British Gas earned less money from residential customers in the UK last year, after 400,000 clients switched to other suppliers.
Owner Centrica said three per cent of household accounts were lost during 2016, mostly in the first six months.
As a result, pre-tax profit fell 11 per cent to £553m.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
SUBSCRIBE & SAVE
Sign up for The Week's Free Newsletters
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Latest Videos FromThe Week
Chief executive Iain Conn said the results showed the competitiveness of the UK market and that there was no need for any further intervention from regulators or government.
Energy regulator Ofgem has already announced a cap on charges for pre-payment customers "and the government is due to publish a Green Paper in April which may further restrict the prices energy companies can charge", says the BBC.
But Conn said that 50 companies were already competing for customers - with some smaller providers appearing to offer "energy at a loss" - and that the "market is starting to change".
There have long been complaints that some of the most vulnerable customers sit for years on the big six suppliers' standard energy tariff, which is considerably more expensive than some fixed rate deals.
British Gas's experience last year suggests clients are now starting to get the message about the need to shop around.
Conn, however, insisted his company's standard rate, the lowest of the big six, was "good value".
While the difference between British Gas's standard tariff and its cheapest deal is £43, across the industry customers can in some cases save in excess of £200 by switching.
"British Gas recently announced it was freezing its tariffs until August, against a backdrop of rising prices at some other large energy companies," the BBC adds.
The company also announced yesterday that existing customers will be offered a series of discounts, including on Sky television packages.
Profits for the wider Centrica group last year surged to £2.2bn from a loss of £1.1bn in 2015, when it booked £2.4bn in a series of accounting writedowns, says Sky News.
Meanwhile, profits at the group's UK and Ireland energy and services arm, which includes British Gas, rose two per cent to £906m, "as earnings from home services and business customers improved".
British Gas offers Sky TV as part of £100m loyalty scheme
22 February
British Gas customers could get discounts on Sky television packages or wireless heating controls as part of a new loyalty reward package announced today.
Centrica, which owns the former gas monopoly, said the new scheme will come into force in April.
"Highlights will include a collaboration with Sky [and] loyalty deals with larger discounts for customers who have been with British Gas longest," says City AM.
Customers will also be offered "bundle" deals that effectively include discounts on the likes of British Gas Homecare services, its Hive wireless heating control system or boiler insurance for tenants.
Mark Hodges, chief executive of Centrica Consumer, said: "The rewards programme we're unveiling today is about offering customers more than just energy.
“In the competitive services and energy markets where consumers have many choices, we know we have to work hard to win new business and keep our loyal customers happy."
The "big six" energy suppliers have come under fire in recent years over energy bills, especially for more vulnerable and lower-paid customers who typically sit for years on their supplier's standard tariff.
British Gas's new programme has come in for criticism for failing to deal with that underlying issue and reportedly making it more complex for customers to compare the value of their energy tariff.
"Energy regulator Ofgem has said it wanted to see an end to complex tariffs, [but] the competition watchdog has said the move was stifling competition," says the BBC.
Gillian Guy, chief executive of Citizens Advice, said: "While offering rewards is one way to acknowledge how valuable loyal customers are, bringing down bills would make a bigger difference to… household finances."
A spokesman told the BBC the company "strongly denied" offers such as Sky TV would make it harder for customers to compare tariffs.
He added that British Gas's standard tariff was the cheapest among the big six and at £43, the difference in price to its cheapest fixed-rate deal was among the lowest in the sector.
