It is urging the government to toughen up the targets so that gas and electricity firms have to insulate people's loft and walls, which could help 1.4 million households save £220 a year on their energy bills.
Councillor Paul Bettison, chairman of the LGA's Environment Board, said: "The failure of energy companies to really help householders cut their fuel bills is an outrage. Energy suppliers should be filling our lofts and walls with insulation, not filling our cupboards with light bulbs."
He added that consumers are already paying for the scheme through a supplement on their gas and electricity bills and therefore suppliers have a duty to do what is best for both customers and the environment.
According to the Energy Saving Trust, the average household can save around 1.5 tonnes of carbon dioxide each year by making their home more energy efficient.
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