- Publication date
- 12th February 2018
- Information types
- Policy areas
- Ofgem will protect those who don’t switch while making it easier for those who do to get a better deal
- Ofgem will launch trial of “simplified” collective switch for those on worst deals
- Ofgem is overhauling industry systems to allow people to switch by next working day and reduce number of switches which go wrong
Ofgem is pushing ahead with reforms to make it easier for those for who switch to get a better deal while protecting those who don’t from being charged too much.
Ofgem is launching a trial in the coming weeks of a simplified collective switch aimed at consumers on the worst deals who have not switched for more than three years.(1)
Organisers of collective switches help large groups of consumers to save money by negotiating a good deal with a supplier on their behalf.
In Ofgem’s trial, around 50,000 of a large supplier’s disengaged customers will be offered a better deal which the consumer partner appointed to organise the collective switch has negotiated.
Unlike other collective switches, these customers will not need to enter their existing tariff details for their personal savings from switching to be calculated, making it easier to take part.
Depending on the outcome of the trial, Ofgem could roll out simplified collective switches for more customers.
Ofgem is also launching a new trial involving over 250,000 customers on expensive deals who will receive up to two letters or emails from their supplier telling them about three available cheaper deals, including from rivals.
This follows the success of a similar smaller trial run by Ofgem last year which resulted in a trebling of switching rates.(2)
Ofgem’s reforms to make it easier for people to switch, as well as protect those who don’t, are part of our plans to deliver a more competitive, fairer and smarter energy market for all consumers.
Earlier this month, Ofgem extended its prepayment safeguard tariff to almost 1 million vulnerable households to protect them from overpaying for their energy.
Ofgem is also working with the Government to protect all customers on poor value default deals, such as standard variable tariffs, with a wider price cap as soon as possible.
Customers who are protected will be able to save even more money by switching to a cheaper deal.
They might also want to switch to benefit from a range of new “smart” or digital products and services coming onto the market.
Ofgem is also today giving the go ahead to a programme which will allow people to switch by the end of the next working day and reduce the number of switches which go wrong.(3)
According to Ofgem’s new figures, overall domestic switching rates are at a record high, which shows that more people are engaging in the market. Last year, 18% and 19% of electricity and gas customers respectively switched supplier, the highest switching rates since 2009 for electricity and 2008 for gas.(4)
However, around 57% of households remain on poor value standard variable tariffs which are not covered by the safeguard tariff.
Rob Salter-Church, interim senior partner for consumers and competition, said: “Ofgem is committed to getting all consumers a better energy deal.
“We will protect consumers who don’t switch from being charged too much while we put in place the building blocks for a more competitive market.
“In the long term, we believe that competition, combined with protection for those who need it, is the best way to deliver the best energy deal for all consumers.”
Notes to editors
- Overview of Ofgem’s collective switch trial
- In November we published the results from the Cheaper Market Offer Letter prompts trial and our plans to run a larger trial on this concept. Today we have published the summary of qualitative research with consumers who were in last year’s trial.
- Ofgem has today published a decision document setting out our decision to implement reliable next-day switching.
- The number of customers switching supplier is based on the number of meter points a supplier gains from another following a customer choice to change their supplier. These figures equate to:
- 5.1 million electricity meter point switches (18% of meter points)
- 4.1 million gas meter points switches (19% of meter points).
Please note that these figures cannot be added together to calculate the overall number of UK energy customers switching, as many of these will be dual fuel customer switches, and also because some customers may have switched more than once.
5. Early findings from Northampton trial of Ofgem’s simplified online switching service.
6. Rob Salter-Church’s new blog on how Ofgem is helping consumers, particularly those who rarely engage in the market, to get a better deal.
Further information for media
For further information, contact:
Kieran Lowe: 0207 901 7108
Media out of hours mobile: 07766 511470
Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.