up the power market, but consumers will
need to be wary,
As if the idea of banking where you buy your groceries isn't bizarre enough, you will soon be able to buy your electricity from the company that insures your car, Paul Slade discovered.
Next month sees the start of a 10-month campaign to introduce competition into the electricity supply industry. Customers in Canterbury, Margate and Dover will be among the first targets.
Insurance companies, banks and supermarkets have already decided they want a piece of the action, and hope to act as agents, selling power on behalf of the electricity suppliers.
In a report published this week by accountants PricewaterhouseCoopers, half of the big financial services companies and retailers questioned said they might start selling electricity, with 22 per cent saying they planned to join the new market soon. One big financial services player said it wants one million electricity customers within four years.
Murray MacFarlane, the PwC partner responsible for the report, says: "A typical insurance company may be good at making insurance, but if they haven't got good customer access, they're cut off at the knees. Therefore, they are looking for any mechanism that establishes them with a customer contact.
"In principle, I can imagine a Commercial Union or a NatWest Bank saying `Why don't you buy your electricity through us? If you're a current customer, we'll give you a special deal'."
If the sales techniques used by other agents in last year's gas competition campaign are any indicator, customers will need to be wary.
Ian Bickley, spokesman for the Office of Electricity Regulation (Offer), says: "With gas, it was reported that people were asked to sign a form which said that someone had visited them and spoken to them. What they didn't realise was that they were actually signing a contract to take a supply from that company."
In order to guard against such sharp practice, Offer has introduced licence conditions for electricity suppliers and their agents. The conditions specify no payment in advance, compensation in cases of malpractice, proper training for all sales staff, and a "cooling off" period of 14 days.
Kate Goodfellow, a senior researcher at the Consumers' Association, says: "We hope the introduction of the conditions into the licences will have some effect. But we do have concerns that similar practices might occur because - even after the introduction of similar marketing conditions - they still haven't entirely gone away with gas."
Professor Stephen Littlechild, director general of electricity supply, admits there have already been a few instances of new electricity suppliers marketing their wares in advance of September's launch, where "customers have been deliberately misled, or where improper sales practices have been used, particularly in the case of doorstep selling."
As with gas, the incentive produced for customers tempted to switch suppliers will be cheaper power, although the actual savings look like being quite small.
"Electricity prices have come down quite a bit already," said PwC's MacFarlane. "At the moment, people would quote 1 per cent to 3 per cent. My gut feeling is that economics will produce more reduction than that."
The rolling campaign to introduce competition will continue until June next year, by which time every domestic electricity user in the UK should have a choice of suppliers.
Before considering a new supplier, Offer says you should get certain answers from the electricity salesman:
1 Does your company charge different rates for different times of the day? This could be important for those on Economy 7.
2 What payment options do you have?
3 Will I have to pay my bills weekly, monthly, or quarterly?
4. Does your contract run for a fixed term? if so, how long will it last?
5. How can I end the contract early if I want to, and how much will it cost me to do so?
6. Does your company impose both a standing charge and a unit charge? Or are the two wrapped up in one?
7. How often will my meter be read?
8. What happens if I fall behind in paying my bills? What will your company do to help me catch up again?
9 To whom do I speak if I have a query or a complaint?
10. Does your company offer additional services such as energy efficiency schemes?