‘Disengaged’ domestic consumers pay too much for energy – CMA

Britain’s energy retailers have been criticised in provisional findings from the UK Competition and Markets Authority (CMA) after a year-long investigation into the energy market. According to the CMA, the average household currently spends about £1,200 on energy each year. For the poorest 10% of households, energy bills account for about 10% of total expenditure. However, widespread consumer disengagement is impeding the proper functioning of the market. A survey of 7,000 people in Great Britain found that over 34% of respondents had never considering switching provider. 

As a result, the report finds that dual fuel customers could save an average of £160 a year by switching to a cheaper deal, says the CMA. About 70% of customers are currently on the ‘default’ standard variable tariff (SVT) despite the presence of generally cheaper fixed-rate deals.

‘There are millions of customers paying too much for their energy bills – but they don’t have to,’ said Roger Witcomb, Chairman of the market investigation, although poor levels of customer engagement in the market are also responsible for its inefficient operation.

Lack of awareness of what deals are available, confusing and inaccurate bills and the real and perceived difficulties of changing suppliers all deter switching – and the higher price levels reflect the fact that suppliers can charge higher prices to these disengaged customers, adds the Authority.

The CMA will now hold discussions with all interested parties on the findings and possible remedies as it moves to publish its final report by the end of the year.