Hello, I’m Allan Asher, chief executive of energywatch, and we’re going to be talking about Britain’s energy future.

We’re a consumer group set up to help consumers get a better deal from energy companies, also to campaign for the fuel poor and to work for an energy future that doesn’t cost us the earth.

A striking distinction between our current lifestyle and the lifestyles of our grandparents is our access to plentiful, relatively inexpensive and safe energy. Until very recently, most Britons scarcely gave a thought to where energy came from, how much it cost, or what impact our ever-increasing consumption might have on the planet. But all that’s changing fast, and in the next few minutes, I want to talk about the promises, problems and prospects of our underperforming market for gas and electricity.

Twenty years ago, Britain set about selling off state-owned gas and power assets, and set up a competitive and open market. Dozens of new firms flocked in and prices tumbled. New services sprang up, and demand shot up as well. On the downside, however, aggressive and creative salespeople started pounding our footpaths and set out on a frenzy of selling, and mis-selling, which saw 20 million households change suppliers. Problems that we encountered were very poor sales techniques, people who were tricked into buying products they didn’t want, lots of people who didn’t really buy at all – their names were just forged on contracts. Also, disconnections: up to 30,000 people a year were disconnected for failing to pay their bills on time, and also the introduction of millions of pre-payment meters, the cost of which is many times that of the energy that others buy.

Well, in recent years the 20 or so firms who entered the market shrank to 13, and now just six giant companies control most of our energy production and sales. Prices are shooting up, and we face serious environmental dangers due to natural and man-made emissions of carbon dioxide and other gases which trap heat in the atmosphere – we all know those now as greenhouse gases.

But perhaps worse still, the business model of energy companies is to produce more and more. The revenue that they develop, and their profits, come from sales of ever-increasingly large amounts of gas and electricity which compounds the environmental problems.

That with four million families in the UK who are already spending more than 10 per cent of their household income just on heating and lighting means that there’s something of a national crisis.

Well, what are the prospects then? First, 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.

But lots of other changes are going to be necessary as well if we’re going to have a good future for energy, and the first of those is to have a new attitude for caring for consumers and caring for the planet. 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?

There are lots of positive things happening though, and one of those is to equip consumers with much more accurate, understandable information about the energy that we use, possibly about the amount of carbon that we’re each responsible for, and to give us choices that might be able to lead us to buy energy at off-peak times, to be able to buy more energy from renewable sources, or as many people are starting to do, install small generators at home, and indeed exporting some of the excess energy back to the energy grids. All of these things are possible, but until our metering system is improved, they’re really not realistic.

At the moment the government’s considering the installation all around Great Britain of smarter meters. These are meters with two-way communications, which could mean for example that you could have a signal that allows some electrical appliances to be turned off in times of generation problems, or for us to be able to switch on our energy consuming appliances – such as dishwashers – later at night where the costs and the environmental impacts might be lower.

Another big change for the energy industry is to develop a much greater sense of social responsibility. At the moment, consumers who use pre-payment meters which include some of the poorest consumers in the community often face prices which are so much higher than those of use who use internet-based tariffs or direct debit tariffs. Indeed, the gap can be as much as £460 a year on a bill of just on £900 - so 50 per cent more for the same amount of energy. Those sorts of differences shouldn’t be allowed, and that forcing the poor to pay more for power and gas is just immoral in today’s society. Again, the opportunities are there for suppliers to fix this: some are, some aren’t. In the not too distant future it’s likely that governments might push for laws that require the implementation of tariffs to protect the interests of the poor.

Other big changes that are underway are the use of much more renewable energy – energy from wind farms, energy from wave power, and energy from other renewable sources which don’t have the same carbon consequence but do have some downsides, the key in which is that they’re so much more expensive to produce. And so, those years of benign, falling prices, or prices that we didn’t pay attention to are just no longer a feature today. Increasingly, we can expect prices to go up, and for people to have to think much more about energy.

It’s also not the case that Britain is an island. In the energy market, increasingly, our energy is coming from outside Britain. Already as our gas fields start to run down, we’re starting to source more and more gas from gas fields owned by other countries, and through power cables that are linked to the continent. All of these things mean that global co-operation is needed in the production and distribution of energy, but of course also global co-operation in dealing with some of the environmental hazards. The early days where we didn’t really need to think about these things, there was abundance of inexpensive energy are long gone, and that for all of us we face something of an uncertain energy future.

Thank you.

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