Differing household energy bills fuelled by the way households pay
Around five million people in the UK are being unfairly overcharged on their energy bills – with some paying up to £330 a year more than their neighbours even though they use the same amount of gas or electricity – a think-tank has claimed.
Some customers are paying drastically different amounts for the same amount of energy due to the way that they pay their bills, according to the research by Institute for Public Policy Research (IPPR).
The report found that Scottish Power consistently offers up to £330 difference between its standard and cheapest tariff.
Npower offers up to £315 between its cheapest and standard tariff to customers in the same location.
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British Gas, Scottish and Southern Energy (SSE) and EDF all offered much smaller differentials of up to £126, £100 and £86 respectively.
IPPR tested tariffs for British Gas, EDF, E.ON, npower, Scottish Power and SSE for three different payment types using a price comparison website for properties in London, Sheffield, Dumfries in Scotland and Aberystwyth in Wales.
The think-tank claims that some suppliers offer heavily discounted tariffs to entice customers while existing loyal customers pay higher rates to subsidise the loss-leading deals.
Figures from Ofgem estimate that 60 per cent of households have never switched energy supplier.
Stephen Fitzpatrick, managing director of independent supplier Ovo Energy, said: "Regardless of their energy supplier, consumers should be paying no more than is absolutely necessary. To ensure this happens, we maintain that what the UK needs is more competition with fewer tariffs, simpler pricing and improved transparency."
However, suppliers claim that they are able to offer online discounts to new customers, which makes the market more competitive.
An npower spokesman said: "This research highlights that many more consumers would be able to benefit if they shopped around.
"Suppliers can offer differing rates through savings they make by reducing costs. Many consumers who still pay quarterly can instantly save money by paying via direct debit."