Customers of the Big Six energy suppliers are paying up to £234 a year too much in gas and electricity bills, a competition probe has found.
The Competition and Markets Authority (CMA) said 95% of dual fuel customers could have saved by switching tariff or supplier.
It said the average saving available to these customers was between £158 and £234 a year depending on the supplier.
The findings were the latest update from the CMA’s full-scale probe into the sector which is dominated by the Big Six firms – Centrica, SSE, npower, EDF, Scottish Power and E.ON.
It has updated a statement it published at an earlier stage of the investigation in July last year. The CMA said it had not yet reached any conclusions. Provisional findings will be published in May.
The probe also highlighted how customers stuck on more expensive, standard types of tariff tended to be less educated, less well-off, less likely to own their own home or have internet access and more likely to be disabled or a single parent.
These customers were more likely to be with an “ex-incumbent” supplier – the gas or electricity provider that served the area before the market was opened up to competition in the 1990s.
They tended “to think switching is a hassle, that there are no real differences between suppliers and that something may go wrong if they switch”.
But the CMA found that from 2011 to 2014, the Big Six suppliers made 12% more per unit for electricity and 13% for gas from those on these standard variable tariffs (SVTs) than customers on fixed or other deals.
It said the next stage of its investigation would focus on understanding which customers do not switch and why, and identifying the nature of “barriers to switching”.
Half of customers surveyed said they had never switched, and around a third said they had never considered switching or thought it was impossible.
Those in the latter category tended to include people aged 65 and over, those in social accommodation, customers with no qualifications and those on lower incomes.
The report said the sector was in the midst of regulatory changes and political uncertainty while facing a lack of trust from customers.
It acknowledged “broad public concerns” over rising prices, energy firm profits and poor standards of public service.
From 2009 to 2013, average prices for domestic customers rose “significantly”, the report found, with electricity up 24% and gas up 27%. Underlying profit margins in this sector were 4.4% and 2.1% for electricity.
But the overall figures masked “considerable variation in the profits and average prices associated with different types of tariff offered to domestic customers”.
The CMA said: “The evidence we have seen to date suggests that over the last three years the gross margins that the six large energy firms earn are higher for customers on the SVT than for those from non-standard tariffs.
“Some suppliers have stated that the costs to serve SVT customers are higher than for customers on non-standard tariffs, and we will wish to investigate this further.”
Meanwhile it said that information supplied by the Big Six firms showed the number of recorded complaints had increased fivefold from 2007 to 2013, mainly from problems related to billing, customer services and payments.
Other pieces of evidence suggested “that the customer service provided by the six large energy firms may be relatively poor”.
The CMA played down concerns about the way some of the big firms also produce power, saying it had not found evidence that they had earned “excessive profits” from their generation business.
The report also considered the “incumbency” of suppliers since the monopoly of British Gas ended in 1996 and the liberalisation of the electricity market in 1999 – previously controlled by 14 regional boards.
It found about 40% of British Gas’s domestic gas customers had been served by it for more than 10 years.
In electricity, 40-50% of domestic customers of incumbent suppliers within each region had been with their supplier for 10 years or more.
However independent suppliers offering cheaper fixed rate tariffs had grown to 7% of the electricity market and 8% for gas, when both had a 1% share in 2011.
Meanwhile, the effect of the way the gas and electricity market is regulated will also come under scrutiny as the CMA continues its probe.
It said: “We have identified several elements of the regulatory regime that may have a potential impact on competition between suppliers to serve customers, and which we intend to investigate further.”