Households failing to take advantage of online energy deals

12.5 million households in the UK could be paying over the odds for their energy because they are on suppliers' standard tariffs rather than online energy plans. As a result, consumers could be paying up to £344 a year more for their energy than they need to, says uSwitch.com, the independent price comparison and switching service. In total, this overpayment could be costing consumers as much as £1.69 billion a year.

While energy suppliers are offering their cheapest prices and best deals online, official statistics suggest that customer take-up is low. According to Ofgem, only around 1.3 million or 5% of households are on online energy plans and less than one in five consumers are ‘active' in the market - regularly seeking out and moving to competitive deals. With around four in ten households having never switched energy supplier, this means that many households are still on suppliers' standard plans and will be paying far more for their energy as a result.

Standard plan customers who are still paying quarterly by cash or cheque are among the worst hit. Around 40% of energy accounts are paid this way. Standard plan customers using this payment method will be paying £185 a year more on average than online direct debit customers. The gap between the most expensive standard plan and the cheapest online plan is £344 a year. This is over a quarter of the average annual household energy bill, currently £1,245.

The hype about energy prices coming down this year may have lulled consumers into a false sense of security. However, price cuts have averaged out at just 3.7% or £48, leaving standard plan customers paying £333 a year more today than they were in January 2008. Consumers could recover much of this increase by going online where the rates are cheaper. These rates are not given to households automatically - they have to apply for them.

Consumers shouldn't be put off by the fact that these plans are ‘online' - every supplier has its own interpretation. With some you only have to sign up online and can then carry on as before with paper bills, meter readings and being able to phone your supplier. For more vulnerable customers, such as the elderly, or those who do not have internet access, this could be the ideal solution as a friend, family member or trusted adviser could help them register online so that they can start to benefit from lower prices.

Will Marples, energy expert at uSwitch.com, says: "This is not about lack of competition - this is about consumers failing to take advantage. Whether it's down to lack of understanding, poor communication or apathy, there is absolutely no reason for large numbers of consumers to be overpaying for their household energy. Online energy plans are where suppliers are offering their lowest prices - if households are not taking advantage then they will be losing out.

"Consumers can help themselves by following three simple steps: move to dual fuel, pay by direct debit and sign up to an online plan. Don't be put off by the fact that it is called an online plan - with some suppliers only requiring you to register online, this is a small obstacle that is very easy to overcome after which you can run your account as usual. There really is an online energy plan to suit everyone."