Big six energy companies routinely overcharging customers – exclusive

The UK’s big six energy companies have been accused of dirty tricks after analysis for the Guardian revealed that they are routinely charging customers almost exactly the same amount after switching them off controversial default tariffs.

In the face of Theresa May’s plans to impose a price cap on standard variable tariffs (SVTs), which more than half of energy customers are on despite their steep prices, companies such as British Gas, E.ON and SSE have pledged to phase out such tariffs and shift billpayers onto better value fixed deals.

The chief of energy regulator Ofgem has welcomed such moves as a sign of progress in the energy market.

But data compiled for the Guardian shows that in the case of market leader British Gas, the most expensive fixed deal – that many customers are being moved on to – is identical to its SVT, at £1,099.84.

It is understood that when customers contact their supplier to change their tariff, most are moved to the most expensive fix that the company offers. Each company’s cheapest fixed deals are often only available through comparison sites.

E.ON charged £1093.35 for both its SVT and most costly fix, while the gap for ScottishPower was just £8.49 and npower’s was £37, the figures obtained by challenger supplier Octopus show. SSE was slightly better, with a £54.73 gap, and EDF’s gap was £82.83.

The data suggests the companies are engaged in what is largely a rebadging process rather than a genuine effort to cut customers’ bills by switching them to more competitive products.

John Penrose, the Tory MP who pressured Theresa May to confirm a cap last October, said: “The big six need to do more than just a cosmetic exercise. No one should be fooled if they’re just moving customers from one rip-off tariff to another, with a different label on the tin.

“The only way we’ll put a stop to these dirty tricks is with an energy price cap, so I’m delighted the government is about to bring one in.”

British Gas on Thursday cited the price cap as one reason it is shedding 4,000 jobs, although its consumer energy arm’s profits only dropped 1% despite losing 750,000 customers to more competitively priced rivals.

More than half of British Gas customers are on SVTs, with similar shares for E.ON, EDF and npower. SSE has the highest proportion, and Scottish Power the lowest.

The data compiled by Octopus on big six pricing tactics is a snapshot taken of tariffs offered on 18 February in the London region. It excludes fixed tariffs with extras, such as boiler cover.

While the gap is small or non-existent in most cases between the SVT and the most expensive fixed tariff, the big six do offer cheaper fixes to lure in new customers. For example, British Gas’s cheapest fix is £200 below its SVT.

Although the figures are taken on a single day, an examination of the companies’ tariffs over a 90-day period ending on 18 February showed the pricing behaviour is not an anomaly.

Greg Jackson, the founder and chief executive of Octopus, calling the pricing cynical and said: “Time and time again we see the big six ducking and diving to find new ways of covertly ripping off their loyal customers. This latest is a cynical move as now even the experts – press, regulators and politicians – won’t be able to hold them to account, and it shows why the energy price cap is so vital.”

British Gas declined to comment but SSE said: “We work hard to keep prices down and our fixed deals give customers the security of knowing their prices are locked in for a set period of time.”

E.ON said it was still working out the detail of ending SVTs but: “Our new model of offering customers a one-year tariff as the default option … [will] be cheaper than their current standard variable product.”

Npower said its tariff was cheaper and “also protects customers from any price increase for the next three years”. It added: “It is also worth noting that our cheapest generally available tariff is now £92 less than our SVT product.”

EDF said: “We don’t agree that moving customers on to a deal which is almost identical to their existing standard tariff is in their best interests and we don’t do it.”

Asked what percentage of customers were moved off an SVT on to the company’s most expensive fix, none of the big six responded.