Energy customers 'pay too much' - but MSE has said this for years

The Competition and Markets Authority (CMA) says 95% of dual fuel customers could save between £158 and £234 a year by switching tariff or supplier.

Its report highlights the fact that customers stuck on more expensive standard tariffs tend to be less educated, less well-off, less likely to own their own home or have internet access, and more likely to be disabled or a single parent.

These customers were more likely to be with the gas or electricity provider that served the area before the market was opened up to competition in the 1990s and tend "to think switching is a hassle, that there are no real differences between suppliers and that something may go wrong if they switch".

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The findings are the latest update from the CMA's full-scale probe into the sector, which is dominated by the big six firms – British Gas, EDF, E.on, Npower, SSE and Scottish Power.

However, the CMA hasn't reached any conclusions yet – its provisional findings will be published in May.

Rising prices and poor customer service

The CMA has also reported today that from 2009 to 2013, average prices for domestic customers rose "significantly", with electricity up 24% and gas up 27%. Underlying profit margins in this sector were 4.4% for gas and 2.1% for electricity.

But the CMA also found that from 2011 to 2014, the big six suppliers made 12% more per unit for electricity and 13% for gas from those on these standard variable tariffs than customers on fixed or other deals.

The CMA says: "Some suppliers have stated that the costs to serve standard variable tariff customers are higher than for customers on non-standard tariffs, and we will wish to investigate this further."

Meanwhile, it adds that information supplied by the big six firms shows the number of recorded complaints has increased fivefold from 2007 to 2013, mainly from problems related to billing, customer services and payments.

Other pieces of evidence suggested "that the customer service provided by the six large energy firms may be relatively poor".

Breaking up the market

Energy Secretary Ed Davey has said he won't flinch from breaking up the big six firms if the evidence from the CMA is strong enough to suggest market intervention as the next step.

He told BBC Radio 4's Today programme: "If the evidence from the CMA is strong that the next step ought to be breaking up a company, if the Competition and Markets Authority recommend that... we would not flinch from taking that tough action."