Energy shoppers given switching promise by industry
11 June 2016
- From the section Business
Energy companies have drawn up a list of pledges aimed at helping customers to shop around for the best deal.
Energy UK, which represents the major suppliers, has launched its Energy Switch Guarantee – to make it easier for customers to know how to switch.
But a number of suppliers, including SSE one of the so-called “big six” firms, have yet to sign up.
It comes as a major inquiry found a third of residents had never considered switching for a better deal.
The list of pledges, designed to be easy to understand and give confidence to customers, include making it clear that any switch will be free and that the new provider is responsible for dealing with any issues that arise.
A final report into the energy market is due to be published on 24 June.
Initial findings from the Competition and Markets Authority’s (CMA’s) investigation suggested that 70% of customers with the big energy firms are on their supplier’s default tariff and could save more than £300 a year by switching.
Although switching numbers have shown an upward trend there has been widespread agreement among the government and industry that more could be done to encourage people to shop around.
Lawrence Slade, chief executive of Energy UK, said: “It is fantastic news to see that nearly two million people have switched supplier since the beginning of the year. The new Energy Switch Guarantee will give customers the extra boost of confidence to engage in the market.
“The aim is to reach out to those customers who have never switched before, so hopefully we will get millions more households engaging in the market.”
One of the promises appears to be a stumbling block for a string of suppliers.
It states that “the switch will take no more than 21 days from the date your new provider receives your completed application”.
Some smaller suppliers and SSE have said they are unable to commit to the guarantee owing to this 21-day deadline.
The company said: “SSE has worked with the rest of the industry to develop these new commitments and we will be signing up to the guarantee. However, there are changes that need to be made to our present systems and processes to enable us to meet the standards set in the Switch Guarantee.
“System upgrades are under way to resolve this and we made the decision not to sign up to the guarantee until we are able to honour the commitments every time a customer chooses to switch.”
SSE has just topped a customer satisfaction league table published by Citizens Advice.
Green energy supplier Ecotricity raised concerns about the complexity of the switching system for suppliers. It said: “The Energy Switch Guarantee scheme is something we’re working towards but the inherent complexity of the [switching] system and processes we have to follow make it difficult and we think the government should focus on that – simplify the system.”
The pledge goes further than the current regulations that are in place. If a supplier consistently takes more than five weeks to complete a switch, it may face enforcement action from energy regulator Ofgem.
Smart meters – which give suppliers a daily reading of our energy use – are promoted as an opportunity to make it quicker to switch to deals that suits customers’ lifestyles.
Plans are for them to be installed in all British homes by the end of 2020. So far, they’ve been installed in more than three million homes.
One belongs to Angie Boakes, a business development manager from Tonbridge in Kent.
Although she thought she would never have to read a meter again, the 48-year-old said she had to do so when switching to a cheaper deal.
“I ended up having to lay on the floor with a torch, pressing a number of buttons on the smart meter to try to get the right [meter reading] number,” she says.
Some of the functions of her smart meter also stop when her supplier is switched.
The rules say customers must be told when their smart meter is installed that not all first generation meters are compatible with different suppliers.
Ms Boakes is switching from Ovo – which has 20% of its customers on smart meters – to EDF.
Melissa Gander, energy director at Ovo Energy, says that the processes are not yet in place for customers to be freed from taking any meter readings when they switch suppliers – but there were many other benefits of having a smart meters.
Ten suppliers are currently signed up to the guarantee – British Gas, E.On, EDF Energy, First Utility, Flow Energy, Npower, Octopus Energy, Sainsbury’s Energy, So Energy, and Scottish Power.
The Department for Energy said there were now more than 40 providers operating in the UK.
Energy UK claims that 70% of the market is signed up, a figure that is expected to rise significantly in the coming months.
The guarantee is very similar in style to the Current Account Switch Guarantee, aimed at encouraging people to switch banks.
The success of this banking scheme is arguably limited. Last year’s switching rate of 2% was even lower than the previous 12 months, although that service claims switching numbers are picking up.
You can hear the full story on Money Box on BBC Radio 4 at 12:00 BST on Saturday, 11 June, and repeated at 21:00 on Sunday, 12 June.
This post was written by FSB News