Energy prices vary by £100 depending on where you live
Households face a postcode lottery on energy prices that sees prices vary by an average of £100 according to where they live, says uSwitch.com. At its worst, it can see a supplier charging customers in one area up to £189 a year more than customers living elsewhere, even though they are on the same energy plan, paying by the same method and using the same amount of energy.
This postcode lottery has been commonplace on suppliers' old fashioned standard energy plans, but it is also hitting customers on their cheapest online energy plans too. The plans remain competitive, but there is a stark difference in the amount people will pay based on where they live. This regional pricing policy sees a ScottishPower Online Reward Energy customer living in Cardiff (Swalec energy region) paying £1,031 a year. However, another customer with the same plan but living in Nottingham (East Midlands energy region) will be paying just £842 - £189 a year less.
Regional pricing also means that suppliers often charge higher prices to customers living in their incumbent regions. EDF Energy is the worst offender, charging its highest prices in its three incumbent regions. Customers living in Bristol (Sweb), Brighton (Seeboard) and London will be paying £959, £945 and £939 a year respectively, while customers in Nottingham (East Midlands region) pay just £865.
Regional pricing leads to winners and losers with households in the East Midlands energy region paying £855 on average - making it the cheapest energy region in the country. However, households in the Swalec region are not so lucky - they are living in the most expensive region, paying £949 a year on average.
But while this seems unfair, by being on an online energy plan households will still be enjoying the most competitive energy prices. On average they will be paying around £300 a year less than those on standard energy plans. They key is to ensure that they are with the supplier offering the cheapest online energy plan in their region, as prices across the big six suppliers can vary by as much as £155 in one region.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "Ofgem's push on cost reflective pricing may iron out some of the extremes, but the fact is that while suppliers choose to target their ultra-competitive online plans regionally we will continue to see a postcode lottery. Regional pricing is a key part of the competitive battlefield - the important thing is for consumers to avoid becoming a casualty.
"Consumers cannot assume that their local supplier will automatically be cheaper - very often they are not. The key thing is for consumers to understand that energy companies price by region and to minimise the impact. They can do this by making sure they move to the most competitive plan with the most competitive supplier in their region. Even though all suppliers offer their cheapest prices online, these can vary by as much as £155 in one area, which is why it's so important for households to shop around."