Energy chiefs agree action to cut bills for households

Millions of customers will receive letters offering advice on how to reduce costs by switching to different payment methods and taking advantage of free or subsidised insulation.

Suppliers have also agreed to put a message on bills this winter encouraging people to check whether rivals offer a better deal and to provide better information to help them switch.

Chief executives of the “big six” suppliers were brought together with consumer groups and watchdog Ofgem to discuss concerns over price rises with ministers.

Mr Cameron told them it was “absolutely vital” that consumers struggling already with rising food and petrol prices were not also hit by higher fuel bills.

Ministers were determined to be seen taking action on the issue after Labour leader Ed Miliband made tackling the “rigged” energy market one of his key policies.

Mr Miliband said at the weekend that firms should use soaring profits to cut “crippling” bills after figures suggested annual profits per customer had risen to £125, from just £15 in June.

Those figures, produced by Ofgem, were disputed by suppliers.

Among the measures agreed at the summit, held at the Department of Business, Innovation and Skills with Energy Secretary Chris Huhne, were:

Letters to be sent to eight million consumers who could save £100 by switching from the quarterly credit billing system;

Government letters to four million vulnerable households – paid for by energy firms – informing them they are eligible for free insulation;

A campaign to encourage people to consider switching supplier and a commitment to provide energy use data in electronic form to aid making comparisons;

A report by Ofgem before the end of the year recommending ways to improve conduct and transparency in the energy industry.

Speaking afterwards, Mr Cameron said: “We are making energy companies be competitive.

“They’re permanently being watched by Ofgem to make sure it is a competitive market, and we are making them make their energy available so that others can come in and provide customers with a good service.

“We’re also writing to millions of customers today to encourage them to shop around to get the cheapest possible deal they can for their energy..”