Overcharging for energy costs some households £300 a year, study finds

Some households are paying £300 a year more than necessary for electricity and gas, according to new research.

In a study, the respected IPPR think tank said as many as five million homes were being overcharged for power and called for reform of the energy market so that the Big Six – British Gas, EDF, E.on, npower, ScottishPower and Scottish and Southern – faced stiffer competition from new entrants. If the market were truly competitive, IPPR calculated, efficiency savings by the Big Six would knock £70 a year off the average bill.

Overall, households could be missing out on as much as £1.9bn a year by 2020 unless the regulator Ofgem acted, according to the report, which was commissioned by one of the small suppliers, Ovo Energy.

The Independent is running an "End the Big Six Energy Fix" campaign, calling for a windfall tax on energy firms' profits – with the proceeds used make homes more energy efficient.

Will Straw, IPPR's associate director, said some of the Big Six were failing to offer consumers tariffs that reflected the true cost of energy. "Some households are paying £330 more than their neighbours while millions are being overcharged," he said.

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