Electricity free-for-all promises 10% off bills

THE SWITCH was pulled on electricity competition yesterday, with the announcement that 750,000 households will be allowed to shop around for a different supplier a month from now. Price reductions are likely to be in the region of 5 to 10 per cent.

Domestic competition will be launched on 14 September in 13 towns spread across four regions of the country. Initially, 10 per cent of households in each region will be able to switch supplier, with the remainder of the area opened up to competition over a six-month period.

The full roll-out of competition to all 26 million domestic and small business users will not be completed until next June - 15 months later than originally planned. The cost of the exercise will be pounds 726m, or pounds 33 for every household.

The first four areas to be opened to competition next month will be the regions covered by Eastern Electricity, Manweb, ScottishPower and Yorkshire Electricity. However, Seeboard has missed being included in the opening phase because of delays with its computer systems.

British Gas, which has been waiting for two years to attack the electricity market, said it had already signed up 300,000 customers while a further 1.5 million had registered their interest in buying electricity from it.

The domestic gas market began being opened up to competition in 1996. According to figures released yesterday by Ofgas, more than 3 million customers have deserted British Gas since then, tempted by offers of up to 20 per cent off their bills from rival suppliers.

The price cuts in electricity are expected to be more modest with bills falling by between 5 and 10 per cent at most. The take-up is also expected to be more gradual, with around 5 per cent of households forecast to switch supplier compared with 15 per cent for gas.

Electricity suppliers have been fined for the delays in introducing competition, but a committee of MPs said last month that the level of penalties was inadequate.

The towns where competition will be introduced on 14 September are: Norwich, Fakenham, Lowestoft and Cromer (Eastern Electricity); Chester, Mold and Holywell (Manweb); Motherwell, Aidrie and Lanark (ScottishPower); Hull, Hornsea and Beverley (Yorkshire).

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