Households face postcode lottery when it comes to energy prices

Many consumers are forced to pay up to £189 extra a year on their energy bills purely because of where they live a new study by uSwitch.com has found – a situation referred to as a ‘postcode lottery’.

This postcode lottery has been commonplace on suppliers’ old fashioned standard energy plans, but it is also hitting customers on their cheapest online energy plans too, according to uSwitch. The plans remain competitive, but there is a stark difference in the amount people will pay based on where they live. This regional pricing policy sees a ScottishPower Online Reward Energy customer living in Cardiff (Swalec energy region) paying £1,031 a year. However, another customer with the same plan but living in Nottingham (East Midlands energy region) will be paying just £842 – £189 a year less.

But while this seems unfair, by being on an online energy plan households will still be enjoying the most competitive energy prices. On average they will be paying around £300 a year less than those on standard energy plans.

Ann Robinson, Director of Consumer Policy, uSwitch.com, said:

“Ofgem’s push on cost reflective pricing may iron out some of the extremes, but the fact is that while suppliers choose to target their ultra-competitive online plans regionally we will continue to see a postcode lottery. Regional pricing is a key part of the competitive battlefield – the important thing is for consumers to avoid becoming a casualty.

“Consumers cannot assume that their local supplier will automatically be cheaper – very often they are not. The key thing is for consumers to understand that energy companies price by region and to minimise the impact. They can do this by making sure they move to the most competitive plan with the most competitive supplier in their region. Even though all suppliers offer their cheapest prices online, these can vary by as much as £155 in one area, which is why it’s so important for households to shop around.”