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Unprecedented scrutiny for Big Six profits

The staggering profits made by the big energy firms are under scrutiny as never before, but it could be two years before consumers see any benefit.

However, there are easy ways to reduce gas and electricity costs now - and some people could save hundreds of pounds.

It was revealed this week that British Gas, the UK's largest provider, has agreed to compensate thousands of customers after using misleading information to persuade them to sign up for its services.

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The latest in a long line of energy mis-selling scandals broke just days after regulator Ofgem announced it was referring the entire industry to the Competition and Markets Authority for investigation.

If the CMA finds that lack of competition is keeping prices artificially high, it could order the break-up of the biggest providers, potentially transforming power provision.

Citizens' Advice chief executive Gillian Guy described the move as "long overdue", adding: "Consumers are struggling to meet costs that have risen seven times faster than earnings, and our evidence shows people are increasingly dissatisfied with the service they are getting."

However, the CMA isn't expected to publish its findings until December 2015, so nothing will change before 2016.

In the meantime, the Ombudsman Service is receiving record numbers of complaints about power providers, particularly the Big Six of British Gas, EDF Energy, Npower, ScottishPower, E.ON and SSE, which together supply 94 per cent of households.

Unfortunately, this growing disillusionment is blinding many people to the fact that there are ways to cut their costs.

In a Gocompare.com survey of Big Six customers, 17 per cent said they wouldn't switch to a smaller supplier, with 22 per cent stating this was because "all energy companies are the same".

Ofgem says as many as six out of ten gas consumers remain with the original supplier for their area, and according to MoneySupermarket.com, households that have never moved could slash their bills by an average of £350 a year - the highest saving since 2010 - simply by switching to the cheapest deal for their usage and location.

Clare Francis, the comparison site's editor-in-chief, said: "Even if you have switched energy provider in the past, if you've been on the same deal for more than 18 months, chances are you'll be paying more than you need, so look to see if you can make savings by switching to a cheaper tariff.

"And remember, if you're currently on a fixed-price plan, you need to switch when it comes to an end, otherwise you'll see your bills leap."

Even customers who pay by monthly direct debit - traditionally the cheapest option because of the lower admin costs - could typically save £269 by moving to a better deal.

Many people are nervous about switching, but nine out of ten members of consumers' association Which? who have made the move report that it went smoothly.

And it will soon be even easier, with suppliers committed to the introduction of a three-day switching process (after the statutory 14-day cooling-off period) by the end of the year.

The easiest way to compare suppliers and make a change is via an online switching service such as which.co.uk/switch or one of the leading price comparison sites.

You will need to know your current provider, your tariff and the number of kilowatt hours (kWh) you use annually. This information is available on bills, annual statements or from your supplier.

Even if you are already on a good-value tariff, you can still recoup cash. Half of all households are in credit on their power bills. According to uSwitch.com, this means providers are holding £1.2 billion of customers' cash, equivalent to £86 per account. It says a fifth are in credit by more than £100, while 260,000 are owed more than £500.

Ann Robinson, uSwitch.com's director of consumer policy, explained: "Reclaiming this credit has never been easier, as new rules from Ofgem mean suppliers must refund this money to customers whenever they request it."

To ensure you don't add unnecessarily to your provider's coffers, submit regular, accurate meter readings - and if you have built up a large credit, let them know you want it back.

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