Just one in ten households are paying the cheapest energy prices on the market leaving 87 per cent still potentially paying over the odds for their energy, says
uSwitch.com, the independent price comparison and switching service.
Although one million more households are now on online plans - where suppliers consistently offer their most competitive prices - this still only adds up to around 3.5 million or 13 per cent of households in total, says
uSwitch.com.
The comparison site says the low uptake of competitive plans shows the depth and scale of the problem Ofgem faces in trying to boost consumer engagement in the market.
Despite Ofgem’s push in recent years to increase the number of households cutting their energy bills through switching, so far just 3.5 million have moved to online plans. Instead, seven million have taken out price guarantee plans - often paying a premium to do so - while 3.8 million electricity customers and 2.6 million gas customers are on expensive prepayment meters.
uSwitch.com says an estimated 10 million households are still on standard plans and will be paying far more for their energy as a result. In total, this overpayment could be costing consumers as much as £2.2 billion a year, with standard customers paying quarterly by cash and cheque forking out around £300 a year more for their energy than online customers paying by direct debit.
The low take up of suppliers' cheapest plans may be partly due to how consumers switch. A recent Ofgem report shows that 30 per cent of people switching gas supplier found out about available deals through an independent comparison service while a third (33 per cent) switched as a result of door knocking.
In fact, in total, 61 per cent of switchers found out about deals through a supplier - which meant there was no guarantee that they were being offered the cheapest online plans or even the cheapest plans at all.
"No matter how these figures are dressed, the fact that just one in ten British households are paying the cheapest energy prices on the market is a huge disappointment and means that Ofgem really does have its work cut out said Ann Robinson, Director of Consumer Policy at
uSwitch.com.
“The market is competitive - otherwise you wouldn't be able to save around £300 a year by moving online - but not enough consumers are taking advantage. And this is what the regulator has to address.
"Online energy plans are now around £300 a year cheaper than standard plans and offer consumers a chance to take their energy bills back down to pre-2008 levels. I would urge householders to move to dual fuel, pay by direct debit and sign up to an online plan so that they can start to enjoy competitive prices straight away.”
Find out the latest gas and energy news by receiving our
MoneyMaker newsletter.
