Gas and electricity Updated:
Think you're paying too much for your gas and electricity? Well, you probably are. The results of a Competition and Markets Authority (CMA) year-long investigation show that the energy market simply isn't doing enough for consumers, and as a result, a huge number are paying too much.
The research found that the average household currently spends around £1,200 on energy each year. This makes matters particularly tough for the poorest 10% of households, with energy bills now accounting for approximately 10% of total expenditure. However, much of this could be due to disengagement on the part of consumers, with a survey finding that over 34% of respondents had never considered switching provider.
This could have a serious impact on your finances, because the report found that millions of customers are paying too much. In fact, dual fuel customers could save an average of £160 a year by switching to a cheaper deal, and at the very least, you should look away from standard variable deals! Currently, around 70% of customers are on suppliers' default standard variable tariffs, despite the fact that fixed rate deals are generally far cheaper.
A lot of this could be due to a lack of awareness of what deals are available, the report noted, while confusing and inaccurate bills and the difficulties (both real and perceived) of changing suppliers deter switching even further, but this means that suppliers can get away with charging higher prices to disengaged customers.
Unfortunately, the report also found that regulatory interventions, such as the 'four-tariff rule' which have been designed to simplify prices are not having the desired effect of increasing engagement, and have instead limited discounting and actually reduced competition in the sector.
As a result, the CMA has proposed a few changes, namely that the regulatory approach should be based on clear principles that allow customers to reap the benefits of competition, and that measures to increase engagement (such as smart meters) should be promoted. The body will be considering whether safeguards such as price caps on the most expensive tariffs are needed to protect customers until other measures have led to a more competitive market, and will look at improving transparency in the sector to build trust in suppliers.
"The CMA report out today has exposed £1.7bn a year of overcharging, and clearly says to energy customers that unless you switch you'll get ripped off," said Mark Todd, director of energyhelpline.com. "Put simply, loyalty doesn't reap rewards in the energy market. Too often it's the most vulnerable Britons that end up paying over the odds on their energy bills. This doesn't have to be the case. It's easy to shop around for the best deal and switch, and we encourage more consumers to make the change."
The CMA specifically said that disengaged customers should also be targeted to prompt them to shop around, but disengaged or not, the fact remains – if you want to ensure you're getting the best deal possible, shopping around is the only option! Use our search tool to find the best tariffs for your area, and see if you can cut your energy bills down to size.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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