Only ten percent of households are receiving the cheapest energy prices with most paying around £300 more per year than if they switched to a better energy deal.
Research published by uSwitch has found that only 13% of UK households are benefiting from the cheapest energy prices and households on standard energy tariffs are paying more than £300 per year than they need to.
Online energy plans, where suppliers consistently offer their most competitive prices, provide the cheapest deals, however only 3.5 million households are taking advantage of these to lower their energy expenditure. In contrast, 7 million households have taken out price guarantee plans, which often incur price premiums despite the security of fixed prices.
A further 3.8 million electricity customers and 2.6 million gas customers are on expensive prepayment meters, uSwitch is reporting.
The low uptake of the best energy deals is attributed to the way in which more price savvy consumers are switching to better deals – around 30% are switching via online price comparison whereas 61% found out about deals through their existing supplier which may not be the most competitive on the market.
Ofgem, the energy regulator, and the Government are taking steps to better inform customers about the benefits of switching energy supplier. With initiatives such as the introduction of annual statements which will provide better information about household energy usage and ensuring that suppliers display their cheapest tariffs on customer bills.
It seems that Ofgem still has a long way to go to better inform consumers, as Ann Robinson, Director of Consumer Policy at uSwitch.com, points out:
“The fact that just one in ten British households are paying the cheapest energy prices on the market is a huge disappointment and means that Ofgem really does have its work cut out. The market is competitive – otherwise you wouldn’t be able to save around £300 a year by moving online – but not enough consumers are taking advantage. And this is what the regulator has to address.”
“Online energy plans are now around £300 a year cheaper than standard plans and offer consumers a chance to take their energy bills back down to pre-2008 levels. I would urge householders to move to dual fuel, pay by direct debit and sign up to an online plan so that they can start to enjoy competitive prices straight away. Ofgem has taken some good first steps, including introducing Annual Statements, but more still needs to be done if this message is to get through to consumers loud and clear.”