Online customers benefit from energy price cuts

While the majority of households have seen energy prices drop by 4% or £54 this year, new research from uSwitch.com reveals that households who are on suppliers' online plans have enjoyed cuts three times this size. Since the beginning of 2009 their prices have been reduced by a healthy 12% or £133, leaving online customers paying £249 less than standard customers.

While the debate about whether suppliers should be cutting prices again in light of lower wholesale costs rumbles on, households on online plans are sitting pretty. They have seen bills drop from £1,123 on the 1st January to £990 today. However, households on standard plans have not fared so well - their prices have dropped from £1,293 at the beginning of the year to £1,239 today, barely making a dent in the 42% or £381 increase in energy prices seen last year.

At the beginning of 2009 online energy plans were £170 a year cheaper than suppliers' standard plans. Today this has stretched to £249. Yet despite the fact that online plans are consistently cheaper than standard energy plans, only around 5% or 1.3 million households are taking advantage.

But even households already on online plans may have missed out. This is because suppliers tend to bring out new plans with lower prices rather than cut the prices on existing plans. If householders have not kept on top of this they may have found themselves on a plan that is no longer the cheapest available from their supplier. As a result, they might not have seen the full benefit of the price reductions made to online plans.

The findings will be cold comfort to consumers worried about the cost of energy. uSwitch.com research shows that most people (65%) are worried about the cost of their winter energy bills and almost two in ten households (19%) are finding their energy bills difficult to afford. Almost six in ten households (57%) are already cutting back on energy to make their bills cheaper while a further 17% are planning to join them. In the absence of further price cuts, moving to an online plan could make a real difference to these households.

Will Marples, energy expert at uSwitch.com, says: "Suppliers have been busy cutting prices, but unfortunately these reductions have been passing most consumers by. Online energy plans have been reduced by 12% or £133 this year - yet only around 1.3 million or 5% of households are currently in a position to benefit. Worryingly, those who arguably have the most to gain - the elderly and the vulnerable - are the least likely to be benefitting.

"Online energy plans are consistently cheaper than standard energy plans - but the message doesn't seem to be getting through. It's a shame because this is where competition is really working for the consumer - suppliers are competing hard on price and bringing out ever more competitive plans. The problem is that not enough consumers are taking them up. More work needs to be done on educating and informing consumers - with particular attention paid to those who are less able to go online. Ofgem should also monitor the number of households who move from uncompetitive standard plans to online plans - if competition is to work this number should grow steadily year-on-year."