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Electricity market currently charging higher regional prices

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12/04/2007

The UK market for electricity is not “properly competitive”, according to research compiled by experts at Warwick University.

Michael Waterson, professor of economics, said that customers are still being charged a higher price for their electricity by companies that once had a regional monopoly in the areas they serve.

These “incumbent” firms were found to charge up to 10% more than the new companies that try to sign customers up with the promise of lower tariffs, although there are discrepancies on the tariffs offered.

“The surprising thing was the big range of prices among the entrants to the market,” said Waterson. “The highest could be 30% more than the cheapest – and might even be more than the incumbent.”

Many households have switched energy suppliers over the years, encouraged by a raft of players from the Government to the energy regulator to the ever-increasing number of online firms which advise on switching.

But many households have not switched and are still paying over the odds. According to Waterson, this could be down to inertia. “For most consumers it’s not a particularly exciting product, like buying new car tyres,” he said.

One solution, in Waterson’s view, would be to make energy supply contracts subject to a fixed period of time.

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