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LONDON (Alliance News) - Ofgem on Wednesday revealed Centrica PLC's British Gas, SSE PLC and a band of other non-listed energy suppliers have the highest proportion of customers on more expensive tariffs, as the regulator publicly named and shamed the worst offenders.
Around two-thirds of UK residential customers are on standard variable tariffs that are tied to movements in wholesale prices compared to others such as a fixed tariff that locks in prices for customers.
Ofgem, with the help of the UK government and the Competition & Market Authority, has been tightening its grip on the industry and breaking the hold that the Big Six had previously enjoyed, and the new data has revealed the majority of customers with seven UK suppliers are on more expensive deals.
Centrica's residential arm, British Gas, was found to have the most residential customers on standard variable tariffs at 6.6 million. SSE was second with 3.8 million customers on the same tariff followed by EDF Energy, Npower and ScottishPower, all of which had between 1 to 2 million standard variable tariff customers.
However, the proportion of those customers in relation to each suppliers total customer base was even more revealing. Those 6.6 million customers at British Gas account for 74% of all its customers while the 3.8 million at SSE represent almost all of the company's accounts at 91%.
Only challenger supplier Telecom Plus PLC's Utility Warehouse had a higher proportion of accounts on more expensive standard variable tariffs at 94%, equal to about 503,955 customers.
Out of the eleven suppliers named, British Gas had the second cheapest standard variable tariff on average at GBP1,044, only beaten by Utility Warehouse at GBP1,012. SSE was in the mid-range with an average tariff cost of GBP1,068.
The company that had the highest priced tariff on average was Co-operative Energy at GBP1,121. The difference between that and its cheapest tariff is GBP245, the second highest only to Npower.
Interestingly, Ofgem decided to channel customers that had been recently left high and dry by the collapse of GB Energy to Co-operative Energy, meaning those customers were sent to the supplier with the most expensive average tariff and will be the customers who could save the most by switching.
The cheapest tariff on offer from British Gas is GBP129 cheaper than its standard variable tariff, but, by switching to a new supplier altogether they could save as much as GBP174, Ofgem revealed.
For SSE, customers on standard variable tariffs could save as much as GBP98 by moving to the company's cheapest tariff, or GBP198 by switching to the average cheapest tariff on offer elsewhere.
Centrica shares were down 0.9% to 219.20 pence per share on Wednesday afternoon while SSE shares were down 1.5% to 1,502.20 pence.
Those with Co-operative Energy, including the new GB Energy customers, could save as much as GBP252 by going to a new supplier, the second biggest potential saving out of the 11 suppliers included in the data.
Customers can view the data online and Ofgem intends to keep the pressure on suppliers by updating it periodically in the hope that companies will do more to avoid being associated with being the most expensive in the market.
The entire industry came under fire when customer bills were reduced late last year or in early 2016 disproportionately to the drop in wholesale energy prices. The Big Six cut bills by just 5.0% on average while the smaller suppliers, already gaining ground at the time, made deeper cuts. Suppliers argued the cost of wholesale energy only made up about half a customer's bill.
Lawrence Slade, chief executive of trade association Energy UK, said: "Industry is committed to make the energy market work for everyone. That is why we urge all customers to make sure they are taking advantage of all the deals on offer from over 40 active suppliers in the market."
"We encourage customers to check they are on the best deal either with their current supplier or another supplier," he continued.
Over 4 million customers have switched this year and millions more have also saved money by sticking with their supplier but moving to a different tariff. Back in June, much to the disagreement of the larger suppliers, the CMA said up to 70% of UK households could save up to GBP300 per year by switching.
The CMA has given Ofgem more powers over the industry to boost competition and sway things more in favour of consumers. Customers that have not moved for three years, for example, will have their data passed on to suppliers to allow them to vie for the account unless customers opt out, a change seen as controversial by those worried about data protection.
Only last week did the CMA finalise its price cap - the only one imposed on the market - on prepayment meters, often used by those who have struggled to keep up with payments in the past despite being more expensive than other tariffs. That is expected to save up to four million people up to GBP300 per year.
"The CMA welcomes the government's consultation on giving customers access to data on their energy usage and enabling them to share this securely with price comparison websites if they wish, to help them switch and save ? a move which was recommended by the CMA in its June report," the CMA said on Wednesday.
Alongside the residential market, 45% of the UK's microbusinesses - those with less than 10 employees - have been found to be on more expensive tariffs, offering a potential combined saving of GBP180.0 million if they switched.
"At present when some microbusinesses come to the end of an agreement with a supplier, they can be transferred onto more expensive 'rollover' contracts. The CMA has ordered that, from next year, suppliers will have to stop using high exit fees to lock microbusinesses into these contracts," the CMA said.
"Suppliers will also have to publish their prices so that microbusiness customers can get a much better idea of what they should be paying for their energy - and what alternatives they have," the CMA added.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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