Eight times as many people get a better deal in Ofgem’s collective switch trial
Press release
- Publication date
- Industry sector
- Supply and Retail Market
- More than one in five disengaged customers on poor value deals switched through simplified collective switch offer
- Switching rate was eight times higher than similar customers in the trial who received no information
- Ofgem plans a larger collective switching trial for 200,000 energy customers later this autumn
More than one in five disengaged customers who took part in Ofgem’s trial of a simplified collective switch changed their energy deal, eight times the switching rate for customers who received no information through the trial about better offers.
Ofgem is working with suppliers to make it easier for people on poor value default deals who rarely switch to save money on their energy bills. The regulator is running a programme of trials to find the best ways to help these customers make better choices about their energy bills.
The simplified collective switch trial, which ran between February and April this year, is the most successful trial Ofgem has completed to date. It involved around 50,000 customers from one of the six largest energy suppliers who had been on a standard variable tariff for three years or more.
These customers received letters showing how much they could save by moving to an E.ON collective switch tariff negotiated by the price comparison service, Energyhelpline.
When selecting the collective switch tariff, Ofgem required Energyhelpline to choose a supplier that had a customer service rating of a least three out of five stars (according to Energyhelpline’s ranking system).
Unlike other collective switches, customers did not have to provide complicated information about their existing tariff to see a personalised savings calculation, making it easier to start a switch.
When customers contacted Energyhelpline online or by phone they also received information about potential savings from other deals across the market.
Overall, 22.4% of customers in the trial switched. Customers who switched to a new tariff averaged savings of around £300*. Of these, approximately half chose the collective switch tariff. Just under a quarter moved to other cheaper deals through Energyhelpline, and the remainder chose another tariff without using the price comparison service. Almost a quarter of customers who switched either to the collective switch tariff or to other deals listed by Energyhelpline were over 75 years old.
The 22.4% overall switching rate in the trial compares to the 2.6% switching rate in the ‘trial control group’ of similarly disengaged customers who did not receive any information about the collective switch offer.
Rob Salter-Church, Ofgem’s interim executive director for consumers and markets, said: “Many customers on poor value default deals rarely switch because they think it’s too much hassle, or might not realise how much they can save.
“The results of this trial demonstrate that offering a simplified collective switch and providing personalised savings can be a big help in giving these customers the confidence and reassurance they need to start a switch.
“It’s particularly welcome to see many of those who typically are less likely to switch, such as older people, taking advantage of the savings available during the trial.
“Ofgem will work with suppliers on a larger collective switch trial as the evidence so far suggests that it could help many disengaged customers get a better deal. We will also protect those who don’t switch from being overcharged by putting in place a price cap.”
Collective switching tariffs are negotiated, usually through an auction, and offer a unique, discounted energy tariff. Ofgem is planning a larger collective switching trial involving over 200,000 customers later this autumn.
Customers who are thinking about switching tariff should also look at the customer service provided by a supplier as well as the price. Consumers can find out more by visiting the Citizens Advice customer service league table.
Notes to editors
*Excludes savings for customers who switched to deals without using the Energyhelpline.
1. How did the trial work?
Approximately 50,000 customers who had been on a default tariff for three years or more received letters which showed them personalised savings (based on their consumption and their existing tariff) if they switched from their current deal to the exclusive collective switch tariff.
Customers could phone Energyhelpline or go to their website to see the collective switch tariff and other available tariffs on the open market. Some customers also made their own comparisons and switched either to another supplier, or to a better deal with their current supplier.
2. Ofgem’s open letter on the results of the trial.
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