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Ofgem must set ambitious switching target to boost competition

Ofgem should set a target of 25% for the proportion of consumers changing energy provider annually by 2020 to stimulate competition between suppliers, according to Uswitch.com, the price comparison and switching service.

Speaking today (Thursday) at the Westminster Energy, Environment and Transport Forum, Uswitch.com Director of Consumer Policy, Ann Robinson, will call for ambitious switching targets to focus and evaluate efforts to improve poor levels of consumer engagement with the market.

The numbers moving provider have been at some of their lowest in seven years – latest figures reveal just 11% switch supplier annually, down from a peak of 20% in 2008. This is despite the fact that a number of new suppliers have entered the market offering competitive tariffs, and numerous collective switch schemes have helped to drive high switching volumes this year.

Uswitch is calling on Ofgem to set a switching target of 20% by 2018 and 25% by 2020 between suppliers, as well as devising and setting additional measures to monitor those changing to better tariffs with their existing supplier and comparing deals.

With the outcome of the Competition and Markets Authority’s energy market investigation delayed until at least April 2016, Uswitch believes Ofgem must urgently get on with measures to increase consumer engagement in the meantime. For example, it should do more to encourage collective switch schemes, which have helped increase the number of first time switches. A recent Ofgem ruling could inadvertently restrict suppliers’ ability to offer cheap tariffs through such schemes in future.

Ofgem should also undertake a root and branch review of its Retail Market Review reforms, including overhauling regulations relating to the content and format of energy bills and annual energy statements.

Ann Robinson, Director of Consumer Policy at Uswitch.com, says: “Switching rates have been at record lows and are in part responsible for the fact that the majority of consumers are overpaying millions for their energy.

“Consumer engagement is at the heart of making this market work. That’s why we believe an ambitious target of 25% of customers changing supplier by 2020 should be set to evaluate efforts to get competition working. Getting this level of engagement with the market will help lower bills and improve service for all customers – not just for those who switch.

“The CMA’s final proposals, if implemented, are unlikely to be in effect by next winter or even the winter after that. That’s why Ofgem must urgently review its Retail Market Reforms to help more consumers engage with the market in the here and now.”

Find out how you could save over £1,000 a year with Uswitch here.

FOR MORE INFORMATION

Jason Wakeford

Phone: 0203 872 5612

Email: jason.wakeford@uswitch.com

Twitter: @UswitchPR

Notes to editors

  1. Trends in domestic energy switching rates: https://assets.digital.cabinet-office.gov.uk/media/544e0c9640f0b6130e000003/StephenLittlechild_submission-_Trends_in_energy_switching_rates.pdf. Current switching rates are from Energy UK and refer to electricity.

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