Keeping up with the Joneses could save £70 on energy bills

Allowing people to nose through their neighbours’ energy bills could shave up to £70 off households’ annual gas and electricity costs, it has been suggested today.

Evidence from the UK and abroad shows that households reduce their energy use when their bills are compared with more energy efficient neighbours, in a classic case of "keeping up with the Joneses".

Energy companies could allow households to anonymously join the scheme, which would let them compare their bills with people living in similar sized properties, according to the study by Policy Exchange.

The report comes as the last of the so-called 'Big 6' energy companies raise its energy prices this winter. Bills will jump by an average 8.7% for customers of energy giant EON tomorrow Friday January 18. The hike will take the price gap between the cheapest tariff on the market and the standard tariff of the ‘Big 6’ energy companies to more than £300 a year said Confused.com.

[Related link: Could you save by switching? Compare energy tariffs now]

A trial in Camden, London, helped people reduce their bills by 6% through a combination of comparing bills and energy efficiency advice at a cost of just £3 per household.

The Government's new energy efficiency subsidy, the Energy Company Obligation, which levies money from people's energy bills to support measures such as insulation, should be extended to schemes influencing behavior, said the centre right think tank.

Eligible schemes could involve home energy visits that show people where they are wasting energy, better leaflets on how to cut bills and comparisons of energy use.

With an average household dual fuel bill of £1,260, this could lead to savings of more than £70.

Schemes in the US have seen an average reduction of 2% by sending bills to households which compare their costs with an energy efficient neighbour.

It costs between £8 and £40 to save a megawatt hour of electricity, compared to £80 per megawatt hour of electricity generated from a gas-fired power stations, the cheapest form of electricity generation, the report said.

Subsidising energy efficiency is also more cost effective than subsidising renewables, as is currently done in the UK, making it a cheaper way to cut carbon emissions, the study said.

And efforts to change behaviour, such as getting people to turn down their thermostat or washing clothes at a lower temperature, are even more cost-effective than installing energy saving measures such as insulation.

Such a scheme would create a market for energy efficiency which would allow charities and other experts to compete for the subsidy, alongside bigger energy companies.

It could reduce the costs of the "ECO" scheme, which are added to people's bills, the report said, and would help households cut both gas and electricity costs.

And it would take full advantage of the roll-out of smart meters, which will see more than 50 million new gas and electricity meters installed in homes across the UK, and will give detailed information on energy use.

Guy Newey, the report's author, said: "Helping people to cut their rising energy bills and avoid wasting energy is one of the most important things the Government can do.

"It is also one of the easiest and cheapest ways of reducing our carbon emissions.

"Smart meters have the potential to help change the way we use energy in the home. But they won't change habits on their own.

"Households need support to understand where they can make savings. If you find out your neighbour is paying £50 month less for their energy, you're much more likely to do something about reducing your own energy use."

The report also recommends the Government works to champion smart meters and launches a national advertising campaign to promote their benefits and how they fit in with other energy efficiency policies such as the Green Deal.

And it warned that Government plans to "simplify" tariffs to limit the number of energy deals offered could undermine the potential of smart meters to offer innovative tariffs depending on using energy at different times of the day.

Earlier this week it was revealed that soaring energy costs kept inflation high during December.

Households in England hoping to take advantage of free insulation and help with energy bills - worth up to £3,500 - under the government’s Warm Front Scheme have just two days left to apply.