Gap between cheapest and most expensive energy tariff has got WORSE since price cap – how to find the cheapest deals
THE loyalty penalty paid by customers that don't switch suppliers has got worse since the government introduced its energy price cap.
The cap, which came into force in January 2019, was specifically designed to protect customers from overpaying by hundreds of pounds when deals came to an end.
But new research from auto-switching service Look After My Bills shows that the cap is failing and loyal customers are actually worse off than before.
Last year, customers that stuck with one of the big six energy firms once an introductory rate ended would have overpaid by £130.
But since introduction of the cap, the same customers now overpay by £183 on average.
Some customers will overpay by significantly more.
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But when the cap rose by £117 on April 1st - the divide became dramatically worse.
It is thought this is because energy suppliers now use the energy cap as a base for their most expensive tariffs, rather than competing on price.
The jump was biggest for SSE customers where the gap between the cheapest and most expensive tariffs rose by 98 per cent.
Customers with this energy provider now pay £121 more for an SVT than on the supplier's cheapest deal.
Even though the gap rose the most since last year, SSE still has the smallest gap among all of the big six - but it's significantly higher than the £61 increase customers faced in 2018.
British Gas customers saw the second biggest hike, with the gap between cheapest and most expensive deals jumping by 92 per cent.
Customers here pay a whopping £206 more for an SVT that the provider's best available deal.
At the other end of the scale, the gap faced by loyal customers at Scottish Power only rose by four per cent.
But the price rise customers on standard various tariff's face is still severe - they will pay £146 more than the cheapest rate on offer.
How to switch and save
ALL you need to do to avoid paying more is switch to a new deal - which should only take you ten minutes.
You may be able to get a better offer through your existing provider, but you'll generally get an even bigger discount if you shop around.
Using a comparison site, such as Comparethemarket.com, uSwitch.com or GoCompare.com can help you find the best deal on the market.
You'll need your postcode, the name of your current supplier and the name of your current tariff.
It's also handy to have a recent bill so you can see your usual energy usage.
You'll want to consider price, but you may also wish to look at factors such as customer service or environmental credentials.
Once you've chosen a new deal, switching is easy - especially if your new provider is signed up to the Energy Switch Guarantee.
This means that your new supplier will handle the whole switchover for you, and guarantee that everything will be sorted within 21 days.
Once you've swapped over, you have 14 days to make sure you're happy, and if not you can switch back.
Your gas and electricity supply continues as normal during the switch.
23 different energy suppliers set their most expensive rate within £10 of the price cap maximum.
Lily Green, head of research at Look After My Bills, said: "The message [the price cap] should send to the Big Six to do right by their customers seems to have been flagrantly ignored.
"What we have seen over this last year is energy companies clustering prices around the cap and continuing to penalise customers for their loyalty.
"Frankly it’s disgraceful that people are expected to pay £183 more for the same gas and electricity as their neighbour."
A spokesperson from SSE said: “We have one of the most competitive energy retail markets in the world and fierce competition is requiring suppliers to offer lower prices.
“We believe competitive markets drive best outcomes for consumers and we are calling for the cap to be reviewed as regulatory price interventions are rife with unintended and undesirable consequences.”
The energy watchdog is expected to reduce the price cap this month, which should help to narrow the gap.
Analysts Cornwall Insight are predicting that the cap will drop by approximately £80 a month.
But this is unlikely to stop customers who fail to switch from overpaying.
The most sensible strategy for consumers is to make sure they shop around for a good energy deal every time an an introductory tariff comes to an end.
Switching saves £280 a year on average, and you'll almost always be able to beat an SVT even if the cap keeps these rates under control.
A BEIS spokesperson said:“The energy price cap has ensured that consumers pay a fair price for their energy. With more than 60 energy suppliers now competing in the retail energy market, consumers who switch can make significant savings on their annual bills.
"The price cap has also encouraged suppliers to examine their costs and provide services more cheaply and efficiently.”
The Sun has asked all the other Big Six suppliers to comment on their price gaps and will update this story once we have a response.
We have also asked the energy regulator Ofgem for their views.
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