WORCESTER-based energy giant npower has pledged to ensure customers are getting the best deals after a report showed the UK’s six biggest power companies have been overcharging by £1.2 billion a year.

The Competition and Markets Authority (CMA) report was released this morning following a year-long inquiry into the energy sector and revealed tariffs offered by the ‘Big Six’ – npower, British Gas, SSE, EDF Energy, E.ON and Scottish Power – were about five per cent higher than they should have been between 2009 and 2013.

Although the government agency stopped short of recommending a break-up of the companies to encourage competition, it has said customers should be encouraged to switch suppliers to get a better deal.

A spokesman from npower – which has its headquarters in Warndon Villages – denied the company treats new and existing customers differently.

“Like many companies, we attract customers by offering introductory prices, in our case by giving customers certainty and using fixed term contracts,” he said.

“And our customers are really engaged – each year a significant proportion of them either change to us from another supplier or switch to a new tariff we offer them.”

He added the amount of switching to get a better deal was higher in the energy sector than it is among mobile phones, mortgages and insurance customers.

“We will now take time to digest the CMA’s findings and provisional remedies,” he said.

“We will continue to work with the CMA to ensure that we understand the full impact on customers and the market so that unintended consequences are avoided, and the very best outcome for customers is achieved.”

The report said about 70 per cent of energy customers were on default standard variable rate tariffs, despite better rates being available and more than 34 per cent of the 7,000 polled had never considered switching.

The CMA has pledged to develop measures to help customers shop around and is considering introducing a price cap on the most expensive tariffs.

The investigation’s chairman Roger Witcomb said: "There are millions of customers paying too much for their energy bills – but they don't have to.

"Whilst competition is delivering benefits to increasing numbers of customers, mainly through the growth of smaller suppliers with cheaper fixed-price deals, the majority of us are still on more expensive default tariffs.

“The confusing way energy is measured and billed can make comparing deals understandably daunting.

"The result is that some energy suppliers know they don't have to work hard to keep these customers."

Electricity prices have increased by about 75 per cent and gas prices by 125 per cent in the past decade.

Energy watchdog Ofgem welcomed the CMA's findings, adding: "We will work with them, to develop and implement their final remedies, where they fall within our jurisdiction, to deliver a more competitive market for consumers."

The CMA will publish a final report later this year.