Competition in the energy market isn’t working for three quarters of UK households with suppliers failing to release £3 billion in price cuts according to U-Switch, the independent online comparison and switching site.
The figures show that bills rose by £277 (38%) between January 2006 and January 2007 – which means that suppliers are still pocketing an extra £177 per household.
The study also found that three quarters of households (78%) are not making full use of competition and that customers are concerned that suppliers will use the seasonal variation in wholesale prices over the winter months as an excuse to avoid making any more cuts.
Ann Robinson, Director of Consumer Policy at uSwitch.com comments on the findings: “Competition is not a spectator sport – it will only work if consumers and suppliers get stuck in. The best chance people have of seeing lower bills will be through taking action themselves and moving to a cheaper supplier.
“The benefits will be twofold - while price cuts to-date amount to £100, a consumer could save over £200 by switching from their incumbent supplier to the cheapest dual fuel plan. But also, by voting with their feet, consumers may force suppliers to cut prices again.”
Following the price war earlier this year, more price cuts were predicted but have yet to materialise. The last price reductions, implemented on June 15, saw ScottishPower make an 11% cut on gas and a 5.5% reduction on electricity and EDF Energy make a 10% cut on their standard gas tariff. However, at the time many consumers were locked into higher price contracts and were unable to switch.
It also seems that despite the widespread publicity over falling prices and the wide choice of deals available, consumers are still not fully engaged in the market with only one in eight households signing up to the cheapest energy plans offered by suppliers and a further 2.4 million (19%) dual fuel households losing out on £174 million by not paying energy bills by direct debit.
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