In December, Ofgem revealed that 20 million UK households are on standard energy plans. Now, new research from uSwitch.com shows that it's costing them £191 more per year on average.
Standard variable rate tariffs are the 'default' tariffs of energy suppliers, and often the most expensive.
These are the tariffs customers are automatically placed on when they move house, and the plans they are rolled on to when their fixed rate plan expires.
These are also the plans of customers who have never switched supplier — and that loyalty has a price tag of £3.6 billion.
Further, customers on these variable rate plans are not protected from price rises. uSwitch Energy Expert Claire Osborne points out:
“With one big six price rise from EDF already confirmed to kick in after the winter and more on the cards after the current price freezes end – consumers languishing on sky-high standard variable tariffs should take matters into their own hands by switching now to a much cheaper fixed deal.”
Surprisingly, customers don't even need to switch supplier to save hundreds per year, as they can simply switch to a cheaper deal from their own supplier.
ScottishPower customers, for example, can switch from the company's standard tariff to its cheapest one for a savings of £129 per year. Extra Energy customers could save £202 by switching from the supplier's standard plan to its own cheapest deal.
However, the savings grow to £191 per year if households switch to the cheapest plan on the market.
Despite requirements to notify customers of cheaper plans available to them, Osborne believes more can — and should — be done:
“It’s hard not to look at these figures and come to the conclusion that energy companies are not doing enough to get their most loyal customers off expensive standard variable tariffs and onto cheaper fixed deals. This is evidence that loyalty doesn’t pay when it comes to your energy bills.
“Energy companies must do a lot more to help their customers understand the deal they are on and what the alternatives are. The CMA’s package of remedies will provide more of an incentive for companies to do this, so it needs to be implemented now and given time to succeed so that competition can drive greater choice, better customer service and reduce bills."
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