Since last summer, the Competition and Markets Authority has been studying the energy sector, focusing on ‘dual-fuel’ prices.
According to their investigation, from 2012 to 2014, over 95% of customers who buy two types of fuel from a supplier would have saved money by switching suppliers or tariffs.
The missed savings ranged from £150 to £234 per customer per year.
This investigation started in response to a referral from Ofgem, the UK’s energy regulator. They were concerned with the dominance of the big six suppliers that equated to 92% of the market.
The current big six firms: Scottish Power, SSE, EDF Energy, E.On, RWE Npower and Centrica.
Poor customer service
During the investigation, the CMA highlighted other areas to focus on including the big six firms’ poor customer service.
Between 2007 and 2013, complaints filed against the companies rose fivefold. They were largely concerning payments, customer service and billing.
The report states: “We note that increasing numbers of complaints may reflect: declining quality of service; price rises; changes in reporting standards; increasing media scrutiny of the sector; or a combination of these factors.”
Customers who shall not be moved
The CMA also highlighted so called “sticky” customers who were inherited by the big firms after the privatisation of the sector in the 1990s.
These “sticky” customers who are mostly on standard variable tariffs rarely think about switching, therefore miss out on huge savings.
According to the research, between 40-50% of customers have been with their supplier for over 10 years. For one of the big six, the figure is approximately 70%.
The CMA believe these customers are “less educated, less well-off, more likely to describe themselves as struggling financially, less likely to own their own home, less likely to have internet access, more likely to be disabled or a single parent.”
They also follow on to say that they are less likely to switch because they think it’s a great hassle, there isn’t much difference between suppliers and things might go wrong if they finally switch over.
The CMA will now look to investigate why customers think that the switch over process is so difficult.