British energy bills are '£235 too much each year'
BRITONS are paying £3.4billion a year too much to heat their homes due to unfair tariffs, an energy supplier claimed yesterday.
First Utility said 14.3 million dual fuel customers of the Big Six firms are paying on average £235 too much each year.
It claimed that two-thirds of Big Six customers are on the most expensive tariffs.
And it called for variable tariffs to be scrapped to give customers a better deal.
The call was welcomed by energyhelpline.com - but it warned that suppliers would find other ways to increase revenues.
Customers can opt for fixed tariffs which are set for up to three years and provide price stability.
But if a customer does not renew their fixed tariff they usually go automatically onto a standard variable tariff where the bill will reflect the ups and downs of market prices for energy.
Fixed tariffs are usually cheaper though customers can find themselves out of pocket with them if the market price drops well below their rate.
First Utility chief executive Ian McCaig said two-thirds of the industry’s customers are on the most expensive energy tariff.
He estimates that 70 per cent of the 20.4 million homes getting gas and electricity from the Big Six are paying too much.
He called for the standard variable tariff to be scrapped and renamed an “out of contract tariff” that makes clear it reflects fluctuating wholesale costs.
And he said energy firms should tell customers about the cheapest available tariffs across the industry every month.
Currently the watchdog Ofgem only requires firms to include details of their cheapest tariff on their bills which are often delivered once every three or six months.
McCaig, CEO, First Utility said: “The UK energy industry has contrived to put itself in a situation where around two-thirds of its customers are on the most expensive energy tariff the industry has to offer, namely the ‘standard variable tariff’.
“That simply can’t be right and is even more inexcusable in a climate where wholesale prices have been coming down.
“First Utility believes that the industry needs to change from within and do more to inform and support customers to help them make informed choices about the best tariff.
“A big step would be to scrap the standard variable tariff and call it what it is - the ‘Out of Contract Tariff’ i.e. the tariff you’re left on when you’re not on one of the good ones.
“Just as importantly, every household should be told in writing every single month whether there’s a better, cheaper tariff for them anywhere across the entire industry and not just the company they’re with.
“These changes would undoubtedly make a very positive difference for every energy customer in the UK - surely the staggering sum of £3.4bn a year extra spent on standard variable tariffs would be better in UK households’ own bank accounts.”
A spokesman for Energyhelpline.com said: “We would welcome anything that would save customers £3.4billion a year.
“But if you ban variable tariffs, suppliers would come up with a standard tariff which would be just as expensive.
“We would like a maximum price for the standard tariff. It should be a fair price for customers so they don’t get ripped off and a far price for the suppliers so they can keep the lights on.”
Energy UK, which speaks for the suppliers, declined to comment as First Utility is a member.
