Following a review of its June 2014 consultation, the regulator aims to “simplify and harmonise” the gas and electricity switching arrangements and wants consumers to benefit from new arrangements by 2019.
It hopes to use the opportunities provided by the roll-out of smart metering to make the switching process faster and more reliable for consumers, reducing switching costs and increasing consumer engagement in the energy market.
“Our June 2014 consultation set out that the current switching processes depend on systems that operate differently between the gas and electricity markets and were developed in the late 1990s,” Ofgem said. “They are slow, inefficient and unreliable.”
The regulator has developed a five-stage plan and will collaborate with industry workgroups to establish a ‘blueprint’ design for next-day switching using a new CRS. It will also assess whether two-day switching offers a better outcome for consumers.
The industry cost of implementing the proposed changes is estimated to be £4.21 for an average dual fuel domestic consumer, with an additional 27p annual cost.
However, Ofgem stresses the “dynamic competition benefits” to consumers are expected to “significantly outweigh these costs” and, by enabling next-day access to cheaper tariffs, consumers could save up to £17m in the first year.