Big Six ‘rip us off by £4billion every year’
FAMILIES on standard variable energy tariffs are effectively overpaying by £4billion a year, a damning study found.
The figure, far higher than previous official estimates, reveals the rip- off tariffs are around £350 a year more expensive than the cheapest deals.
A 2016 investigation by the Competition & Markets Authority (CMA) suggested households and businesses were overpaying by £1.4billion annually because they were on the expensive SVTs.
That finding triggered a promise by Theresa May to impose a cap on the SVT – which is expected to cut these bills by around £ 100 a year when it comes into effect later this year.
However, a new study based on official figures compiled by the Department of Business, energy and industrial Strategy (BeiS) suggests the scale of the annual overpayment has climbed to £4billion.
The report was commissioned by the small energy firm Bulb, which argues that even after the cap is imposed millions of struggling households will continue to pay too much to stay warm this winter.
The concerns come after all the ‘Big Six’ energy firms have put up prices – some of them twice – in recent months, which has effectively negated the benefits of the government’s price cap.
Bulb said: ‘Over 12million – 44 per cent – of households in the UK are on expensive standard variable tariffs with the Big Six, overpaying by an average of £350 on their electricity and gas bill each year.’
it said the scale of the rip- off on the SVT compared to the cheapest deals available varies according to region.
its analysis found: ‘Households in the South east and the east of england are among those who are overpaying the most. On average they could save £379 per household on their bills if they shopped around and switched to a cheaper energy supplier.’
Hayden Wood, co-founder of Bulb, whose electricity comes from renewable sources such as wind power, said: ‘More and more people across the country are realising that they are overpaying on their energy bills, and switching away from the Big Six to cheaper suppliers.
‘Switching supplier only takes a few minutes, and as these figures show there are immediate savings to be made.’
The Big Six energy firms – British gas, SSe, eDF, npower, e.on and Scottish Power – have rejected the rip-off claims.
They have blamed recent price hikes on increases in the wholesale price of gas and electricity – coupled with levies applied to customer bills as a result of government policies to support a switch to green energy, help poor customers and install smart meters.
The average bill has now reached £1,200 a year following the price rises.
e.on has partly blamed a plan to cut 500 jobs on the decision to cap SVTs, which will hit company profits.
Centrica, which owns British gas, argues the original claim from the CMA that customers on SVTs were being overcharged by £1.4billion a year between 2012 and 2015 were based on a faulty analysis of industry figures.
it said the figure was more than the combined annual profits of the major suppliers over this period.
energy UK, which represents suppliers, said there is good evidence that more people are now shopping around and switching away from SVTs to cheaper fixed rate tariffs.
‘Overpaying by £350’