You are here: Home - Household Bills - News -

Competition in the energy market isn’t working properly, says Ofgem

0
Written by: Paloma Kubiak
01/11/2017
Energy bills have come down since the 2013 peak, but competition isn’t benefiting all consumers with 60% still stuck on pricey standard variable tariffs.

Energy regulator Ofgem’s ‘Annual state of the energy market report’ looked at how well the energy market is working for consumers in terms of competition and affordability.

While it found that competition continues to benefit household consumers who are able and willing to shop around, it isn’t working well for those who are less active.

Currently, 60% of consumers are on their supplier’s default variable tariff which can be around £300 more expensive each year than the cheapest fixed-term deal.

Ofgem implemented a cap on prepayment meter (PPM) tariffs from April 2017 and as a result, prices fell by around £60 for a typical dual fuel PPM consumer, though it noted some of the cheapest tariffs are no longer available.

The regulator said that even if suppliers provide energy at the lowest feasible prices, some people may still find it hard to manage their bills. This can result in high bills, debts, or under-heated homes.

However, Ofgem noted that in 2016, the average dual fuel bill for a customer of the ‘big six’ suppliers (British Gas, EDF, E.ON, Npower, Scottish Power and SSE) was £1,123, 16% lower than its 2013 peak in real terms.

Households with the lowest incomes spend 10% of their expenditure on energy – over three times more than the proportion spent by households with highest incomes.

However, Ofgem found that energy debt levels are at their lowest level since it started collating the data in 2006 and households are using 20% less energy than 10 years ago, which has reduced bills.

The regulator also noted that due to the two-tier energy market, nearly half of those who are unemployed or are in low or semi-low skilled work have never switched supplier. This compares to less than a third of all other consumers. As a result, this group are more likely to be on pricey standard variable tariffs, even though they are less able to afford them.

Ofgem’s CEO, Dermot Nolan, said: “Energy is an essential service and so we want to ensure that the markets work in the interest of all consumers. Transparency is crucial in informing debate and policy development in the energy sector. This annual report shines a light for the public, experts and stakeholders on where the market is, and where it isn’t, working for consumers.”

Alex Neill, Which? managing director of home products and services, said: “The report makes it crystal clear that the energy market is not working for consumers, with far too many people still stuck on expensive standard variable tariffs. As the temperature drops and bills start rising, it is vital that the government’s interventions really do fix the broken energy market.

“Our advice to consumers who aren’t getting a good deal is to switch to a better one now, before you find yourself overpaying for another winter.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Increasing number of under 35s take out life insurance

The number of people under 35 taking out life insurance has increased slightly over the past year, according to a...

Close