Utility Week

16 | APRIL 2022 | UTILITY WEEK Energy Analysis Switch away from price Industry experts say the collapse in the number of consumers switching supplier is an opportunity to shift the focus away from price and towards the relationship between retailer and customer. F or a number of years, the success of the energy market has been judged on high rates of switching among custom- ers looking for cheaper tari s. Switching reached its zenith in 2019 when 6.4 million customers moved supplier. Since then, the pandemic and the energy crisis have brought the numbers crashing down. "Energy switching has been a zero sum game – with the switchers getting loss- making bargains at the expense of other cus- tomers paying high prices. Instead, we need to harness the activity of engaged custom- ers to create better value for everyone," says Octopus Energy chief executive Greg Jackson. He was speaking as latest ‰ gures showed a sharp decline in the number of consumers choosing to switch electricity supplier. Although the trend began with the spread of the coronavirus in 2020, switching really began to stall in autumn last year with the surge in wholesale energy prices. When combined with the price cap, this led to a sharp increase in the number of cus- tomers rolling on to standard variable tari s, which became cheaper than any of the ‰ xed- price deals available and the same across theŒboard. Many suppliers had already been o ering loss-making tari s to lure in new customers. But lacking su' cient hedging, the price cap meant they were forced to sell energy at an even greater loss, and without deep enough pockets to ride out the storm, dozens went out of business. As suppliers withdrew their now more expensive ‰ xed-price o erings from the mar- ket, even price comparison websites halted their energy services towards the end of 2021. Whereas previously consumers were encouraged to switch supplier to get a cheaper deal, one industry observer believes there will be a shi" towards internal switches – where a customer opts for a better deal with the same supplier. Internal switching Matt Cole chairs the Energy Switch Guaran- tee, a voluntary industry initiative set up to ensure switching is "hassle-free and quick" for customers. "I think we'll get back to a world with higher levels of switching – albeit not neces- sarily all supplier to supplier, but also where customers continue to upgrade and update "We know our market needs to evolve from a one-size-fi ts-all approach and recognise customers as individuals, and that one person's interaction with energy is going to be completely diff erent to another's." Michael Lewis, chief executive, Eon UK "We know our market needs to evolve from a one-size-fi ts-all approach and recognise customers as individuals, and that one person's interaction with energy is going to be completely diff erent to

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