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Energy firms ripping off loyal pensioners and families on low incomes by £250m

3 March 2017

Citizens Advice is calling for the government to cut bills for low income households on standard variable tariff

Some of the poorest pensioners and families in Britain are paying an extra £250 million each year for being a loyal customer, Citizens Advice reveals today.

New analysis by the national charity finds that around 800,000 of the poorest pensioners and 1.5m low income families with children in Great Britain are on their energy supplier’s standard variable tariff. 

These households are paying an average of £141 more a year for a dual fuel gas and electricity bill than if they were on the cheapest deal available from one of the 9 largest suppliers.

Citizens Advice’s research previously found that around 4.7 million households in England haven’t switched their energy supplier for 10 years, with older people and people with low incomes more likely than younger and better off households to have never switched supplier at all.

People can also be automatically switched onto their supplier’s standard variable tariff when a fixed-term gas, electricity or dual fuel deal ends.The Competition and Market Authority has estimated that all households on the standard variable tariff together pay an average of £1.4 billion a year more than if the energy market was fully competitive.

Citizens Advice is calling for the government to intervene by extending the pre-payment meter price cap to the 2.6 million people on credit meters who are eligible for the Warm Home Discount - a group that includes low income pensioners and families.

Gillian Guy, chief executive of Citizens Advice, said:

“Energy firms are ripping off the loyal customers who can least afford it.

“Heating and lighting your home are basic necessities, not luxuries - but energy firms are still charging customers on the standard variable tariff £141 more on average for the same gas and electricity.

“To help those worst hit by high energy bills including some of the poorest pensioners and families, the government could extend the prepayment meter cap to all those eligible for the Warm Home Discount.”

Anyone looking to save money on their energy bills now can use the Citizens Advice price comparison tool to look for a cheaper deal, or can contact their nearest Citizens Advice for help

Notes to editors

  1. GFK Energy Market Monitor surveys between January to September 2016 found that 11% of customers in Great Britain on a standard variable tariff are families with children and an income of £15,500 or less, single people aged over 65 with annual income of £9,500 and couples aged over 65 with an annual income of £15,500 or less. Citizens Advice has estimated that the 2.2 million accounts held by these customers pay £112 on average more for gas, electricity and dual fuel tariffs than the cheapest deal available from the 9 largest suppliers - approximately £250 million in total. The average difference between each supplier’s standard variable tariff and the cheapest deal for each fuel type has been weighted to reflect the number customers the supplier has on the standard variable tariff.
  2. The number of customers per supplier used is from data published by Ofgem in December 2016, based on information received from suppliers for March 2016.
  3. Price data reflects available tariffs on 22 February 2017 for a medium user paying by direct debit.
  4. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  5. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  6. To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
  7. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
  8. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
  9. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.