Is your household overpaying for gas and electricity?

The Competition and Markets Authority (CMA) said its year-long inquiry into the energy sector found tariffs offered by the big six energy suppliers were around 5% higher than they should be between 2009 and 2013.

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It outlined plans to encourage customers to switch, but stopped short of recommending a break-up of the energy giants, saying competition in wholesale markets was working well.

The CMA said it uncovered "widespread consumer disengagement", with around 70% of customers on default standard variable rate tariffs despite better deals available.

More than 34% of 7,000 people polled for an extensive survey have never considered switching, according to the CMA.

It found dual fuel customers could save an average of £160 a year by switching to a cheaper tariff but often failed to do so because of a lack of awareness of which deals are available, "confusing and inaccurate" bills and worries over the difficulty of changing supplier.

The CMA said it plans to scrap recently introduced rules restricting suppliers to offering just four tariffs, saying they have in fact ended up reducing competition.

Instead, in its provisional findings, the CMA said it would look at measures to prompt customers to shop around, such as by using smart meters.

It will also look at introducing a price cap on the most expensive tariffs until competition is working as it should be in the market.

Roger Witcomb, chairman of the energy market investigation, 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."

He added: "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."

Its proposed "safeguard" price cap would provide "direct protection" to so-called sticky customers who fail to switch, some of whom are on low incomes or vulnerable, according to the CMA.

But it said there could be risks associated with introducing price controls in the energy market.

In its report, it said: "We will need to be sufficiently confident that such a remedy would not unnecessarily cut across the beneficial effects that competition has the potential to bring to customers."

The report has not recommended that the so-called big six - British Gas, SSE, EDF Energy, RWE npower, E.ON and Scottish Power - should be dismantled to separate power generation and supply.

There were fears that the firms were colluding to increase profits by using their so-called vertical integration benefits - where they own both power generation and supply businesses.

But the CMA said: " Competition in the wholesale gas and electricity generation markets works well, and the presence of vertically integrated firms does not have a detrimental impact on competition."

It added there was no strong case for returning to the old "pool" system for the wholesale electricity market.

British Gas parent Centrica said it had some "questions and concerns" over some of the CMA's proposals.

Iain Conn, chief executive of Centrica, said: "This looks to be a comprehensive and thorough assessment.

"We welcome the possibility that this review will have a constructive and positive influence on competition in the energy market.

"While we have questions and concerns about some of the proposals we look forward to engaging with the CMA in the next phase of this process."

The CMA probe into the energy market was launched in the wake of a pledge by Labour in 2013 to freeze prices if it won this year's general election, following years of sharp increases in electricity and gas prices.

Suppliers have eagerly been awaiting the outcome of the report, which had the potential to drastically change the shape of Britain's energy market.

While the CMA did not find the need to break-up suppliers, its findings on pricing and competition in the supply market made for painful reading for the big six.

Its research found that while residential customers were being overcharged by around 5% between 2009 and 2013, small businesses were paying around 14% more.

This means residential households are paying around £1.2 billion more a year for their energy, while small firms are forking out around £500 million too much a year.

But it found smaller energy suppliers competing with the big six often offered cheaper prices.

While it said it did not have overall figures yet for the smaller energy firm prices, it found the cheapest tariff offered by these firms was £30 to £40 lower than the least expensive tariff offered by the big six.

It said results from its survey suggested customers of two of the small suppliers were paying around 8% less than those with the cheapest of the large suppliers in the final three months of last year.

The CBI business group said the investigation was a "good opportunity to restore public confidence in the energy market".

Katja Hall, CBI deputy director-general, said: "These early findings demonstrate that every effort must be made to ensure people have the information they need and can more easily shop around for the best deal.

"Ahead of the final report, we all need to carefully assess the remedies, making sure they are proportionate, and reflect both the evidence and consumers' needs."

But the GMB union dismissed the provisional findings as "tinkering".

Gary Smith, GMB national secretary, said: " As we fiddle about trying to fix a market that doesn't actually exist, we are losing generating capacity and can't get new powers stations built."

He added: "The whole process is little more than fiddling whilst providing a convenient smoke screen for the Government's betrayal of the UK energy sector and and manufacturing supply chain."

Electricity prices have risen by around 75% and gas prices by around 125% in the last 10 years, according to the CMA.

It said moves towards cleaner energy were needed, but would have a "significant" impact on driving up bills.

Mr Witcomb said: "We need to ensure that the process of bringing clean electricity into the market is carried out efficiently and transparently and at the lowest possible cost."

He added that there also needed to be greater transparency in the market to address a lack of trust.

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 said its investigation saw it survey 7,000 residential energy customers, while it received more than 100 submissions from interested parties, such as energy suppliers, government and consumer groups, as well as academics.

It will now consult on its proposals and publish a final report before the end of the year.