UK’s competitive energy market boosts switching

Energy customer switches have risen by 30% with millions of customers changing suppliers in the first half of the year.
Published: Wed 07 Sep 2016

We wrote recently about Ofgem’s struggle to get more energy consumers to switch but [Good Customer Service To Blame for Poor Switching Numbers in the UK?] it seems as if the corner has been turned.

Ofgem has published data which shows that in the first half of this year (running from January to June 2016), over 3.8 million switches took place as people changed their energy supplier. This is around a million more than the same period last year. 1,643,386 domestic customers switched gas suppliers and 2,157,798 domestic customers switched electricity suppliers.

In the first half of 2016, around 1.6 million domestic customers switched gas suppliers and 2.2 million domestic customers switched electricity suppliers. Ofgem’s data also shows that consumers have more choice than ever before, with over 40 suppliers to choose from. 

However, whilst there are more deals in the market to choose from, Ofgem’s data reveals that two thirds of domestic customers are still on expensive standard variable tariffs. In response to this, Ofgem is taking forward the CMA’s reforms to better protect those on prepayment meters and to increase competition for all other customers. [Modernising Britain’s energy market.]

Competitive rates drive switching

Meanwhile, customers can save over £300 by ditching expensive standard variable tariffs for the cheapest deal, often a fixed-term tariff. The average standard variable tariff of the larger energy suppliers as of 28 July 2016 was £1,066. The cheapest tariff available on that date - a one year fixed tariff - was £758, a saving of £308. 

Rachel Fletcher, Ofgem senior partner, Consumers and Competition, said:  “Great deals are there for the taking. There are very competitive offers and many more suppliers to choose from, and that’s why more consumers are switching.

 “With savings of around £300 available, and winter coming, now is a great time to shop around for cheaper deals, says Ofgem.

Small Business, Consumers, and Corporate Responsibility Minister Margot James said:  “Thanks to Government action, it’s easier and quicker to switch than ever before. The number of suppliers has more than tripled since 2010 and it is great to see more people have already taken advantage this year by switching and saving money on their bills.”    

A long road ahead

With 66% of consumers still on expensive standard variable tariffs, there is a long way to go.

Energy suppliers are still benefitting from the blind loyalty of consumers. Customers who don't switch are effectively giving their supplier money unnecessarily, says Mark Todd, the co-founder of price comparison site He adds: “Households must replace their passive approach with a more proactive one, holding suppliers to account for their service." This would certainly hold true for the recent gas bungle. [UK gas billing bungle an opportunity].

Juliet Davenport, the chief executive of independent supplier Good Energy, said: "I think this news is perhaps the first sign that the giant, old-fashioned energy companies are coming to an end. For far too long the big six have taken loyal customers for granted. Smaller suppliers are taking more customers than ever before as consumers look for better service, fairer prices and green energy."

Roger Witcomb, Panel Chair at Competition and Markets Authority, says that he is pleased to see that increasing numbers of households are taking control of their energy bills by shopping around and switching suppliers.”

To encourage more switching, Ofgem is planning to trial "more effective prompts" on customers' bills to encourage them to compare different tariffs. However, Ofgem said it would not be capping standard variable energy tariffs.