Prime Minister promises to help reduce energy bills
Prime Minister David Cameron has vowed to help reduce the burden on billpayers, promising the government will help "people get their [energy] bills down".
In an open letter written by Cameron and energy secretary Chris Huhne, the Prime Minister says that although the government cannot control "volatile" global energy prices, it can "still help people get their bills down".
The letter comes ahead of today's energy summit, which both Huhne and Cameron will attend alongside consumer groups and industry regulator Ofgem. The "Big Six" energy providers have also been invited to attend.
Cameron and Huhne say the simplest ways for consumers to reduce energy bills are to switch tariffs and reduce the amount of energy wasted.
"First of all we want to clear up the bewildering array of tariffs and special offers provided by energy companies so people know how to get the best deal. Right now, it's all far too complicated and it's incredibly frustrating," the letter states.
Last week, Ofgem announced a raft of new reforms, planning to make billing simpler and more straightforward for consumers.
The government has given Ofgem "significantly enhanced powers", according to the open letter, to enable the watchdog to carry out its proposals as soon as possible.
Home insulation is the other main way to cut energy bills, says Cameron. From 2012, homeowners will be able to take advantage of "improved insulation... at no cost".
In the meantime, vulnerable billpayers will receive free or "heavily subsidised insulation" and 600,000 pensioners will receive a £120 rebate.
'Hot air' not enough
Despite Cameron and Huhne's promise to fight rising energy prices, critics argue the Prime Minister and energy secretary are making the right noises but ignoring the true scale of the problem.
"The nation is looking to David Cameron to take a lead on this and people will not forgive him if all that comes from the Downing Street summit is a load of hot air," says Mark Todd, director of energyhelpline.com.
There are 6.4 million UK homes currently in fuel poverty (where a household has to spend more than 10% of its income on electricity and gas bills) but another harsh winter could push more into this category, according to energyhelpline.com. The comparison website estimates that another 1.9 million homes could fall into fuel poverty.
Homes will need to have a combined income of £30,000 to avoid the fuel poverty trap, according to energyhelpline.com. Todd says these figures uncover "the shocking extent" of how many consumers will struggle to pay their bills this winter.
"The stark reality is that there is a real crisis looming in millions of homes and this could be the worst Christmas for many in a generation," Todd adds.
Ros Altmann, director general of Saga, says much of the government's advice on switching tariffs neglects the needs of older customers: "Pensioners are least likely to be able to find the best deals too. The most vulnerable older people who are not on the internet will be denied the best rates.
"We need to ensure that older people have access to the best rates in the market, even if they cannot 'shop around'."
Altmann also highlights the reduction of winter fuel payments by the government:
"While holding meetings to discuss this problem, the government is also presiding over a cut of £100 in winter fuel payments to the over 80s. This year, instead of getting the £400 they have received in past years, they will receive only £300."