Energy Customers Are Hit With Higher Bills By Local Suppliers

There was a time when people were rewarded for loyalty to local businesses. Sadly these days seem distant, and in many instances customers of local business will have to pay more for their bills than if they use companies further afield.

This is particularly true of the energy market. There have been 29 different energy price changes this year so far. A mere 3 of these have rewarded customers who remained loyal to their energy supplier.

According to research by Uswitch.com, people who choose to stick with their local energy supplier are expected to pay 15% more than those who do not. It has been estimated that the British population could make a combined saving of £681m on their electricity bills by researching the market for the best deals.

In many instances the local electricity supplier is adding what is dubbed a ‘loyalty tax’ to the bills of their longer term customers. Research has shown that local suppliers will charge anything up to £25 more to customers in their ‘home’ area.

Despite the money that could be saved by switching it is estimated that 33% of energy customers remain faithful to their local supplier.

The competitiveness of the energy market means that energy suppliers are always attempting to lure new customers by offering attractive deals. People who have been with the same supplier for a long time are advised to research the market online for home insurance. Just half an hour online could result in significant savings.

Gareth Kloet, head of energy at Confused.com, said, ‘our research suggests that despite fierce competition in the energy market, the energy suppliers continue to be more willing to compete on price in an attempt to gain new business than they are in retaining and rewarding loyalty in their old monopoly trading regions’.

As an example, British Gas cut an average of 10% off its standard electricity prices a few months ago. Without taking the time to find out such information people may have carried on paying significantly over the odds with their local supplier.

Ann Robinson, Director of Consumer Policy at uSwitch.com, said, ‘There are two ways of looking at this. The downside is that suppliers are charging local customers a
loyalty tax, but the upside is that they are providing a really good incentive for households to switch, which is what competition is all about. This issue is completely in consumers’ own hands, as these extra costs are avoidable if they use the market’.

‘Consumers have to understand that there is no reward for loyalty. The cheapest prices and best deals are being offered time and time again to those who are prepared to change suppliers,” she said. “It cannot be clearer than this – if you are still with your local electricity board you are not getting a good deal. This local loyalty tax is completely avoidable – don’t let it hit you’, she went on.

The insurance industry is also highly competitive and people are advised to consider what savings they could make on their Home and Contents Insurance premiums.

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