Households waste £3.5bn a year by overpaying for energy
Around 11 million households on pricey default tariffs will collectively overpay by £3.5bn for their gas and electricity this year unless they switch to a cheaper deal, research reveals.
While households are likely to see gas and electricity prices fall from April thanks to the latest decrease to the government’s energy price cap, the maximum suppliers can charge for each unit of energy, millions will still be paying over the odds.
This is because the UK’s six biggest energy providers have all set their standard variable tariffs (SVT) at around an average of £1.33 cheaper than the maximum price allowed under the cap.
As such, 11 million households on these tariffs will overpay by around £3.5bn per year compared to the cheapest deal on the market – that’s an extra £315 per household, per year, according to Bulb.
Research from the challenger supplier also revealed that over the past two years, the Big Six providers – British Gas, EDF, E.ON, Npower, Scottish Power and SSE – have pocketed around £5bn from customers who have failed to switch to cheaper deals.
Bulb added it is the fourth time in a row that these suppliers have simply tracked the price cap set by the regulator, Ofgem, seeing it as a target rather than a limit. There’s now just a £4 difference between all of the Big Six standard variable tariffs.
Bulb co-founder and chief executive, Hayden Wood, said: “The price cap, which Bulb supports, was meant to be a maximum and not a target. But the Big Six are refusing to help hard pressed families and are instead trying to exploit them.
“Wholesale prices have been falling, but the Big Six are still setting their prices as close to the price cap as possible. That means that more than 11 million households will take a £300 price hit this year unless they switch in April.”