Consumers who don’t regularly shop around for new and cheaper energy tariffs are at risk of paying up to £1,000 extra per year according to the charity Citizens Advice.
Even though there a huge savings to be had, around a third of people said they could not see the value in changing provider as they believed that they were all alike. Customers who do not change providers are often moved onto default tariffs when their contracts end, which typically end up being far more expensive than the fixed price deals they were previously on.
Data from Ofgem, the energy watchdog for the UK, showed that 35% of households did not switch energy companies between 2012 and 2017. A survey undertaken by YouGov found that only 16% of people read reviews of a new company before switching.
The Energy Saving Trust, The Department for Business Energy and Industrial Strategy and Citizens Advice have set up Big Energy Saving Week which plans to educate households across the country on how they can get a better deal on their energy.
Philip Sellwood, the Trust’s chief executive, said: “The difference between the average standard variable tariff and the cheapest deal on the market is significant, but millions of households still aren’t accessing these savings.
“To put that into context, switching this year could save you up to £300 – equivalent to more than a month’s worth of food shopping.
“In other words, if you haven’t switched for six years, you’ve missed out on more than six months of food shopping.”
Citizens Advice is putting on regional events to show people how much money they can save by using the charity’s own comparison tool which gives a neutral ranking of all the available options in the area.
The charity has said that through prior studies they have found that new customers are much more likely to get a better deal than current consumers who could end paying considerably more for the same tariff. They also found that consumers who were over 65 as well as those who were on low incomes were less likely (or were unable) to switch provider.
“Companies routinely use tactics that take advantage of human behaviour, and regulators are letting them get away with it,” said Gillian Guy, chief executive of Citizens Advice.
“That is why regulators need to take action by setting targets to reduce the number of loyal customers who pay over the odds, and investigating solutions for vulnerable people.”
The Competition and Markets Authority (CMA) has said it would investigate the impact that not switching could have on vulnerable consumers. A CMA spokesperson said: “We share concerns about people being penalised for staying loyal to one provider, and we plan to consider this issue as part of our work to examine how markets affect vulnerable people.