Ofgem moves to deliver next day switching

Reform package could deliver over £1bn in consumer benefits, claims regulator

Ofgem has launched a consultation on a proposed package of regulatory reforms that would deliver next day switching for domestic energy customers in GB.

The move is part of a wider plan put forward by the regulator to create a fairer energy market with higher levels of consumer engagement. Ofgem estimates that its faster switching proposal could deliver consumer benefits of up to £1,056m, as well as delivering non-monetised benefits via increased competition and innovation.

In its new consultation document, Ofgem said next day switching is required to replace the “unreliable and slow” industry processes currently in place. The regulator said these are delivering an “unacceptable” service for consumer in which it takes two to three weeks to switch supplier.

Existing processes “were designed in the last century, and in some instances rely on outdated IT systems. The underlying data is poorly managed and this results in errors and problems during the switching process,” said Ofgem.

The prosed package of switching reforms – called RP2a – would replace the separate switching system which currently exist for electricity and gas accounts with a central switching service. It will also “harmonise and speed up the processes in gas and electricity so that consumers can submit a request to a supplier to switch by 5pm and be with that supplier by midnight the following working day.”

The regulator expects next day switching to become “the industry standard” in the future, but said that it will only be mandatory for suppliers to complete a switch within five working days.

Responses to Ofgem’s consultation on faster switching are required by 3 November 2017. It will then make a final decision on its approach in January 2018 and proceed with relevant  industry code modifications during 2018.

No definitive timeline has been given for implementation of the new switching regime, but Ofgem said that once a go-live date is settled, suppliers will be given a “short” transition window in which to become compliant with new switching conditions. The regulator said this would be about three months.

Ofgem’s proposals to speed up switching for GB energy consumers sit alongside a range of other industry developments which will change the way consumers interact with the market. These include the smart meter rollout and the potential introduction of half-hourly settlement for domestic energy customers.