Families ‘Overcharged’ for Energy
By Katie Anderson on February 29, 2012
Research published by the Institute for Public Policy Research (IPPR), a political think-tank established to promote “social justice, democratic participation and economic and environmental sustainability in government policy”, suggests millions of households may be paying more for their electricity and gas central heating as a result of anti-competitive measures employed by energy suppliers.
The IPPR study claims that families who rarely switch suppliers are most affected by the tactics, which are under investigation by the energy regulator Ofgem.
Claiming that around 5.6 million people could be losing out on savings worth up to £330 per year, the research adds further weight to the belief that new energy providers are being priced out of the market by the big six suppliers, which appear to support a system that penalises long-term customers while herding tariff-switchers from one major provider to the next with a seemingly never-ending string of “loss-leading” offers.
According to the IPPR, which examined tariffs for each of the big six energy firms – SSE, Scottish Power, Npower, E.ON, EDF and British Gas – approximately 60 per cent of households in Britain have never switched suppliers. Families who pay in arrears on a standard credit account are subject to the highest energy tariffs.
IPPR Director Nick Pearce said: “At a time when living standards are falling in real terms and more families are finding it hard to pay their energy bills, it is unacceptable that people are being overcharged for their energy use.
“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.
“99 per cent of energy customers get their energy from the big six energy companies. Energy companies need stability in the energy market regulatory structure and the tax regime they face, but in return they need to operate in a properly competitive marketplace that is fair to all their customers”.
IPPR’s research will renew calls for the domestic energy market to be investigated in Britain. Energy users, meanwhile, are urged to reduce their reliance on gas and electricity by improving energy efficiency in the home. Double glazing, eco-friendly boilers and loft and cavity wall insulation can greatly reduce domestic energy consumption.