People not on cheapest energy deals being advertised by suppliers

People are being urged to check the small print after new research reveals that only one in eight of customers are actually on the cheapest energy deals being advertised by suppliers.

By only offering their lowest rates online – effectively excluding 12.5 million standard plan customers - and not always automatically applying these rates to existing online customers, suppliers are raking in almost £1.5 billion a year:

No reward for loyalty: customers on standard plans are paying an average £132 more than new online customers

12.5 million UK households are losing out on the cheapest energy prices by sticking to a standard tariff

Consumers could save up to £204 by moving to an online tariff.

Over 12.5 million households (51%) in the UK are paying over the odds for their energy because they are on standard rather than online tariffs, according to new research by uSwitch.com, the independent online comparison and switching service.

This is allowing suppliers to rake in almost £1.5 billion a year because the majority of customers are stuck on expensive standard tariffs, while suppliers are offering their best deals and cheapest prices on their online tariffs which have far lower customer take-up.

The research suggests that take-up is so low that only one in eight (13%) people with regular internet access is on an online energy tariff. But nobody would guess from suppliers’ advertising that so few people are getting their best deals.

The hype about prices coming down may have lulled consumers into a false sense of security. Although suppliers have reduced their standard tariffs, they have also brought in far cheaper online rates, costing on average £132 less. But these are only available to online customers who sign up to them. Standard plan customers and, in some cases, existing online customers are not automatically given the cheaper rates – they have to apply in the same way as a new customer.

As a result, many consumers will be paying over the odds without even realising. While a new British Gas online customer will only be paying £755 for energy, a standard tariff customer will be paying £913 - £158 or 21% more. It is estimated that if all British Gas’ standard tariff customers switched to its new online tariff they could save £430 million.

According to the research, British Gas has the second lowest number of customers on an online tariff out of the Big Six suppliers despite having the largest customer base. Only 9% of its dual fuel customers are on an online tariff. ScottishPower has got the most on online tariffs – over a quarter (27%) are on one.

Geoff Slaughter, Energy Expert at uSwitch.com, says: “Suppliers are playing a very canny game. By deliberately offering their cheapest prices on those tariffs with low take-up they can look competitive, attract new customers but keep their existing customers merrily paying over the odds. While it seems unfair, they will only get away with it if consumers continue to allow them to do so.

“Consumers have to understand that there is no reward for customer loyalty. Good energy deals do not come to those who wait, they come to those who take – and people really do have to take action for themselves by choosing the deal that suits them best.

“Customers switching from a standard tariff to an online tariff with the same provider could save up to £187, while those switching from a standard tariff with one supplier to an online tariff with another could save up to £204.”

uSwitch.com’s research reveals that some 68% of UK dual fuel households would be happy to manage their energy bills online. However, 45% say that the idea of no longer getting a paper bill would be their main reason for not moving to an online tariff9.

In reality though, each supplier has a different definition of an online tariff. Some simply expect customers to register online, but to manage their account in the same way as before, while others expect the account to be managed online too.

Geoff Slaughter concludes:“Given the difference in how each supplier defines an online tariff, most of the objections to being an online customer could be overcome. I’m sure that there is an online deal to suit most people and it would be great to see more consumers playing the suppliers at their own game and snapping up their best offer time and time again.”