£3.5 billion energy saving missed by Brits who don't switch
UK consumers could reduce their annual energy bills by more than a fifth on average (22 per cent) just by moving to the cheapest available product - meaning a staggering saving of £3.5 billion for cash-strapped households across Britain. The average saving by moving from the traditional energy supplier to the best deal is around £282 per year.
Research by moneysupermarket.com, the UK's number one comparison site, shows the varying costs paid by energy customers around the country. In the 14 energy regions the average most expensive bill falls in North Wales and Liverpool. Here, the total dual fuel bill for those who are still with the original energy supplier for their gas and electricity is £1,373. The cheapest energy bills for those who are still with the traditional energy supplier for their gas and electricity are in North Scotland where average standard energy bills are £1.281. That's a difference of almost £100.
When the ‘Big Six' energy companies increased the price of gas by an average of 17.4 per cent and electricity by an average of 10.8 per cent in 2011, all standard customers were affected. However, even though we are now seeing price cuts, the millions of people that have never switched their energy provider and remain a standard customer, won't see any reduction to their bills. E.ON is the only traditional electricity supplier to have cut electricity bills, while British Gas (the traditional gas supplier for all regions) has cut the price of electricity only, and EDF Energy, SSE, Scottish Power and npower, all of which are traditional electricity suppliers, have cut the cost of gas only. Therefore only the electricity customers in E.ON's core regions (Eastern, East Midlands and North West), have seen a reduction to their bills - all customers in the other parts of Britain will not see decreases to the cost of their energy.
Across Britain, households who have never switched provider could save an impressive £282 a year on average if they moved from the original (incumbent) provider's standard tariff and opted for the best value deal. If all the households which are yet to change from their incumbent provider moved to the best possible deal, the nation could collectively save £3.5 billion on its energy bills.
Clare Francis, site editor at moneysupermarket.com, said: "The price cuts announced over the last few days don't even scratch the surface of the price hikes forced on bill payers in 2011. Worse still, these decreases exclude millions of people who are still with their incumbent provider; many will see no price cut whatsoever and are paying the most for their gas and electricity.
"In the days before the energy market opened up to competition, British Gas provided gas to all energy regions while electricity was provided by one regional supplier, for example London Energy in London which now falls under EDF Energy. Despite the greater choice available to consumers for both gas and electricity, the majority of UK households remain with the providers who traditionally provide their gas and electricity and are therefore over paying for their energy.
"The best value deals available are the energy companies' online tariffs. They enable customers to pay monthly installments, record actual meter readings with an online account and cut out the need for estimated billing. Paying by monthly direct debit allows people to spread the cost of their energy evenly throughout the year and avoid the 'bill shocks' that come after the costly winter months when energy usage is at a peak."
First Utility is currently winning the 2012 price war. Its iSave v9 product is the best value tariff across all 14 UK regions. Bill payers who have never switched from the traditional energy provider for their region (the incumbent provider) living in the East of England for example, currently pay around £1,307 a year on a standard tariff paying quarterly by cash or cheque. Switching to First Utility iSave v9 would reduce their bills to £1,005 per year. That's a saving of £302, or 23 per cent, and would mean they'd pay the least across the UK for their energy.
Clare Francis concludes: "These latest price changes highlight the fact there is no reward for loyalty when it comes to gas and electricity, many of those who have never switched provider will see no benefit from the recent price reductions whatsoever. It's a token gesture from some of the energy firms, which when you look at the finer detail, will have minimal impact. The easiest way for individuals to reduce their energy bills is to take advantage of one of the cheap online tariffs available - the savings to be made are significant."