By Steven Birch
Letting people check what their neighbours are spending on utility bills can help them to cut up to £70 from their annual gas and electricity costs, according to a report.
The Policy Exchange has drawn up a study based on evidence from Britain and abroad that suggests the Government's new energy efficiency subsidy, the Energy Company Obligation, should be extended to influence consumer behaviour.
At the moment it levies cash raised from people's energy bills to back measures such as insulation. The think tank believes this could be expanded for eligible schemes to incorporate home energy visits, demonstrate where energy is being wasted and hand out detailed leaflets on how to cut down the cost of bills.
The Policy Exchange believes these schemes could allow homeowners to join anonymously and then let them compare what they regularly pay with what other people in similar-sized properties fork out.
If there are any significant differences, it is thought this could act as an incentive to make homeowners examine their energy usage more closely to see where they can reduce costs.
During a trial period in Camden, London, homeowners cut their bills by around six per cent as a result of receiving expert advice and comparing bills. The trial cost just £3 per household, but with average dual fuel bills costing £1,260 it could generate more than £70 in savings.
In the US similar plans, giving homeowners the chance to compare costs with energy efficient neighbours, have led to a two per cent fall in average household bills.
The report also stated that subsidising energy efficiency is more cost effective than subsidising renewables.
It also highlighted that focused attempts to change people's behaviour, such as encouraging people to put a jumper on instead of turning up the thermostat or washing clothes at a lower temperature, provide greater benefits than funding measures such as insulation.
The think tank also believes such a scheme would stimulate a healthy competition between the big energy suppliers, charities and other experts for the subsidy.
Meanwhile, the costs associated with the "ECO" scheme that are often added to bills would be reduced, helping homeowners see real benefits with their gas and electricity costs.
It would also take full advantage of a roll-out of smart meters, with more than 50 million gas and electricity meters being installed across Britain providing more information on energy use.
Guy Newey, who wrote the report, stressed that helping consumers avoid wasting energy should be a top priority for the Government as it is one of the easiest, and cheapest, ways to reduce carbon emissions.
Although smart meters have the potential to transform the way energy is consumed by homeowners, they will not change habits on their own, he added.
"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," he said.
Considering the potential of smart meters the report also calls for a national advertising campaign to promote their benefits and how they fit in well with other energy efficiency policies.
The report also warned that under Government plans to "simplify" tariffs the potential of smart meters to provide alternative tariffs covering energy used at different times of the day.