Co-operative Energy has today called for energy suppliers to waive the exit penalties on fixed price tariffs so that customers are free to switch and benefit from cheaper prices. And to back up its call, the customer-owned supplier has pledged to pay the penalties of customers who switch to it.

The gas and electricity supplier has demanded the end of what it describes as the 'one-sided' industry practice which locks customers in to a fixed price contract and then penalises them up to one hundred pounds if they decide to switch supplier.

And to add weight to its calls, Co-operative Energy has promised to pay the exit penalty for any energy customer who wants to switch to them. The offer will be open to 10,000 customers and will be awarded on a first come, first served basis.

The move follows Co-operative Energy's decision to cut both its gas and electricity prices following a fall in wholesale energy prices. It was the first supplier to announce a price cut this winter and is one of the few to have cut both its gas and electricity prices.

Co-operative Energy's Nigel Mason said: "Thousands of customers were talked into signing fixed price contracts when energy prices were rising in the autumn. Now prices are falling and customers are checking the small print, they are facing punishing exit penalties making it impossible for them to switch to a lower tariff.

"It's a trap. These are tough times and people don't have money to waste so we're putting our hands in our pockets and offering to pay the exit penalties for any customer that switches out of a fixed price contract to Co-operative Energy."

He added: "We think people should be free to switch supplier at any time. That keeps the supplier honest and ensures their prices remain competitive. Tying people in is a barrier to open competition. We need to be giving people a fair and honest deal, passing on price cuts as fast as we can and helping people manage their energy bills."

·         The offer is open to customers if they switch to Co-operative Energy

·         They must be leaving a fixed price contract to join Co-operative Energy

·         They must supply proof of exit penalty after signing up, by email or post

·         Co-operative Energy will credit the customer's first bill, which will be about 3 months after joining

·         Offer is limited to the first 10,000 customers who switch from a fixed term contract to Co-operative Energy