Bulk buying by government could cut energy bills

9 April 2006
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10 April 2006 | Anusha Bradley

Bulk buying gas and electricity on behalf of pensioners and benefit recipients could slash 15 per cent from their average energy bill according to a think tank.

The Institute for Public Policy Research is urging the government this week to buy gas and electricity in bulk and deduct the charges directly from income support or pension credit payments, saving each recipient around £60 a year.

The institute says a similar scheme in Ohio, US, helped 60,000 low-income customers to reduce their monthly gas bills by as much as 18 per cent.

Most UK benefit recipients and pensioners use prepayment meters and weekly savings stamps, but these meters cost on average £39 more a year for gas and £23 a year for electricity. More than a third of electricity prepay customers and more than a fifth of gas prepay users are on a low income, the IPPR says.

By deducting payments directly from benefits or pensions the IPPR calculates that around 2 million people could save about £83.5 million a year on gas and 3.6 million could save £76.6 million on electricity.

The government already has a system in place for people to make regular payments for gas, electricity, water, council tax and fines. For example, the Department for Work and Pensions deducts the amount for each person and then makes a single bulk payment to the payee.

Ian Kearns, IPPR deputy director, said gas and electricity prepay meters are costly for suppliers to maintain so they pass the cost on to consumers.

"If the government bought the gas and electricity direct they could pass the savings on, and could do it right away because the computerised system already exists to deduct payments from income support and the pension credit," he said in a statement.

SMapr2006

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