Getting more consumers to switch

ON FEBRUARY 27th Ofgem, the energy regulator, announced proudly that the number of households changing their gas and electricity suppliers had hit a six-year high. In 2016 7.7m 'switches' took place, a rise of 30% on 2015. The energy market, dominated by the 'big six' of SSE, EDF, Npower, E.ON, Scottish Power and British Gas (now owned by Centrica), has often been criticised by politicians and regulators for overcharging. So the rise in switching was hailed as welcome evidence that consumers are now wising up and shopping around for cheaper prices. Or, in the lexicon of competition policy, getting 'engaged with the market'.Maybe. But there is still plenty of evidence from all sectors to suggest that the consumers who would benefit most from switching to cheaper accounts'the elderly and the poor'remain the least likely to do so. And until they start to switch in larger numbers, there will always be a contrary pressure to cap prices by fiat. This is what happened to the telecoms giant BT on February 28th.Ever since utility markets began to be liberalised in the 1980s, switching has been something of a holy grail for regulators....Continue reading
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