A price increase from British Gas, which affected 3.1 million customers, has resulted in the amount of consumers changing to a new energy supplier to sky rocket.
On August 1st, British Gas announced that they would be increasing the cost of their electricity supply by 12.5%, meaning that now the company’s average annual dual-fuel bill to rise by 7.3%, or £76.
Although the energy giant held back from increasing it prices earlier on in the year (unlike several other large energy companies) the price announcement has led to the market’s biggest ever year on year growth in switches last month.
According to Energy UK, which represents all energy suppliers, almost half a million consumers changed their energy supplier in August 2017 – 30% more than in August 2016. This pushed the total number of customers switching so far in 2017 to 3.5 million.
Even though the company does not disclose which suppliers experience a rise or fall in customers each month, Energy UK’s data does demonstrate that the majority of switches were made away from larger energy suppliers.
Energy UK’s website reports that only around 35% of switches made in the last month were from one large supplier to another, whereas almost 40% of switches were from large suppliers to smaller competitors. Energy UK suggests that these figures are proof that there is progress in terms of helping the millions of consumers sitting on poor-value standard variable energy plans.
Since there are over 50 companies looking to gain people’s custom, and with almost 25% of last month’s switches consisting of consumers opting to move to a smaller company, the energy supply giants are facing the challenging competition in the market.
Ofgem, the energy regulator, informed the six larger energy suppliers and all of their smaller competitors that it is planning on introducing a price cap in a meeting last month. The energy price cap would affect up to 2 million vulnerable customers who are suitable for the warm home discount scheme. Customers benefit from the scheme by getting up to £140 off their energy bill. This also applies to prepayment users. The cap is due to come into effect in January to offer some relief during the winter months.
Ofgem has yet to respond to a letter sent by the government which required asked for the regulator’s plan to shield consumers on the lowest value tariffs.