Electricity supply competition offers real savings for consumers - Wilson

04 Jan 2001

Scotland Office Minister, Brian Wilson today said that 350,000 domestic electricity consumers in Scotland had reduced their bills by changing their electricity supplier and urged other consumers to ensure that they are receiving their electricity at a competitive price.

Commenting on the findings of the National Audit Office report into the impact of electricity competition on domestic customers Mr Wilson said:

"It is interesting to note that 350,000 domestic electricity customers in Scotland are already benefiting from supply competition. There are another two million domestic customers who have decided to remain with their current supplier and this represents a high level of customer loyalty.

"Many of these customers will have taken the positive decision to remain with the long established suppliers and a service with which they are generally satisfied. However, it is important that they should be aware of all the options in order to make that informed decision.

"Scottish customers are not choosing to change suppliers to the same extent as customers in England and Wales. Since competition started two years ago only 15 per cent of Scottish customers have chosen to change supplier, compared with 25 per cent across Great Britain as a whole.

"I am concerned to see that customers using pre-payment meters - many of whom are on lower incomes - find it so much more difficult to find an attractive deal. I urge the industry to do what it can to reduce costs to such customers. In addition, fewer customers in rural areas have changed supplier, although in their case it would appear that it is the lack of information from companies rather than lack of savings that is the problem.

"The NAO quite rightly puts a strong emphasis on ensuring that consumers are aware of the opportunities available to them and I am confident that the regulatory body Ofgem and energywatch - the consumer protection body - will do what they can to improve the lot of all electricity customers."

NOTES TO NEWS EDITORS

1. The NAO Report, published today shows that since competition began in September 1998 more than 6.5 million customers - one in four - have saved money by changing supplier. Domestic electricity bills have fallen by some £750 million since competition began - of which some £140 million is on account of competition and the rest due to regulatory price controls.
2. In many cases by switching suppliers customers in Scotland could save an average of £35 per year - an annual saving across Scotland of some £70 million.
3. The report highlights the fact that fewer customers in Scotland have changed supplier, even after allowing for the fact that Scotland has relatively more rural customers, and more customers using a pre-payment meter than the rest of Great Britain. The report suggests four possible reasons for this:

• Fewer electricity suppliers have actually marketed electricity in Scotland, reflecting the smaller size of the market
• The high degree of customer loyalty to the two incumbent suppliers
• More limited scope to offer dual fuel (i.e. gas and electricity) deals due to the lower penetration of gas in Northern Scotland
• The different market structure whereby the incumbent suppliers also own the generation, transmission and distribution businesses in Scotland

1. Media can obtain further details about the NAO report from their website at www.nao.gov.ukor by telephoning the Press Office on 020 7798 7400.