How cynical energy firms abuse our trust

THERE was a time when loyal customers could be reasonably confident big-name companies with reputations to uphold would give them a fair deal. No longer.

In an eye-opening report, hailed by some as a watershed moment for the energy industry, a price comparison website finds that not a single one of the Big Six firms – ScottishPower, British Gas, SSE, Npower, E.on and EDF – has a tariff in the top 100 cheapest deals available.

Yes, from one angle this can be seen as a triumph for the free market, with the emergence of cut-price competitors offering families relief from extortionate bills.

But in reality, it exposes the ugly side of the business model adopted by the Big Six. For as these companies are well aware, most energy consumers – particularly the elderly and vulnerable – are daunted by the process of switching to new suppliers and therefore likely to stick with them.

True, many internet-proficient customers have abandoned them for cheaper alternatives. Indeed, only this week, British Gas owner Centrica admitted it had lost 110,000 accounts in the first four months of the year.

But with their 75 per cent share of the domestic market, the Big Six cynically calculate that there are still fatter profits to be made from overcharging loyal, existing customers than from competing with smaller rivals by lowering tariffs.

Heaven knows, their sheer size should allow them to offer highly competitive rates, through economies of scale. Yet they choose instead to carry on overcharging, to the tune of £1.4billion a year. What a shoddy way to treat customers who trust them.

This paper has grave reservations about state intervention in markets. Indeed, we hope that, in time, as switching suppliers becomes simpler and price comparisons easier to decipher, free competition will work its magic on the energy sector and bring down prices charged by the Big Six.

But until this happens, these greedy firms will have only themselves to blame if the Government presses ahead with plans to impose a cap on standard tariffs. By abusing customers’ trust, they’re asking for it.