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UK households' energy overspend 'tops £7bn over three years'

Millions of UK households have spent £7 billion more in total than they had to on energy over the last three years, an independent supplier has claimed.

First Utility said households have lost almost £800 each by remaining on expensive standard variable tariffs with Big Six companies, based on its analysis of data from the switching site Energy Helpline.

The supplier said the overspend was because 85% of energy customers are with the Big Six and, of those, 70% are on the most expensive standard variable tariff.

Regions overpaying the most are the east, by £885 million, the south (£725 million) and the East Midlands (£630 million).

The £7 billion figure, released before MPs debate a motion on energy prices in the House of Commons, is enough to fund nine million families' grocery shopping for more than three months, First Utility said.

It comes after most of the major suppliers have announced significant price increases for already-struggling households.

First Utility claimed many customers remained unaware they could save on their bills, "in part thanks to the Big Six energy suppliers doing their best to keep their most loyal customers in the dark about savings and alternative tariffs", adding that many only receive a bill as little as once a quarter or even once a year.

Ed Kamm, the UK managing director of First Utility, said: "The Big Six have been exploiting customers' loyalty for too long and it has to end.

"The brutal truth, hidden away in the CMA report, proves that the Big Six have been relying on their standard variable tariff customers for years to bolster their profits.

"We have to see real change in 2017, with the onus on helping those who have been kept on bad deals for years and years."

The parliamentary debate will see a cross-party group of MPs call for measures to control the market and protect consumers.

The Department for Business, Energy and Industrial Strategy has said the Government is prepared to act wherever markets are not working for consumers.

SSE, E.On, Scottish Power, Npower and EDF have all ramped up their prices over the past months.

The latest increases come despite the energy regulator Ofgem recently saying it saw no reason for the Big Six to raise prices despite upward price pressures because of the way they hedge when buying power.

MP John Penrose, who secured the debate with Caroline Flint and Patricia Gibson, said three energy companies - Octopus, Ovo and Utility Warehouse - had joined him in calling on the Government to implement a 'relative price cap' to protect consumers.

He said: "I'm delighted that the industry is reacting positively to this plan.

"Loyal customers are being systematically ripped off by big energy firms, and it's just not fair. Most industries don't exploit their best customers like this, by quietly switching them onto expensive default tariffs when their existing deal comes to an end. Loyalty should be rewarded, not exploited.

"The House of Commons has a huge opportunity on Thursday to give the Energy Secretary a mandate to implement a relative price cap in order to protect energy consumers."

The motion to be debated on Thursday states that the House "deplores the Big Six energy firms" treatment of out-of-contract energy customers on default tariffs, believes immediate action is needed to protect these consumers, and that pushing customers to start switching will not fix the problem sufficiently quickly or completely on its own.

It calls on the industry, regulators and the Government to consider solutions which recognise that many people lead busy lives where switching their energy supplier may not always be a high priority.

Business and Energy Secretary Greg Clark said: " This Government has been clear that energy companies should treat all their customers fairly and we agree with concerns that recent price rises are hitting ordinary households across the country who are already paying too much.

"We've worked with industry to make it quicker and easier to switch supplier and nearly eight million people are now benefiting from better deals, but millions of energy customers continue to pay too much.

"We're focused on getting the best deal for consumers and are prepared to act wherever markets are not working in their best interests."

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