Over half of customers still on ‘poor value’ contracts, says Ofgem

SSE has come bottom of Ofgem’s new league table, which ranks the ten largest suppliers on how many customers they have on “poor value” standard variable tariffs.

The company had the most consumers on standard variable tariffs (SVTs) in September with 71 per cent. British Gas ranked second from the bottom with 67 per cent of its customers on SVTs. Between them, SSE and British Gas account for more than half of all customers on SVT deals.

The research also showed SVTs are still around £300 more expensive than the cheapest deals on the market.

Of the ten largest companies included in the table, the three with the smallest proportion of customers on SVTs are all independent suppliers – First Utility (23 per cent), Ovo Energy (28 per cent) and Co-Operative Energy (35 per cent) respectively.

But Ofgem said the decline in the overall number of customers on these tariffs is accelerating, because of record switching rates in 2017.

As of the end of September, 57 per cent of customers who are not protected under Ofgem’s pre-payment safeguard tariff were on standard variable tariffs, in comparison to 59 per cent who were on them in April.

The regulator said suppliers still need to do more to help customers get a better deal.

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What the Ofgem figures show

–          57% of households with credit meters are on SVTs.

–          An increasing number of customers with smaller firms are on SVTs. In particular, 16% more First Utility customers were on SVTs in September, when compared to April this year.

–          More than two thirds of customers with British Gas and SSE are on SVTs.

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Some large suppliers have announced plans to use new Ofgem rules to roll customers automatically on to fixed default deals instead of an SVT as part of wider initiatives to phase out the tariffs.

But Ofgem said that while such moves were “a step in the right direction”, they must lead to inactive customers “genuinely benefiting from a significantly better deal, and not just being put on a rebranded poor-value tariff”.

In the same announcement, Ofgem launched a further extension to its safeguard tariff to more vulnerable customers on standard variable and default deals, to protect them from overpaying for their energy next winter.

From February, one million vulnerable households will be covered by Ofgem’s safeguard tariff and the regulator is proposing to extend this by a further two million before next winter.

Ofgem chief executive Dermot Nolan said: “Ofgem’s league table shows which suppliers have the most work to do to get all their customers a better deal.

“Some of the larger suppliers have a significantly lower proportion of customers on poor value standard variable deals than SSE, British Gas and E.ON in particular. This shows it is possible to help more of these customers get a better deal, and it is unacceptable that so many are still paying too much for their energy.”