“Energy switching has been a zero-sum game – with the switchers getting loss-making bargains at the expense of other customers paying high prices. Instead, we need to harness the activity of engaged customers to create better value for everyone,” says Octopus Energy boss Greg Jackson.
He was speaking as the latest figures showed a sharp decline in the number of consumers choosing to switch their electricity supplier.
Although the trend began with the spread of the coronavirus in 2020, switching really began to stall in Autumn last year with the surge in wholesale energy prices.
When combined with the price cap, this led to a sharp increase in the number of customers rolling onto standard variable tariffs, which became cheaper than any of the fixed-price deals available and the same across the board.
Many suppliers had already been offering loss-making tariffs to lure in new customers. But lacking sufficient hedging, the price cap meant they were forced to sell energy at an even greater loss, and without deep enough pockets to ride out the storm, dozens went out of business.
As suppliers withdrew their now more expensive fixed-price offerings from the market, even price comparison websites halted their energy services towards the end of 2021.