Sticking with energy supplier 'subsidises' cheap deals for new customers

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The results of a recent study have shown energy customers who remain on the same tariff with the same provider could be subsidising the cheaper deals offered by energy suppliers to newer customers, according to an article published by Energy Choices.

Conducted by think tank, the Institute for Public Policy Research (IPPR), the study found that the 60 per cent of British consumers who had never switched supplier were subsidising the special deals served up to the 40 per cent who d0 switch - meaning that the former could be paying up to £330 more for the same amount of electricity.

This practice is said to be common amongst the 'big six' - E.ON, EDF Energy, SSE, Scottish Power, British Gas and npower - according to the report.

Associate director of the Institute for Public Policy Research and author of the study, Will Straw, commented on his findings.

He said: "In a perfect world, all customers would shop around for the best deal and new entrants to the market would be able to compete by offering simpler and more innovative processes for heating people's home and keeping the lights on.

"In the real world, however, most people do not have the time, inclination or know-how to switch. The advantage gained by the big energy firms from this situation has created a pseudo-cartel. Greater competition in the market, somewhat paradoxically by controlling tariffs, is the only way ahead."

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