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Energy Bills: 70% Of Homes Paying Too Much

A year-long investigation into the energy market has found the majority of households are paying too much.

The report, published by the Competitions and Markets Authority (CMA) says about 70% customers are on expensive energy tariffs despite the availability of cheaper deals.

Dual-fuel homes are particularly affected, with many missing out on a saving of £160 a year by failing to shop around.

Lack of awareness about what deals are available, confusing and inaccurate bills, and the difficulties of changing suppliers, both real and perceived, are all identified as reasons why more customers don't change their energy tariffs.

But energy consumers themselves also came in for criticism, with the report describing many as "disengaged".

As reported by Sky City Editor Mark Kleinman on Monday , the investigation found tariffs offered by the big six energy suppliers were around 5% higher than they should have been between 2009 and 2013.

The CMA suggests a number of measures be introduced which could encourage more competition in the energy market and ensure a better deal for customers.

These suggestions include the introduction of an energy price cap, which should stay in place until reforms are made to the market, and an independent price comparison service run by energy watchdog Ofgem which could make it easier for consumers to discover cheaper deals.

But while the report did recommend an increase in transparency and more engagement between providers and customers, it fell short of advocating the break-up of the big six energy giants - British Gas, EDF Energy, E.ON, Npower, Scottish Power and SSE - who currently dominate the market.

Roger Witcomb, the chairman of the energy market investigation, said: "There are millions of customers paying too much for their energy bills - but they don’t have to.

"Whilst competition is delivering benefits to increasing numbers of customers, mainly through the growth of smaller suppliers with cheaper fixed-price deals, the majority of us are still on more expensive default tariffs.

"Many customers do not shop around to see if there's a better deal out there, let alone switch. The result is that some energy suppliers know they don’t have to work hard to keep these customers."

The energy watchdog Ofgem, who commissioned the investigation, said: "We welcome the CMA's provisional findings on competition in the energy market.

"We will work with them, to develop and implement their final remedies, where they fall within our jurisdiction, to deliver a more competitive market for consumers.

"Ofgem asked the CMA to investigate the energy market because of our concerns that competition in the market is not working for all consumers."

Responding to the report, Energy Secretary Amber Rudd said: "Our priority is to keep bills down for hardworking families and businesses across the country.

"We'll consider the report and respond soon and we won't hesitate to take further action where the market is not delivering a fair deal for consumers - including doing more to support switching, ensure the swift roll-out of smart meters and increase competition in energy markets."

The big six energy companies have also reacted to the findings, and say they will look carefully at the report and its recommendations.

An E.ON spokesman said: "The publication of the these provisional findings, together with the notice of possible remedies, is a major milestone of the CMA's investigation and as is right, we will now review the material in advance of responding in detail.

"Throughout this process and since we first called for a full market investigation in 2011, we have been open and fully supportive of the detailed and thoughtful investigative work undertaken by the CMA and we will continue to provide all necessary and relevant information as we move towards the final report in December."

Today's provisional report will be followed by a more comprehensive look at the market, due to be published in December.