Is loyalty to your local energy supplier costing you money?

Sticking loyally with your regional electricity supplier could be costing you up to 33% or £111 a year more for your electricity, according to uSwitch.com.

According to the research, the average householder who sticks with their local supplied pays out 15% or £58 per year in what uSwitch.com has labelled, ‘loyalty tax’. In a year, this could add up to an extra £681 million on customers’ electricity bills.

All energy suppliers charge customers different prices according to where they live. But surprisingly, the research also found that energy suppliers charge customers in their ‘home’ region on average 6% or £25 more than they do customers elsewhere, and in 7 out of 14 electricity regions, the local supplier is also the most expensive.

Consumers who are still with their old regional electricity board are being urged to move to another supplier to avoid paying a local ‘loyalty tax’.

Earlier this month, British Gas, the biggest supplier of electricity to homes in Britain, cut an average 10% off its standard electricity prices, a move expected to save 4.5 million customers an average of £43 a year.

Ann Robinson, Director of Consumer Policy at uSwitch.com, says:

“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.”

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