide to leave their fixed price deals.
5. Overcharing for estimated bills - ie if there is a discrepency between current meter readings and estimated meter readings, the energy companies are charging the discrepency at the current, highest prices, rather than using an average price over the period.
Source: The Sunday Times