Energy chiefs agree bills cut

Energy firm bosses have agreed a number of measures aimed at reducing household energy bills after a summit meeting at which David Cameron told them action was "absolutely vital".

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.

The Prime Minister 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 were 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 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.

"So this is about the Government, about the Citizens Advice Bureau, about other organisations, all working together to help people to keep their energy bills down."

The summit came as environmentalists said an over-reliance on fossil fuels could push up household bills by around £300 a year by 2020.

Friends of the Earth sought to pin the blame for rising prices on a failure to use more renewable sources after critics pointed instead to the impact of green taxes.