Understanding Consumers’ Energy Tariff Choices: a research report
Research
- Publication date
- Industry sector
- Supply and Retail Market
Findings on consumer understanding of energy deals including customer service ratings, tariff types and exit fees.
Main points
- Levels of annual savings were the most important factor in driving deal choice – but customer service and exit fees were also important considerations.
- Deals where annual savings fell below £100 started to become disproportionately less appealing, as did suppliers that fell to 3.5 stars or below for customer service rating.
- Consumers who highly rate their current suppliers, especially at 5 stars, show greater resistance to switching, particularly to deals with poor customer service. In contrast, those who rate their current supplier 3.5 stars or less are more inclined to switch across all rating levels presented in the experiment.
- Exit fees have a notable impact on the probability of consumers switching. The steepest decline in probability of choosing occurs between no fee and a £50 fee.
- Reported household spending on energy has a very limited impact on how consumers evaluate prospective deals. This suggests that respondents were mainly considering absolute savings rather than in proportion to their overall energy spend, especially between £75 and £200 saving per year where no significant relationship exists.
- In the case of choice experiment, we found that consumers who believe they have exit fees or have a greater understanding of fees place less emphasis on them in their decision-making and are more likely to switch when exit fees are present.
Methodology
Ofgem commissioned BMG to conduct this research, which comprised an online choice experiment and survey.
The research was conducted with 3,235 energy bill paying adults from across Great Britain (England, Scotland and Wales). The fieldwork was conducted between 29 March and 9 April 2024.