Too many fail to shop around, let alone switch deals.
Millions of people are paying too much for their energy bills, according to the Competition and Markets Authority's (CMA) investigation into the energy market.
The CMA found evidence of widespread disengagement with the energy market, which means the market is not working properly.
In a survey of 7,000 people, 34% said they had never considered switching provider. While the average household now spends about £1,200 on energy a year, the CMA found dual fuel customers could save an average of £160 a year by switching to a cheaper deal.
The report also found around 70% of energy customers are currently on the ‘default’ standard variable tariff (SVT), which tend to be more expensive than fixed-rate deals.
What’s going wrong?
[SPOTLIGHT]The CMA said a lack of awareness of what deals are available, confusing and inaccurate bills and difficulties with changing suppliers, whether real or simply perceived, all deter switching.
The report also found that regulatory interventions designed to simplify prices, such as energy companies being limited to only offering four tariffs, have in fact limited discounting and reduced competition.
The CMA thinks measures like smart meters, which are already being rolled out, will increase engagement and understanding.
But it’s also considering whether safeguards like a transitional price cap on the most expensive tariffs are needed to protect customers until other measures have created a more competitive market.
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Paying too much
Roger Whitcomb, chairman of the investigation, said millions of people do not have to be paying so much for their energy bills, saying that many do not shop around to see if there's a better deal out there, let alone switch.
He added: "The result is that some energy suppliers know they don’t have to work hard to keep these customers. It’s notable that there are such high levels of complaints about customer service."
What next?
The CMA will now consult with interested parties on the findings and its proposed remedies.
Submissions in response to the provisional findings and notice of possible remedies are invited in writing by 31 July 2015.
The CMA will then publish its final report by the end of the year.
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