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Are you on a standard energy tariff?

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Are you on a pricey standard gas or electricity tariff? Millions of people are paying more than they need to for their energy – and they’re often the most vulnerable.

The Competition and Markets Authority’s (CMA) investigation into the energy market is reaching its final stages. So as part of our Fair Energy Prices campaign we’re calling for further action to tackle the millions of people who are paying over the odds on expensive standard tariffs.

Millions stuck on expensive tariffs

We’ve looked at the Government’s latest switching data, and it conclusively shows that switching levels over the past two years haven’t reduced the number of people on standard tariffs.

Approximately 21 million electricity and 16 million gas customers were on standard tariffs at the beginning of 2014. Has this improved since recent reforms which forced suppliers to reduce the number of tariffs and show their cheapest deals on bills? No.

The number of customers on standard deals is almost exactly the same today. That’s around three quarters of all energy customers paying more than they need to. It was too many people in 2014 and it’s too many people today.

The cost of not switching

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Why does this matter? Well a standard electricity tariff costs on average £54 more than other deals per year, and a standard gas tariff is an estimated £75 more a year. That’s a fair chunk or money, but it’s not fair on energy customers.

In short, the number of customers switching has stayed pretty static. You might be a regular switcher and engaged in the market, but millions of people aren’t. And these people are often the most vulnerable. People like Lesley from Pembrokeshire:

‘I have very little money that needs to stretch far. I would like to use my heating in the winter, not just when people visit. Put the oven on to cook, not just for others. It’s hard having no money and trying not to worry others.’

Action needed from the CMA

With switching rates so stagnant, we need the CMA to use its long-running inquiry to ensure that many more people are confident to switch to better deals. It also needs to take action to protect vulnerable customers from paying over the odds.

So when the CMA reports back in June next year, we want to see it:

  • Tackle the number of people on poor value standard tariffs
  • Make it easier to compare and switch through simple pricing
  • Penalise suppliers who fail to protect the most vulnerable customers

Do you regularly switch energy deals? Do you struggle to pay your energy bills, or know someone who does?


Comments
Member

Some people will not know they can, some cannot be bothered, some seem to me to have a lot more money than sense, what anyone else says or tells them they will not listen or take any notice of what is said. There are a lot of ignorant and stupid people in this world.

Member

“Millions of people are paying more than they need to for their energy – and they’re often the most vulnerable.”
“Approximately 21 million electricity and 16 million gas customers were on standard tariffs”
The CMA report says that most people on standard tariffs were capable of changing but chose not to bother – sticky consumers who did not engage with the market. The incentive of making a change for a couple of pounds a a week was not a sufficient incentive.

I suggest getting rid of fixed-price contract tariffs and simply having a new standard tariff and probably an off peak, with tariff structures to suit both low and higher users. Then switching will just be between suppliers. Your choice may be gas and electricity from different suppliers.

I do not see the point in having multiple price comparison and switching sites – just costs money and may influence choice. I’d like to see a national site – possibly under Ofgem’s supervision – where you can compare every tariff and where you can switch.

Member

We did not need a single switching site before privatisation. Unless I am mistaken, not many of the vulnerable people are switching, and they are the ones that are being exploited by the present system.

Member

If we do not have a situation where every energy supplier charges exactly the same – and we won’t – then we need to make price comparison and switching providers as easy as possible.

Member

Which? proposed that we had simple unit pricing a couple of years ago. That means that you can compare prices as easily as comparing the price of petrol or loaves of bread.

If price comparison is any more complicated, then we don’t need it.

Member

The Which? proposal was flawed, both on its analysis and on the practical outcome. I hope no notice is taken of it as it will disadvantage many vulnerable consumers and benefit many well-off ones. That is why I proposed tariffs that are appropriate to both groups, so no one is discriminated against in an unintended way.

Prices will not be complicated with such tariffs. What we do not need is unfairness in the name of so-called “simplicity”.

Member

Tariffs were not uniform under the nationalised industries. Switching wasn’t possible though because each regional Gas or Electricity Board maintained its own infrastructure and usually made its own gas or generated its own electricity and the law at the time did not allow for people or commercial customers to have a supply contract with a Board outside their own region. At least privatisation has opened up choice even if computerisation has facilitated the salami-slicing of tariffs which seems to be the main bugbear now.

Member

In line three above, I should have written “distributed its own electricity” because under the nationalised structure most electricity was generated by the Central Electricity Generating Board which operated the power stations and ran the national grid. It sold power to the electricity boards which acted as distributors.