In response to the Government publishing a bill for an energy price cap today, Will Hodson, co-founder of collective switching organisation the Big Deal – the only switching site pro the cap – said:
“This price cap is hugely welcome. Big Six companies have been overcharging their most loyal customers for years and years.
The temporary nature of the cap is fine for now but it’s important that the Government is willing to extend the cap and even make it permanent if the Big Six companies don’t mend their ways.
The challenge is now for suppliers, and switching sites, to find new ways to prevent British consumers from being ripped off.”
NOTES TO EDITORS
Big Six’s standard deal as much as £225 more expensive than their cheapest
- Eon charges their most loyal customers £1,123 a year versus their cheapest deal on the market today at £898 a year. A difference of £225.
- Scottish Power charges their most loyal customers £1,148 a year versus their cheapest deal on the market today at £973 a year. A difference of £175.
- Npower charges their most loyal customers £1,166 a year versus their cheapest deal on the market today at £1,047 a year. A difference of £119.
- According to Ofgem, 8 million families – three in ten of all households in the country – have been on the Big Six’s standard variable tariff for more than three years.
|Supplier||SVT Price||Cheapest tariff Price||Difference|
|British Gas||£1,102||£1,004 (from Sainsbury’s Energy – a white label of BG)||£98|
Tariff prices correct as of 11th October 2017. Calculated using Ofgem medium consumption values – 12,000 kWh gas and 3,100 kWh – averaged across all 14 regions.
8 million households have been on the Big Six’s worst deal for more than three year
Table showing number of non-prepay customer accounts by tariff type and supplier
|Fixed tariff||Other non-standard variable tariffs||SVT (less than 3 years)||SVT (more than three years)||Total on SVT||Total amount of customers||% on SVT|
Source: Ofgem, published August 2017, https://www.ofgem.gov.uk/data-portal/retail-market-indicators#thumbchart-c7770745751913637-n114504
The evidence shows competition will not be affected – switching rates lower now than when energy price caps were in place around the turn of the century
Citizens Advice states:
“The evidence does not show a clear link between switching rates in the energy market and the savings you can make from switching. In fact, as the chart below shows, switching rates in Britain seem to be lower now than when energy price caps were in place around the turn of the century. And switching rates have fallen in recent years even as the savings from switching have risen.” https://wearecitizensadvice.org.uk/capping-energy-bills-wont-kill-competition-9b55dd8213d7
“The chart makes a simple point: switching rates were the same or even higher when energy prices were subject to caps. Both British Gas, as the former national gas monopoly, and the former regional monopoly electricity boards, were subject to price regulation that restricted how much they could charge their customers. The cap on electricity direct debit prices was removed in April 2000, with the other price caps removed in April 2002. Yet at the time, around 300,000 and 400,000 people were switching gas and electricity each month respectively, compared to around 280,000 and 370,000 now.” (https://wearecitizensadvice.org.uk/power-to-the-people-cutting-energy-prices-ce399cd05ff)
There’s price regulation in Northern Ireland and switching rates are the same as in Britain
Citizens Advice states:
“In one part of the UK, energy prices are still regulated – Northern Ireland. The largest electricity supplier there, Power NI, has a ~60% share of the market. Because of this dominance, its prices and profits are regulated. But price regulation doesn’t appear to be dampening consumers willingness to shop around. In 2016 the electricity switching rates in Northern Ireland and Great Britain were identical, both at 15.8%.”
Price comparison sites say a cap will damage competition:
Richard Neudegg of biggest energy price comparison site uSwitch said:
“A price cap would be the death knell for competition. It would remove any incentive for energy companies to drive down prices and fight to keep their customers, entrenching the position of the incumbent big six. It would create a false sense of security for consumers on poor value SVTs, reducing the chance of them seeking a cheaper deal.” (https://www.uswitch.com/media-centre/2017/04/uswitch-comments-on-reports-of-energy-price-cap-pledge-in-conservative-manifesto/).
Stephen Murray of MoneySuperMarket, said:
“For customers who have the ability to switch – majority outside the most vulnerable – an energy price cap would be a disaster.” (http://www.cityam.com/264080/conservative-plans-energy-cap-could-cost-consumers-upwards)
About The Big Deal
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.