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Report confirms: Switch electricity and save money
Monday 16 April, 2007
Research by the University of Warwick has established that electricity consumers are throwing good money after bad, by simply choosing the wrong supplier or not bothering to switch.
An economists’ report, led by the university, concludes that a fully competitive market has not yet emerged, and prices charged by ‘incumbent’ firms are still higher than expected.
The ‘incumbent’ electricity company in any area of the UK is the one that had a monopoly over the area’s electricity supply before the market was deregulated (eg, SWEB in the south west, and London Energy in London). Now that consumers can choose their suppliers, there is no need to choose the incumbent. But, because those companies are still charging over the odds in their local areas, other suppliers are also able to charge “significantly non-competitive” prices, according to the Warwick research.
The report is based on consumer electricity prices between 1999 (when the market was opened up) and 2006.
Professor of Economics at the University of Warwick, Michael Waterson, claims that incumbent suppliers are charging up to 10% more than other suppliers in their area. And the prices charged by other suppliers can vary by up to 30%.
Professor Waterson said: "It is surprising that some people are consuming electricity much more expensively than other people through their choice of supplier."
Chris Eagle, commercial manager at EnergyChoices.co.uk, comments: “This research makes a valid point about incumbent suppliers. If you haven’t switched since before 1999, you are losing money. The galling thing is, even your incumbent supplier would charge you a lot less if you lived in a different area.
“And it’s incredible to hear that prices from other suppliers can vary so much – choosing the wrong one is just throwing money down the drain.”
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