The energy regulator Ofgem is planning to trial a collective scheme to help customers reduce their bills with potential savings of up to 300 pounds.
The new initiative will be aimed at 30,000 customers who haven’t changed provider in over three years and are on standard variable tariffs (SVTs).
Approximately 57% of people are on SVTs, which are generally the most expensive tariffs available. If you haven’t changed provider in a long time, you would have been placed on one after your initial fixed rate contract was finished. The scheme has been brought about as previous methods to try and get people to switch have been unsuccessful.
The trial will be aimed at customers of one of the ‘big six’ energy firms, although it has not yet been specified which one. It will give the select group of customers the option to change to a specifically designed tariff. The aim of the scheme is to make switching as easy as possible for customers and the entire process will be done either over the phone or online. If the new initiative is successful, then Ofgem will be roll out collective switching to a wider customer base. Collective switching has worked before, with comparison sites, local authorities and publications encouraging thousands of people to switch provider. Due to the large number of consumers switching to a new provider, the third party can negotiate a much better rate for the consumers. One of the reasons that this plan is thought to work so well is that it does not require people to enter their current tariff details into a comparison sight, streamlining the whole process.
Ofgem is also employing a different, more wide-reaching scheme aimed at persuading people to switch to a cheaper deal. A maximum of 250,000 households will be sent two emails or letters from their provider outlining any cheaper deals that they available at the time. A similar scheme was introduced in 2017 and it saw rates of people switching to different tariffs tripling. 2017 also saw the highest rate of people changing suppliers for nearly 10 years with 18% of people opting for a new electricity provider and 19% swapping gas suppliers.
The regulator recently announced that they will be speeding up the process when it comes to switching provider. The new plan allow people to change their energy suppliers by the end of the next day after they switch and try and prevent any mistakes that happen during the changeover process. The aim is to have the new streamlined process in place by the tail-end of 2020.
Rob Salter-Church, interim senior partner for consumers and competition, comments: “Ofgem is committed to getting all consumers a better energy deal.
“We will protect consumers who don’t switch from being charged too much while we put in place the building blocks for a more competitive market.”
If you feel that you might be getting overcharged for your energy then don’t wait for Ofgem to get in touch, check out our handy comparison tool to see how much money you can save.