We at the Big Deal work tirelessly to right the wrongs of the broken energy market.
Once again we’ve unearthed more evidence that the energy industry is rigged to suit big business, leaving customers always at the short end of the deal.
Our new research has found that there is an outrageous and unfair postcode lottery when it comes to energy pricing.
Households can pay over £139 more a year for the same deal, with the same company and using the same amount of gas and electricity, simply based on where they live in the country.
This is wrong, it creates huge unfairness and confusion for millions of households all over the country.
How can this be justified?
Network companies say that because network infrastructure varies from region to region, they need to charge people more in certain areas. This means rural or more isolated areas typically feel the pinch the most.
There’s no denying that this is the case but when we dug deeper, we found the idea that it is customers who have to bear the brunt of these costs difficult to stomach.
Here’s what we found:
Network companies make vast profits
Just ten network companies have the monopoly over regions in the UK and customers have no choice who their network company is.
These companies make massive profits, earning over a whopping £7.5 billion last year.
|Type of company||Revenue (£m)||Operating profits (£m)|
Would it be so unthinkable to channel some of that money into balancing out pricing for customers?
Despite controls imposed by Ofgem, profit margins for the network operators are as high as 39%. To put that in perspective, in Germany, where there are much stricter profit controls, network companies earn about 8%.
Switching becomes problematic
For too long customers have been deprived of the benefits of a supposedly free energy market.
In theory, customers are welcome to switch whenever they wish – but far too many barriers make it impossible for this to truly be the case!
Postcode lottery pricing is yet another example of how the energy market has catastrophically failed in confusing customers and complicating an industry which could be so much more transparent, simple and straightforward.
|Big Deal members Janet & Ken
Janet and Ken are a Croydon couple in their 70s; Janet a retired manager and Ken an architectural designer. They are dual fuel users who were tempted to switch energy supplier by a very competitive rival quotation, based on postcode. They switched, but when confirmation arrived from the new supplier they were at first incredulous and then alarmed to find that actual unit prices would mean an extra £120 a year.
When this anomaly appeared to result from Distribution Regions not respecting postcodes their alarm became anger – especially when they found that even close neighbours could be on the other side of this regional border and pay £120 less.
“Regional energy price variations are quite iniquitous” said Ken “and the fact is that, in spite of this unforeseen increase on our projected bill, it still appears beneficial for us to switch – emphasising just how unfair the UK’s energy charges have become.”
This is a ludicrously unfair way of making people pay more than they should.
What can be done?
The way we see it, who falls under the shadow of one network company or another is completely out of customers’ hands.
To make the energy industry fairer, customers should be charged the same network rate regardless of where they live.
We believe this new flat rate should be brought down to the lowest regional price, so that no one sees their bills go up as a result.
Given that network companies make £7.5 billion in profit and pay their executives millions in annual salary, we see no reason why they shouldn’t absorb the cost of this change and do right by their customers.
This ludicrous system complicates switching energy when it could be so much more simple!
It would take just one tenth of the profits of these network companies to make sure everyone pays the same wherever they are in the country.
We’re campaigning for the government to bring an end to the unfair postcode lottery.
Sign and share our petition to add your voice to our campaign and make them act: https://campaigns.thebigdeal.com/end-the-unfair-energy-postcode-lottery/