10 million energy customers lose £2.2bn by not switching
Are you one of the 10 million households in the UK that are losing a grand total of £2.2bn in savings on their energy bills?
Don't be - switch now. The fact is, unless you change up your energy supplier regularly, you're going to get ripped off big time.
Loyal customers are like weak prey for big energy suppliers. They sneer at your loyalty. They don't see loyalty at all, in fact...they see giant pound signs.
Customers stuck on standard variable tariffs with Big Six suppliers will pay on average £220 more over the course of the year than they would if they had switched to a cheaper deal, according to energy provider Bulb.
Although the energy price cap has recently been lowered by £75 to bring the level to £1,179 a year for customers on default tariffs in an effort to prevent large bill increases, the Big Six are still being accused of using the cap as a target rather than a limit.
Eon, EDF, SSE and Npower have all set their SVTs at the cap limit, £1,179, as of October whilst Scottish Power and British Gas have set their prices just marginally below at £1,178 and £1,177, respectively.
To calculate how much more SVT customers are paying, Bulb analysed what consumers would have paid in the different time periods (January to March, April to September and October to December) for each of the Big Six’s standard variable tariffs.
The figures assume Ofgem’s typical use of 3,100 kWh a year for electricity and 12,000 kWh a year for gas.
It compared this to the average cheapest deal available at the time using Ofgem’s average of the 10 cheapest tariffs available, published in their Retail price comparison by company and tariff type report. The figure it used is the cheapest average tariff on 28 December 2018, three days before the price cap came in.
This difference was then weighted by the length of time each cap was/will be in place. This then provided a total overspend figure compared to what they would have paid had they switched to the December 2018 tariff.
Hayden Wood, co-founder and CEO of Bulb said: 'We've always supported the price cap - it's helped families who have been overcharged on their energy for years. But it's clear the Big Six treat the cap as a target and not a limit, consistently setting their standard tariffs at the maximum level allowed.
'It's disappointing to see families continue to get a poor deal on their energy as a result of this practice.'
The price cap was introduced by the government last year in a bid to encourage those on SVTs to switch supplier and put a stop to the loyalty penalty – customers who get penalised for staying with the same provider.
It was initially set at £1,137 when it launched in January 2019 but increased to £1,254 thanks to rising wholesale costs in April before it was announced this month that it will be reduced to £1,179 as of October 1.
Research from Bulb has shown that nearly 10 million households are still on the default tariffs with British Gas claiming the largest number of SVT customers at over 2.7 million.
SSE followed with just over 2 million customers and Eon followed with 1.9 million.
This is despite customers being encouraged to switch from default tariffs to fixed tariffs, especially for the winter period where households are likely to use much more energy than normal.
This year, the added uncertainty of Brexit is another reason for households to consider switching to fixed tariffs so they can be certain that their bills will not increase wildly after the UK has left the EU.
Cordelia Samson, energy expert at uSwitch said: 'Don't be fooled by the news that energy suppliers have announced a price cut. They've done this because Ofgem, the energy regulator, has lowered the maximum amount an energy company is allowed to charge on its so-called Standard Variable tariff.
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