The Competition and Markets Authority (CMA) has spent a year looking at the way the energy market works and has today published a new report which says there are “a range of problems” with the industry.
Competition should be driving down gas and electricity prices as suppliers compete for our business, but it isn’t. The investigation’s chairman Roger Witcomb said: “There are millions of customers paying too much for their energy bills.”
On average, bill payers spend around £1,200 a year on energy, but the CMA research found 7 in 10 households are on expensive standard variable tariffs, even though they could be paying less on cheaper tariffs.
Between us, it means we’re lining the pockets of energy suppliers with £1.2billion more than we need to.
The watchdog thinks bill payers are either confused by the switching process or simply unaware of the savings on offer. On average, dual fuel customers could save £160 on their annual bill just by switching to the cheapest deal.
It also said that recent moves to reduce the number of tariffs offered by each energy supplier to encourage switching had not worked.
While the CMA is making recommendations to fix the broken market, MoneySuperMarket is now urging households to take matters into their own hands by switching suppliers.
Our energy expert Stephen Murray said: “Ultimately consumers have to take control of their energy bills and be prepared to switch.”
“With energy bills costing up to 10 per cent of household expenditure, for those who’ve never changed their energy tariff, it is vital they take control and switch to a cheaper fixed rate deal, as there are tariffs available for around £900 a year.”
What happens next?
In the short term, the CMA is proposing price caps on the most expensive tariffs until wider reforms to the industry can be made. It does not recommend that the Big Six suppliers – British Gas, EDF Energy, E.On, Npower, Scottish Power and SSE be broken up.
Roger Witcomb said: “These measures can and will help deliver change but we are also aware that we cannot expect an overnight transformation.”
In the meantime, as our expert says, you can make your own savings by switching to the cheapest energy deal. The application process takes around half an hour and you’ll be on your new, cheaper tariff in around 17 days. Click here to get started.
Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
* 51% consumers could save up to £231.63. MoneySuperMarket data, May 2015