Loyal Energy Customers overpaying by £5.4bn per year
Energy suppliers are being overpaid up to £5.4bn a year by loyal customers
A survey has revealed that energy firms are being overpaid up to £5.4bn a year by loyal customers remaining with the same supplier.
The study carried out by energyhelpline also shows customer loyalty to energy suppliers has cost them £18.7 billion in extra bills.
The £5.4billion over-payment is a direct result of customers being on standard tariffs, which are often hundreds of pounds more expensive than the cheapest deals on the market. Customers tend to be moved to standard tariffs when staying loyal to a supplier and not switching for a year or so.
Other findings from the study include:
15% of households that have not switched to a suppliers for 5-10 years, have overpaid between £1,000 and £2,000.
7% of respondents who have remained loyal for 10 to 15 years have lost between £2,000 and £3,000 and the 10% who have stayed with the same supplier for longer than 15 years have overpaid by more than £3,000 each.
What barriers are there to switching and why do people overpay?
When asked why customers are loyal to suppliers and don’t switch, 53% of respondents used quality of service as their main reason.
Another 41% said they benefited from their supplier's reward scheme. Consistency and familiarity with the supplier ranked third and fourth as reasons for not switching.
Lastly, 80% of respondents agreed with the statement ‘if it isn’t broke, don’t fix it’ indicating that most consumers think things are fine.
Mark Todd, co-founder of price comparison site, energyhelpline:
“The media talks a lot about broken trust between energy suppliers and customers but in reality there appears to be too much trust. Many customers are staying loyal even while they are getting fleeced – overpaying by around £300 a year and the most loyal £3,000 a decade.
“If households continue to stay loyal, providers have no incentive to offer cheaper deals.
“The price of loyalty is truly vast. As energy companies are allowed to charge whatever they like in the UK, it’s important for customers to monitor their bills and not be scared to switch”.
“Switching energy can reduce a typical yearly household bill from £1,066 to just £770.”