Pensioners being ripped off by energy firms

At the start of winter the Big Six energy firms announced, with much fanfare, that they were freezing their prices. Well, winter has now thawed and with it the price freezes.

Five of the Big Six have announced price hikes in recent week leaving customers paying up to £445 more a year, according to research from uSwitch. While this will mean many of us reach for our laptops and start shopping around for the cheapest fixed deal, there is one group who are being perennially ripped-off by utility firms – pensioners.

The older generation tends to be less computer-savvy than the rest of us, around two-thirds of those aged over 75 do not use the internet, according to Age UK. As a result they make up the vast majority of utility customers sitting on their provider’s expensive standard rate.

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“Only those who are prepared to switch on a regular basis can ensure they are not paying more than they need to,” says Jonathan Ungoed-Thomas in The Sunday Times. “While switching may be easy for those who regularly use the internet, members of the older generation may be less inclined to do so, and are effectively penalised.”

If you can’t use the internet to get on a comparison website it becomes much harder to find the best deals for your gas, electricity and telephone needs. As a result, many pensioners end up sat on their provider’s standard tariffs for years at a time, unaware they are paying hundreds of pounds more than they need to. In effect they are paying a ‘pensioner tax’ on their utility bills.

Just switching from the same energy firm’s standard tariff to their best fixed rate could shave as much as 20 per cent off your bills, according to Ungoed-Thomas.

In order to end this unfair treatment of less IT-literate customers John Penrose, the MP for Weston-super-Mare is calling for a six per cent cap on the difference between an energy firm’s cheapest deal and its standard variable tariff.

“Millions of loyal customers of the big six energy firms are being systemically ripped off,” he told The Sunday Times.

The latest round of big prices rises could be the last though, if the Prime Minister has her way. Theresa May could announce a cap on price rises before the snap general election, spurred on by news that EDF is increasing prices for the second time in less than a year.

Alternatively, she could include a pledge to do so in her party's election manifesto.

The French firm raised electricity costs by 8.4 per cent in March, but has now announced another rise of 9 per cent in June. According to the Daily Mail the Government is now working on a scheme to introduce a cap.

“We are concerned by the planned increases,” the Prime Minister’s spokesman told the Daily Mail. “We are committed to getting the best possible deal for households and expect energy companies to treat their customers fairly. Wherever markets are not working for consumers, this Government is prepared to act.”

Whatever the Government ends up doing to help customers, action also needs to be taken to protect older vulnerable customers who are currently viewed as cash cows by energy firms.

“Energy is not a luxury. Older people should be able to pay a fair price,” says Ali Hussain in The Sunday Times. “It’s not as if energy firms do not know the age of their customers – surely it can’t be much of a task to identify older customers who have languished for years on a standard tariff and switch them to less costly deals.”