Big six energy companies shamed over variable tariffs
Standard variable tariffs are among some of the most expensive energy tariffs and can cost hundreds of pounds more than the best deals on the market.
Automated energy switching service Switchd has accused energy suppliers of “making a killing” by overcharging customers who don’t have the time to regularly switch their tariff.
The introduction of the energy price cap may have set some consumers at ease that they’re now on a better deal, but many are still paying more than necessary for gas and electricity.
Switchd says the “big six” energy firms (British Gas, E.ON, nPower, SSE, EDF Energy and Scottish Power) are making more than £1.5bn in profit every year, just by keeping their customers on standard variable tariffs.
Using its algorithm, Switchd calculated the average difference between each supplier’s standard variable tariff and its cheapest tariff. It found British Gas makes the most from this practice – it is estimated to be making more than £730m on its gas and electricity customers every year this way. Switchd calculated that the difference between British Gas’s standard variable tariff and its best deal is £231 a year.
But EDF Energy was the worst perpetrator in terms of difference between its cheapest tariff and its standard variable tariff, with a typical difference of £253 a year.
However, far fewer of EDF’s customers are sitting on its standard variable tariff compared to the rest of the big six (48 per cent on electricity and 36 per cent on gas, compared with the average of 57 per cent on electricity and 53 per cent on gas).
SSE has been the most lax about getting its customers onto a better deal. More than 75 per cent of its customers are stuck on the standard variable tariff – but these customers would stand to gain less than £2 per month by switching to SSE’s cheapest deal.
Morgan Young, head of growth at Switchd, said: “This research reveals how the big six continue to ignore their duty to get their customers on a better deal. Fortunately, consumers are increasingly taking back control of their energy bills by switching energy supplier. Switches to a new supplier have more than doubled in recent years.”