7.7 million energy switches in 2016

Switching surge does not help disengaged customers on standard variable tariffs, warns Citizens Advice

New figures from energy regulator Ofgem show that there were 7.7 million instances of customers switching their energy supplier in 2016.

This is the highest annual number of switches recorded since 2010 and represents a 28 per cent increase compared to 2015.

Commenting on Ofgem’s updated switching figures, chief executive Dermot Nolan said: “This welcome increase in switching should serve as a warning to supply companies. If they fail to keep prices under control or do not provide a good service, they risk being punished as customers vote with their feet.”

Nolan urged more customers to take advantage of the “big savings” available by moving from the most expensive deals in the market to more competitive tariffs. He told consumers they should “shop around” “especially if their supplier announces a price rise”.

However, despite the uptick in switching rates, Citizens Advice responded with a plea for further intervention in the energy market, which Ofgem admitted “is not as competitive as we would like”.

The consumer charity warned that there are still “millions of people stuck on a standard variable tariff and who are often paying hundreds of pounds more for the same gas and electricity” than customer on fixed price deals.

For low income households, disengagement from the energy market, may therefore be causing financial stress. Citizens Advice urged government to intervene in the energy market to protect these customers.

“Capping energy bills for low income households on credit meters would help more people to save money,” it said.

Introducing such a price cap would extend a protection already planned for customers on prepay meters, who tend to be classed as vulnerable.

The prepay meter cap is due to come into effect in April this year and will effect around four million UK households. Earlier this month, Ofgem revealed the initial cap levels for prepay gas and electricity meters, these will be reviewed twice annually.

Other insights from Ofgem’s latest switching figures show that almost half of switches (47 per cent) were to small or medium sized suppliers and that savings of around £230 a year were available to those who chose to move.

The regular noted that, as of 28 January 2017, the cheapest dual fuel deal on the market was £834 per year, and the average standard variable tariff on offer from one of the six larger suppliers was £1,066 per year.

Ofgem also observed that the 7.7m switches in 2016 do not reflect the moves of 7.7m individual customers because many customers are on dual fuel tariffs and some customers switch more than once in a year.

In January, Energy UK’s annual switching figures indicated that around five million individual customers chnaged suppliers in 2016. Meanwhile, a survey carried out by Utility Week indicated that 37 per cent of customers who switched supplier in 2016, did so for the first time.

Neither Ofgem nor Energy UK’s swtiching figures take account of customers who change tariffs with the same energy supplier. It is thought that internal tariff switching rates are about twice as high as supplier switching rates.