7 in 10 households’ energy bills could be cut
Families have been paying £1.2 billion1 a year too much for gas and electricity, the Competition and Markets Authority (CMA) has found following an inquiry in to the Big Six companies’ exploitation of loyal customers.
Now, seven in ten households could have their bills reduced as the UK’s largest watchdog has proposed price caps on suppliers’ default tariffs.
The CMA found that the Big Six energy suppliers – British Gas, SSE, EDF Energy, E.On, npower and ScottishPower – had been able to ‘exploit’ disengaged customers by charging them £1.2 billion a year, or about £50 per household.
If households had switched to the very best deals, they could have saved £160 a year, yet a third of households have never even considered changing providers.
What new regulations have been proposed?
The CMA say that customers who fail to shop around should no longer be put on suppliers’ expensive ‘standard variable’ tariffs as a default. Instead, they are proposing the rollout of a new, cheaper ‘safeguard’ tariff with the maximum price level set by the CMA or Ofgem.
Roger Witcomb, chairman of the CMA’s energy market investigation, said that this would result in cheaper bills for the 70% of households currently on a standard tariff.
These safeguard tariffs would act as a transitional measure while other proposals to encourage customers to switch providers were implemented, and remain in place until market competition is deemed to be working.
Your energy bills: Understanding your rights
- Facing an energy price rise? Your supplier must give you 30 days notice before increasing your set charges.
- You may be able to claim compensation for some blackouts. Click here to learn more about this from Citizens Advice.
- Remember your cooling-off period when signing up with a new provider – if you see a better deal elsewhere, it’s not too late to switch.
1 Telegraph, 2015. Millions could see energy bills cut after inquiry finds prices are too high. [Online] Available at: http://www.telegraph.co.uk/news/earth/energy/11722653/Millions-could-see-energy-bills-cut-after-inquiry-finds-prices-too-high.html. [Accessed 13th July 2015].