Many customers, particularly those who are vulnerable, are stuck on costly standard variable tariffs because they worry they could end up even worse off if they do decide to switch, according Ofgem’s senior partner for consumers and competition, Rachel Fletcher.
Speaking at Utility Week’s Energy Customer Conference yesterday (19 January), Fletcher said: “All of the research we’ve done in Ofgem shows that one of the big factors preventing people from switching is the fear of it going wrong.”
“If you’re managing a really tight budget and you face the prospect, for example, of double paying an energy bill one month, that could be the difference between you keeping your head above water and sinking,” she told conference delegates
Fletcher said sorting out the switching process to make it “seamless and reliable” would therefore be a real “game changer”.
“We know that the very people who have the most to gain from switching are quite often the ones who have the most to lose if it goes wrong,” she asserted.
Fletcher was responding to comments made by the chair of the Competition and Market Authority (CMA) investigation into the energy market, Roger Witcomb, on the makeup of the roughly two thirds of customers who remain on standard variable tariffs.
Witcomb said the CMA’s investigation found that disengaged “sticky” customers were not generally people who are “too posh to switch”, as many people had suggested to him.
Instead, they were disproportionately people in local authority registered accommodation; renters on pre-payment meters; the elderly; those on low incomes; or those with low educational attainments. “All the people you would think would actually benefit most from getting cheap energy are those who are actually paying too much,” he added.
Fletcher said this was one reason why the current situation in the retail energy market is “not sustainable or politically acceptable”.
New research by Utility Week published earlier this week found that double billing was the main concern that switching raised among those who had done so recently. The second biggest fear was of ending up on a worse deal.