Switching surge looks increasingly unlikely

The forecasted surge in customers switching energy supplier has yet to come to fruition, with most analysts no longer expecting a significant uptick this year.

In June, just over 170,000 customers switched supplier, a rise of 20,000 since May and a 77% year-on-year increase.

However, it is still someway shy of the near 200,000 switches recorded in April which was the highest number recorded since November 2021.

It is also a long way off the forecasted possible surge predicted by analysts earlier this year.

Prior to the energy crisis, the number of customers switching supplier each month often exceeded 400,000. Last month, Energy UK said that “there is no sign they will return to historic levels any time soon”.

In its latest switching report, the trade association adds: “With energy prices dropping, but remaining well above pre-crisis levels, there is a slow upwards trend in switching numbers but they are still significantly supressed compared to 2021.”

It is worth noting that this latest dataset is from the last month before the price cap fell below the Energy Price Guarantee.

Since then some suppliers have started offering fixed price deals below the price cap, with four such tariffs currently on the market.

However, Robert Buckley, head of relationship development at Cornwall Insight, recently told Utility Week that consumers should be wary about taking fixed priced deals due to the volatile nature of the market.

He added: “While our cap numbers out for the next couple of quarters are below £2,000 at the moment, we have got no surety that that will continue.”

Despite the recent return of competition, Moneysupermarket has this week said that it does not expect customers to start switching energy suppliers in any “significant” numbers this year.

“As we said before, we do not expect significant revenues from energy switching this year,” a company spokesperson said in a statement released alongside its annual results.

James Mabey, analyst at Cornwall Insight, added: “The return of energy fixing has captured the attention of the country over the past few months, as many households seek to secure lower and more stable energy deals. Based on our current forecasts, customers are unlikely to lose out by taking a one-year fixed deal, however, it is doubtful these deals will result in significant savings, if any at all.

“While there are currently limited financial gains to be made from taking up domestic fixed tariffs, they offer a sense of security to consumers amidst the recent volatility observed in the energy market. The desire for stable prices among households may increase the number of people who sign-up for the fixed deals.”

Of the 170,000 switches recorded last month, more than half (57%) were between major suppliers, with switches between large suppliers and smaller firms more or less cancelling each other out.

Movement between supplier groups, June 2023:

• 18% were from larger to small and mid-tier suppliers
• 17% were from small and mid-tier to larger suppliers
• 57% were between larger suppliers
• 8% were between small and mid-tier suppliers