Switching increases as customers respond to savings of up to £325
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- Supply and Retail Market
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- Customers on expensive standard tariffs could save £325 by switching to the cheapest fixed deal
- Switching rates continue to increase, with half of all switchers choosing independent suppliers
- Ofgem is very concerned about lack of competitive deals for prepayment customers
Ofgem’s data shows that around two thirds of customers could save up to £325 by moving from their supplier’s expensive standard tariff to the cheapest fixed- term deal.
Switching continues to rise, with 25%1 more customers switching energy suppliers in the first three months of this year compared to the same period last year, but many customers are yet to reap the rewards from switching away from standard tariffs, which are usually the most expensive on the market.
52% of all customers switching are choosing newer suppliers. There are now almost 40 independent suppliers in the energy market, making up 13% and 14% of the electricity and gas market respectively.
Ofgem’s data also shows that the gap between the average standard direct debit and prepayment tariffs has narrowed to around £70. But while, in theory, there are also savings of around £300 for prepayment meter (PPM) customers, most of the best deals are only possible if they change meters. Ofgem is concerned that the four million households on these meters are losing out because of difficulties switching and a lack of choice in PPM tariffs. Ofgem’s measures have seen the vast majority of suppliers scrap charges to remove PPMs, which makes it easier to switch. The CMA has proposed a transitional price control to help improve this situation further for PPM customers.
Rachel Fletcher, Ofgem senior partner, Consumers and Competition, said: “It’s encouraging to see a continued rise in the number of people switching, and an increasing number of suppliers entering the market. There has never been a better time to switch suppliers and you could save up to £325 according to our latest figures. It is easy to do and Ofgem offers impartial advice on switching through its Be an Energy Shopper website.
"We are very concerned that the data we have published today shows that suppliers are still not offering people with prepayment meters the much cheaper fixed deals available to other customers. Many PPM customers are vulnerable and it concerns us that they are losing out. The CMA’s proposed prepayment tariff and other measures we are taking would improve this situation, and we are considering whether further action is needed."
Citizens Advice and Ofgem have worked together to provide comprehensive advice for prepayment meter customers to help people change payment method where they can.
Notes to editors
Switching statistics
Between January and March 2016
- 855,599 gas customers switched suppliers1
- 1,090,531 electricity customers switched suppliers1
- 52% of those who switched across both fuels moved to an independent supplier.
The average standard variable tariff of the larger energy suppliers as of 21 April 2016 was £1,069. The cheapest tariff available on that date - a one year fixed tariff - was £744.
1Updated 5 May 2016.
Ofgem’s PPM proposals
On PPM installation and removal costs, Ofgem’s engagement has driven good progress but suppliers can do more. As of December 2015, only around 4% of those seeking to change their meter face removal charges and only around 1% face installation charges.
Read Ofgem’s proposals to improve outcomes for prepayment meter customers
About Ofgem
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.
For facts, figures and information about Ofgem’s work, see Energy facts and figures.
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