Postcode lottery in energy revealed – £139 difference between regions even when a household is using the same amount of energy, on the same tariff with the same supplier
Network companies who are responsible for the postcode lottery make £7.5 billion in profits each year
New report by The Big Deal proposes using just a tenth of network company profits to eliminate regional charges for consumers to solve this problem.

New report by consumer collective The Big Deal titled “Ending the Energy Postcode Lottery” found that households can pay over £139 more a year for the same energy deal, with the same company and using the same amount simply based on where they live in the country. Sometimes people in the same neighbourhood can pay vastly different amounts. This is wrong, it creates huge unfairness and confusion in the energy market.

The difference between prices of the same tariff can be nearly £140 just based on where someone lives

British Gas Npower EDF SSE Scottish Power Eon
Most expensive region South West – £1,560 Southern – £1,661 South West – £1,664 South West – £1,630 Merseyside and North Wales – £1,625 South West – £1,639
Cheapest Region South Scotland – £1,481 South Scotland – £1,613 South Scotland – £1,525 Yorkshire – £1,509 South Scotland – £1,532 Yorkshire – £1,549
Difference £79 £48 £139 £121 £93 £90

Data checked by the Big Deal, 13th October 2017.

Consumers have no choice on who their network company is and yet they’re charged hugely different amounts based on their postcode. The network companies are monopolies and they make vast profits, reaching over £6.5 billion last year. Some of the companies made profit margins of 39%.

The network companies say the large disparities in prices faced by families is due to the costs of operating the electricity and gas networks in different regions of the country. However, we’ve found one case where someone paid £120 more than someone in their neighbourhood if they were on the same deal and using the same amount. We think that this clearly shows that there is no need for network companies to charge energy prices by region.

Case Study – Janet & Ken Baker

J&K reduced_ Sensible Garden Opening .jpg

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.”

 

The report proposes a cut in bills for all consumers down to the lowest region, so consumers would be charged one rate for the costs of network rather than 14. This would mean a fairer, simpler energy market, with bills cuts for the majority of consumers.

We propose that the network companies absorb the £643 million cost of this change, given their huge profits and high margins, we believe they can afford to take the hit of just a tenth of their profits to pay for this change.

Edward Molyneux, Head of Research at The Big Deal, said:

“How is it right that someone in Exeter can pay nearly £140 more for their energy than someone in Edinburgh? What about if it’s someone just a street or two away?  If someone is with the same company, on the same deal and using the same amount of energy they should pay the same amount no matter where they live. That seems obvious.

The companies behind this make huge profits of £7.5 billion, they can afford to do right by consumers and make the energy market simpler and fairer. It would take just a tenth of their profits to get rid of the energy postcode lottery.

These proposals to end the ridiculous postcode lottery will make the energy market fairer, simpler and more understandable and millions will see a cut in their bills.”

For further information contact Henry de Zoete at henry(at)thebigdeal(dot)com or Edward Molyneux at edward(at)thebigdeal(dot)com or call 020 3463 0820

To read the full report click here

Notes for editors

Which part of the UK do these companies run?

Transmission regions.png

The network companies make vast revenues and profits

Type of company Revenue (£bn) Operating Profit (£bn)
Electricity Transmission £5.11 £1.81
Electricity Distribution £6.30 £3.46
Gas Transmission £2.27 £0.86
Gas Distribution £2.94 £1.32
Total £16.6 £7.5

Source: Most recent full accounts for each company as found on Companies House or company websites

Network Company Profit Margin (%)
SSE 28.9
Scottish Power 38.9
UK Power Networks 30.2
Western Power Distribution 32.7
Northern Powergrid 35
Electricity North West 25.7
Average 32

Source: ECIU—Monopoly Money, How the UK’s electricity distribution network operators are posting big profits—September 2017

About TheBigDeal.com

TheBigDeal.com is a consumer collective focused on reducing people’s energy bills. We bring together tens of thousands of consumers and use our collective buying power to create exclusive deals.

Launched in March 2014, we now have over 400,000 members and continue to grow. 62% of our members have never or hardly ever switched before – these are the very people who have been let down by the energy market for too long. Moreover, 60% of our members are over the age of 55 and 30% over the age of 65. We have saved the British public over £15 million since we launched.

TheBigDeal.com is a start-up business and charges a commission to energy companies. Unlike price comparison websites we are 100% transparent and publish the exact amount of our commission. For our most recent switch it was £50 for a dual fuel (both gas and electricity) switch. This compares to £60 to £100 for the main price comparison websites.

To read the full report click here


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  Comments: 2


  1. Is it fair that people living in rural communities which do not have a mains gas service should pay more for their electricity?

    If you do not have a gas supply you should automatically receive the dual fuel tariff.


    • We see no reason why network companies couldn’t absorb the cost! It seems completely unfair that anyone be punished price-rise for where they live Martin!

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