Energy providers punish loyalty with higher prices

Energy providers punish loyalty with higher prices

23 February 2010 / by Rachael Stiles

Consumers who use their local energy provider will not be thanked for their loyalty, but rather they will be penalised with higher tariffs compared to those offered to customers in other areas of the country. 

According to new research from Confused.com, energy companies charge their local customers more for their gas and electricity than the tariffs they use to lure new customers from across the UK.

An estimated 33 per cent of consumers remain faithful to their local supplier, but on average they will find themselves paying more for domestic fuel than if they shop around and switch energy provider.

Some energy companies charge customers in their home town an additional 12 per cent, the comparison website has discovered, which equates to an additional £48 a year on their energy bills.

The domestic energy market has been competitive for many years, and online comparison services make it easy for consumers to compare tariffs and switch, so providers no longer hold a monopoly over supplying energy to any particular region.

Gareth Kloet, head of energy at Confused.com, says: "Our research suggests that despite fierce competition in the energy market, the energy suppliers continue to be more willing to compete on price in an attempt to gain new business than they are in retaining and rewarding loyalty in their old monopoly trading regions."

Consequently, Mr Kloet urges householders to take advantage of the open market place and compare other tariffs to get the best deal for their energy. They could also save money by switching to an online energy plan, or changing the way they pay.

Mr Kloet adds: "'Out of area' pricing is still more competitive than 'in area' prices and therefore the age old rule about shopping around and switching supplier in order to save money is as strong today as it was over a decade ago."

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