Customers, Policy & regulation

"Out of kilter" switching suggests customers are fearful of increased energy costs

The implementation of P272 on 1 April has succeeded in engaging energy customers and prompting a surge in supplier switching, data shows.

The amendment to the energy balancing and settlement code meant that half hourly metering for most classes of business customer became mandatory at the beginning of this month. According to insight provided by data transfer service provider Electralink, the milestone was preceded by the highest ever number of pre-switch registrations in February and March.

Speaking to Utility Week, Electralink’s head of network and EMI services Dan Hopkinson said this “suggests business have done something to be ready for 1 April. I can’t think of anything else that is happening in the market at the moment that might have provoked this significant increase in engagement, other than the arrival of half hourly settlement.”

Hopkinson emphasized that the pre-switch registrations – which were also unusually high in January – indicate significant proactive engagement from energy customers because they are “outside of the usual contract cycle”.

“Companies effected by P272 tend to be in 18 or 24-month contract cyles and so we typically see spikes in switching registrations in October and April each year.”

On the one hand, Hopkinson said this “out of kilter” spike in switching will be welcome to energy regulator Ofgem because it proves a “significant” increase in customer engagement.

However, he questioned what the timing of the switching suggests about the motivation for engagement.

“Why are they switching outside of the contract round?” he asked. “What has prompted them – because they could have just waited for the usual April contract round. It would only have been a few weeks of half hourly delivery.

“The question to ask is, are they moving away from increased pricing for some customers, towards those who are offering cheaper prices. In other words, a switch based on a negative experience. Or are they moving towards preferential services?”

Because customers are breaking out of contracts in order to switch, Hopkinson said “it leads me to suspect that they are moving away from increased pricing”.


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