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Who switched energy suppliers in The Big Switch and why?

a big switch on red background

In 2012 Which? and 38 Degrees launched the UK’s first and largest collective energy switch. With 145,000 people taking part, this provided a unique opportunity to analyse real life switching decisions.

At the Centre for Competition Policy – part of the University of East Anglia – we were able to analyse the wealth of data collected from The Big Switch, as well as carrying out a series of follow-up questionnaires with participants. Our aim was to get a better understanding of the factors influencing consumers’ decisions to switch energy supplier.

If you responded to one of these surveys, we want to thank you for taking part – without you the research wouldn’t have been possible.

Reasons for switching energy suppliers

We know that the potential savings are an important factor for switching, and there was a substantial average saving of £120 available to participants of The Big Switch. In total, a quarter of the people who could have saved decided to switch, collectively saving an impressive £5.5m. But this does also suggest that people’s energy switching decisions can be influenced by other factors, even where there’s money to be saved.

After getting energy suppliers to compete, the Big Switch offered the best deal on the market for the majority of the UK. However, in some cases the deal wasn’t the cheapest for particular participants. To make sure everyone saw the cheapest deal for them, Which? showed the cheapest deal in their area alongside The Big Switch offer. But displaying two offers seems to have deterred people from switching rather than spurring them on. This is a particularly interesting result; does comparing more offers make you feel informed or are too many options overwhelming?

We also found that the length of time it took actual switchers to complete the switching process was generally less than the length of time non-switchers expected the process would take. This suggests a perceived hassle factor, which puts people off switching their energy supplier.

Why do you switch?

Other reasons for people switching included: using accurate energy consumption information from their bills to generate a quote, rather than just estimating it; taking part with the aim of saving money rather than just out of curiosity; and preferring the ethical or environmental stance of the new supplier.

Choosing not to switch was associated with relying on an estimate of your energy bill; facing an exit fee when leaving an energy company; and being busy during the period of The Big Switch.

Do any of the above factors fit with your experiences of switching energy suppliers? Do you find the amount of choice overwhelming or are you confident navigating the options? Is saving money the main driver for you to consider switching?

Once again we would like to thank those of you who took part in this exercise and provided survey responses. If you’d like to see the full analysis, you can download the technical report here.

This is a guest post by David Deller at the Centre for Competition Policy – part of the University of East Anglia. All opinions are David’s own, not necessarily those of Which?

Comments
Member

I did take part in this, to see if I could get a better deal than was available to me personally on the open market. That did not seem to be the case.

I use Which? Switch to find my best deal. I record my annual usage as that gives the best estimate (there is a trade off between standing charge and unit price). I choose a fixed price tariff with no exit penalty, and initially look at separate deals for gas and electricity – not necessarily dual fuel – even from different suppliers. Once in a deal, you can change your tariff to a better one if it arises – as has happened over the last few months – very easily and quickly in my experience.

Not a big chore to make worthwhile savings. Even in joining the Big Switch you would then have, presumably, had to look for better deals as time went by. Hopefully even if they didn’t join it would persuade people to shop around.
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What I would like would be to join a collective scheme that automatically updated individual’s deals to the cheapest one currently available. How about a sequel – BigSwitch2?

Member

Like Malcolm, the Big Switch didn’t produce a cheaper tariff for me

I’ve been with the same supplier for years now, but change my tariff every now and again.

Switching is all well and good, but getting OFGEM to force energy companies to pass on savings in the wholesale price to all would benefit everyone, unlike the Big Switch. Oh and OFGEM should also force the energy companies to refund what essentially we’ve all been overpaying for the last 4 years. That would save way more than a switch.

Member

I see that Ofgem lists ELEVEN price comparison sites. Which? Switch is not mentioned.

Member

Maybe we need someone like Which to show what household prices could be if the fallen wholesale price had been passed on. Then show how much lower the price will be compared all anything the ELEVEN comparison sites will list.

Apathy on the part of OFGEM should also be factored into any research findings.

