Monday, February 27, 2012

Rip-off tactics of the Big Six energy suppliers

Having poorly insulated homes is not the only reason why some people are paying too much for their energy use.

New research from think tank ippr finds that people who use the same amount of energy and live in the same area are paying vastly different amounts for their energy because of the way they pay their bills.

They are calling for regulator Ofgem to clamp down on anti-competitive practices in the energy market.

Those who are on a ‘standard credit account’ (paying for their energy use in arrears) and are very unlikely to switch tariff or supplier, are most likely to be paying over the odds.

With more than 60% of all households having never switched energy supplier and 34% being on standard credit accounts, over five million may be being overcharged.

IPPR tested tariffs for British Gas, EDF, E.ON, Npower, Scottish Power and SSE for three different payment types using a price comparison website for properties in London, Sheffield, Dumfries in Scotland and Aberystwyth in Wales.

Across each, Scottish Power was found to consistently offer the greatest differential between their standard and cheapest tariff at over £330.

The difference was greatest in Sheffield at £339 and second greatest in London at £333.

Npower offered the second largest differential between these tariffs of up to £315. E.ON was £229.

Whilst British Gas, SSE and EDF all offered much smaller differentials of up to £126, £100 and £86 respectively, as a whole, the difference in the tariffs offered could not be justified solely by the cost of different payment methods.

Those who are vulnerable or on low incomes are overrepresented among the group at risk of being overcharged.

Nick Pearce, IPPR Director, said: “The loss-leading by some suppliers is limiting competition in the energy market by making it harder for small suppliers and new entrants to compete."

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