Britain's energy companies must transform the way in which they produce, distribute and price power if the public's efforts to become more energy efficient are to have an impact, the chief executive of the UK's consumer energy body argues.

According to Allan Asher, the chief executive of energywatch: “Nothing's going to change unless we reinvent the way that firms produce, distribute and derive profits from energy - and the first thing to do is to break the link with ever-increasing sales and consumption. It's a surprising fact that still, today, every single energy firm charges us less per unit of energy the more we use.

“It's just a basic principle of conservation and economics that in order to reduce consumption we have to charge more for larger consumers rather than less, and unless we do that it's hard to see this ever turning around at all.”

In a podcast for The Times, Mr Asher said that Britain faced an “uncertain energy future” and spoke of “a national energy crisis”, in which four million families are spending more than 10 per cent of their household income on power.

He singled out the present system of calculating and charging for energy use as problematic. “At the moment, a third of all bills that we get are based on estimates of our meter-reading and not actual ones, so, really, a third of all bills are just wrong. How can we possibly act as responsible consumers if our energy bills just don't reflect what we actually use?”

He said that efforts to make consumers more aware of efficient use of energy were cause for optimism, but that at present it was unrealistic to expect these to have an effect.

Nevertheless, he did list several developments that he considered positive. These included giving consumers more accurate information about the energy they use, which might lead them to buy more from renewable sources, or, as some people are starting to do, installing small generators at home and exporting some of the excess energy back to the power grids.

“All of these things are possible, but until our metering system is improved, they're really not realistic,” he said.

The energy industry has come under intense scrutiny in recent months. Customers have been hit as five of the UK's six big suppliers have pushed through price rises.

Centrica, which owns British Gas, sparked controversy last week when it announced record profits of £1.9billion, only a month after raising prices by 15 per cent.

Ofgem, the industry regulator, has launched a formal investigation into the energy supply market and this month the Commons Committee for Business, Enterprise and Regulatory Reform announced an inquiry into anti-competitive behaviour in the energy sector. Energywatch has called for a full Competition Commission inquiry into power pricing.

Yet in the midst of the row over profits and prices, energy companies have to balance their obligations to ensure that their businesses are environmentally sound and do not disadvantage vulnerable or low-income customers, their commercial existence and their duty to shareholders to run a profitable company.

Claire Gibson, of the Energy Retail Association, which represents Britain's power suppliers, said that the industry was taking proactive measures to fulfil its responsibilities. “The industry takes the problems faced by poor and vulnerable customers very seriously, and has a range of voluntary measures in place to provide assistance for them,” she said. She cited a report by Ofgem last September, which welcomed these voluntary initiatives.

Of the £2.75billion that the energy industry is investing in the Government's Carbon Emissions Reduction Target between 2008 and 2011, she said that 56 per cent would be spent on support for vulnerable customers.

“The energy industry sets the standard for voluntary initiatives; there is no other competitive industry which voluntarily gives more help to its customers in need,” Ms Gibson said.

In January, energywatch commended British Gas for outperforming its rivals on the issue of fuel inequality: £7 out of every £10 spent on alleviating fuel poverty comes from British Gas and the company contributes 0.49 per cent of its turnover to schemes that support customers who struggle to pay their bills.

Julian Mears, a British Gas spokesman, said: “We have to ensure that we are looking after the people who are most at risk in the volatile market that we are in.” He said that while consumers were aware of the environmental impact of the sourcing and consumption of energy - and increasingly look to suppliers for advice on energy efficiency - they still expect value for money. “People are becoming more aware of their own carbon footprint, but clearly they want to be saving money at the same time.”

Mr Mears also countered Mr Asher's criticism of the metering system for payments. Mr Mears said that British Gas regularly reviewed its metering system, and, where customers had been overcharged, the credit was reimbursed.

Career campaigner

—Allan Asher's career as a consumer advocate has spanned more than two decades. He moved to Britain from his native Australia in 2001 to take up the post of global campaigns director at Consumer International, a global NGO that comprises 240 consumer groups from 115 countries. He was appointed chief executive of energywatch in 2003

—He trained as a lawyer, and is a barrister and solicitor to the High Court of Australia. He served as deputy chairman of Australia’s Competition and Consumer Commission

—Mr Asher, 57, remains a director of the Canberra-based FEMAG (Foundation for Effective Markets and Governance) and also chairs the International Network of Civil Society Organisations on Competition in Jaipur, India

—He chairs the British Standards Institute’s Consumer Policy Committee and is a board member at the Office of Fair Trading

—His hobbies include flying and mountain biking. He is also a member of Transparency International, a global coalition that campaigns against corruption

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