The latest figures from Ofgem showed that over the course of 2015, more than 6 million households across the UK switched to a different energy plan or provider, saving them varying amounts of money.
Around 40% of the 6 million who switched left plans with the Big Six providers – something that will be welcome news to the CMA who have long been pushing to increase competitiveness in an industry dominated by a handful of companies. Currently, the Big Six supply power to around 90% of the UK’s households, but this number is slowly going down, as these latest figures from Ofgem show.
The CMA will also welcome the fact that these 6 million switchers represent a 15% increase compared to the previous year, and the largest raw figure seen since 2011.
A formal investigation was launched by the CMA two years ago on recommendation from Ofgem, the results of which are to be released soon.
The energy industry has been coming under fire of late, as many customers who find themselves on each providers’ standard tariffs are paying an average of around £300 more each year than they would if they were signed up either with the same provider’s cheapest plan, or with a different provider altogether.
The chasm of difference between each providers’ cheapest and most expensive plan has drawn criticism most recently after each of the Big Six announced that they would be cutting prices for their gas provision on their standard (most expensive) tariffs by around 5%. This comes at a time when, according to some estimates, wholesale prices for gas have fallen by as much as 57% over the past year.
After the announcement of these price cuts, many commentators criticised their small size, and urge customers to make use of the various energy switching services available in order to make sure that they weren’t overpaying for their utilities.
And these latest figures show signs of a trend that, if it continues, will ultimately see a greater reduction in the number of customers paying more than they should do.
According to Tom Lyon at uSwitch.com, the latest numbers mean that “customers potentially saved almost £1bn last year, simply by switching to a cheaper deal.”
He added: “any increase in switching will help boost competition in the market, which ultimately means that energy companies will have to work a lot harder to keep their customers.”
Rachel Fletcher of Ofgem shared similar sentiments. She said: “It’s encouraging to see switching levels at their highest level for four years. With more than 30 suppliers active in the energy market and hundreds of pounds of savings to be made, it’s a great opportunity to shop around.”
She also mentioned Ofgem’s Be an Energy Shopper website, a service they have launched that aims to teach customers about why and how to go about switching their energy tariff to a cheaper deal, including links to Ofgem accredited switching sites, such as our own.
“Whether customer service, price or both is what’s most important to you, remember you always have a choice, if your energy company isn’t up to scratch, vote with your feet and walk away” she said.