To Switch or Not to Switch

When the Dalai Lama said ‘Conversion is not my intention […] You may develop some kind of confusion or difficulties’ he was talking about people changing their religion not their energy supplier.  The government is keen for us all to overcome confusion and become expert energy shoppers and there are certainly financial benefits available to many consumers who are prepared to switch.

While switching should be straightforward (providing you have the relevant information) public mistrust and confusion must surely be one of the reasons why the number of consumers switching to cheaper tariffs (according to the Department of Environment and Climate Change) is falling

In 2010, the energy regulator Ofgem began a Retail Market Review.  Among the measures it proposed was to:

–                make tariffs easier to understand

–                limit the number of tariffs on offer to four each for gas and electricity

–                compel energy providers to advise their consumers of the chjeapest tariff available to them

It was thought that these measures would rebuild confidence in the  energy market and to help reduce public mistrust in the energy providers

In spite of these measures, public confidence remained low.  Early in 2014 one poll showed 73% of the public wanting to see tougher regulation of the energy sector while only 2% did not and a Citizens Advice poll suggested that 80% of consumers wanted to see the market subject to an independent inquiry.  Their wish was granted in June 2014 when Ofgem made a reference to the Competition and Markets Authority (CMA) for an investigation into the energy market in Great Britain.

The CMA has now published a summary of its wide ranging provisional decisions.  It found that the saving the average customer could make by switching to a cheaper deal has risen to over £300.  It recommends the abolition of the ‘four tariff limit’ (two years after it was introduced) and the creation of an Ofgem-controlled database which will identify consumers who have been on the same tariff for more than 3 years.  This will allow rival suppliers to target their marketing to those customers.

This means that after June of thkis year ((when the CMA investigation ios due to be completed and iots proposals implemented) you can expect to be bombarded by offers of cheaper energy if you have been on the same tariff for three yaers.  Will this ease confusion and establish customer confidence?

The CMA also proposes the introduction of a safeguard tariff in 2017 for the four million households with a prepayment meter (PPM).  Suppliers have been reluctant to serve that segment of the market, resulting in those households getting particularly bad deals and fewer switching options.  It is estimated this would save the average PPM customer around £80-90 a year.  The safeguard tariff would kept in place until 2020 by when every household in the UK is expected to have a smart meter fitted.  These meters can be used for prepay or as a standard credit meter.

Regardless of how well  you understand the energy market it is worth looking at switching.  You can find a lot of information available on-line to help you decide on the best energy supplier for you by visiting to access our comprehensive range of information and advice.  You can also find information and advice on Benefits, Work, Consumer Issues, Relationships, Housing, Law and Rights, Education, Discrimination, Tax and Healthcare.

If you don’t have access to a computer (or don’t want to) you can call your CAB on 0344 848 7969 to speak to an assessor or make an appointment to talk to an adviser face-to face. (calls to this service cost the same as calling 01 and 02 numbers included as part of a mobile allowance or a landline call package.)

Last but not least, you may want to follow us on Twitter @Waverley CAB

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