Trust in the energy market also needs to contain an element of trust in the regulator and the only trust it gets from me is that it has and will do nothing for the consumer.

Member

It’s virtually impossible to discover. Generating companies buy their fuel on the futures market at a price fixed long in advance: they also buy the dollars for payments on the future markets. This is all business confidential, so it would take a revolution to find the truth.

But we can be sure that they make loads of money and pay themselves Carribean Island sized bonuses. As many of us have been saying for many yesrs (since Thatcher sold out to businesses), the industry should be overhauled from top to bottom. Perhaps it’s time to go public!

Member

terfar, this should be Ofgem’s job to ensure fair prices are charged. What do we pay them for? They should publish benchmark gas and electricity tariffs, for example, against which the commercial suppliers could be judged.

Member

I switched mainly because of the appalling service I received from NPower and was originally very satisfied with the switch to Scottish Power (using Which? Switch) and was the best deal for me at the time, until fairly recently when my credit balance went over the £500 mark. Happily it has now been resolved after extensive negotiation and receipt of a letter of apology. I am on a fixed tariff until March 2015, but understand, if necessary, I can switch to another supplier within 42 to 49 days before the current tariff is due to end. I have taken certain measures which have reduced my energy consumption by turning the boiler thermostat down to minimum and lined the back of my radiators with aluminium kitchen foil to direct the heat into the room away from the walls.

Since becoming involved with Which? Big Six Campaign I have made various inquiries among friends and family regarding their energy consumption and costs and am frankly amazed at the complacent and apathetic responses received. Some of my relatives seem content to grumble and grouse when large bills arrive on computer or through their letterbox but seem reluctant to take any action and just seem prepared to accept the status quo.

One of the problems with energy (or advantages whichever way you look at it) is it`s accessibility (providing you can afford to pay your bill) and there is a tendency for consumers to take it for granted by just flicking a switch, until heaven forbid we get a power cut (which coincidentally we have just experienced as soon as I started typing this post!) With other commodities such as petrol and food we have to make a concerted effort to leave the home and fetch, making on the spot important choices and decisions as to what to buy and how much we are prepared to spend. Even shopping online for groceries can be quite eventful, especially when you go to checkout and find you have ordered `doggie doo bags with tie handles` when you don’t even have a dog!

I admit there is only so much consumers can do to challenge the energy giants but ultimately it is a matter for the regulators to restore fairness and stability to a very unbalanced and unjust energy market system.

Member

Congratulation to the author and his team. Which? for grown-ups! Serious analysis of the reasons why people act and why people do not act to reduce energy costs. The report is worth reading, particularly if you debate energy costs!

Two caveats. A minor one is the the report is not dated which may seem trivial but does have a bearing if a post report event appears to have been ignored.

I had hoped that I would read of Que Choisir action in 2013 where it signed up 100,000 members swiftly as it had already negotiated the discount ahead of the offer. AFAIR the Big-S was more chicken and egg and I think the French concept much more marketable and attractive.


Recall indeed that the initial offering of the winning supplier (13% for minimum savings compared to the rates regulated by the kWh of October, or 13.5% compared to the regulated rate of sale of November) is only a starting point: a supplementary reduction (on the price of the kWh and an additional lump sum reduction) is planned on the basis of the number of registrants on the gazmoinscherensemble.fr site. More there will be registered, more final offer will be attractive financially: UFC – that choose intends to create a real market of consumers power. Their mobilization must therefore enable to earn 1%, 2% or more of additional discount as a supplementary individual discount amount also depends on the number of registered.

This final offer price is fixed for one year in contrast to the rate regulated sales who plays, he, every month. Similarly, anxious to ensure, beyond the gain in purchasing power, a certainty to policyholders, “cheaper gas together” initiated by the UFC-Que Choisir includes a contract course, more protective of consumers that those typically charged, as well as the involvement of the Federation in the treatment of any claims.

So to boost competition in the gas market, and reduce (finally!) the gas bill, the UFC-Que Choisir invite consumers to continue to register until November 25, on the http://www.gazmoinscherensemble.fr site”