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Loyal energy customers missing out on savings


The Competition and Markets Authority (CMA) has said that many duel-fuel customers are missing out on big savings, as they are not switching energy suppliers.

The energy industry has been under investigation from the CMA since June 2014, and some early findings have already suggested that over 95% of duel-fuel customers could have saved money by switching energy suppliers between 2012 and 2014.

Furthermore, they said that these savings could have ranged between £158 and £234 a year, but a reluctance to switch supplier meant that customers have missed out.

One of the issues highlighted was that energy suppliers inherited a large number of their customers, when the energy industry was privatised in the 1990’s. This issue was backed up by the finding that around 40-50% of customers have been with the same energy supplier for more than 10 years, and one supplier had a customer base where over 70% had been with them for over 10 years.

This situation was further criticised by the CMA, as the people who are likely to have never switched energy suppliers are usually more vulnerable. They said that those who have never switched are "less educated, less well-off, more likely to describe themselves as struggling financially, less likely to own their own home, less likely to have internet access, more likely to be disabled or a single parent".

The statement also said that these people were also likely to believe that “switching is a hassle, that there are no real differences between suppliers and that something may go wrong if they switch".

Further investigations

The next part of the CMA’s investigation will look to reveal why people believe it is difficult to switch, whilst findings are still yet to be made on the pricing and profitability of the industry.

Energy minister Ed Davy has suggested that if major energy suppliers are found to be making excessive profits, then it is feasible that some companies may need to be broken up into smaller ones.

He said: "If the evidence from the CMA is strong that the next step ought to be breaking up a company, if the Competition Markets Authority recommend that, certainly I as a Liberal Democrat, talking to the voters in the next election, will make it clear, we would not flinch from taking that tough action."

However, the CMA has so far found no evidence to suggest that firms have been making excessive profits from electricity, or that wholesale prices are unclear.

Additionally, they also said that they see no problem with energy companies generating and supplying power, therefore suggesting that none of the major energy firms will be broken up into smaller companies.

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