Customers, Policy & regulation

Big six supplier joins race to ditch controversial default tariffs

Scottish Power has said it will stop rolling customers onto standard variable tariffs (SVTs) when their fixed price deals come to an end.

Instead, from next year, customers will be offered new fixed rate products.

The announcement comes amid an apparent scramble for big energy suppliers to scrap SVTs, which have been at the centre of recent pollical controversy about customer detriment in the energy market.

In September, Eon announced that it will replace SVTs with a one-year fixed-price deal for all new and existing smart meter customers in early 2018. And, according to national press reports, British Gas owner Centrica is also moving to phase out its problematic standard products.

Confirming that Scottish Power will also bring an end to the use of SVT’s chief executive Neil Clitheroe said the move had been a long time coming, and will mark the culmination of a range of actions taken by the supplier to improve customer engagement.

“Three years ago, Scottish Power proposed that standard tariffs be abolished and all customers moved to fixed priced tariffs,” said Clitheroe. “Unfortunately, this wasn’t adopted by the CMA.  However, in the meantime, we have not sat on our hands.  Instead, we have engaged with our customers every day and we have convinced nearly two-thirds to move from standard to fixed priced products.”

Clitheroe claimed that Scottish Power now has the lowest level of standard tariff customers amongst the large suppliers “by a considerable margin”, but added “we know we need to do more”. 

In a bid to have “zero customers on standard products” Clitheroe promised that “from next year, we will no longer default customers onto standard when their product comes to end, we will default them onto new fixed priced products”.

In addition, Scottish Power has committed to ensure all of it tariffs are always be available to new and existing customers and that existing customers can move to any of our products at any time, without incurring termination charges.

The supplier hope these actions will not only improve customer engagement, but also overcome widespread criticism of energy suppliers for “punishing” loyal customers by allowing them to linger on expensive standard products, or reserving the best deals for new customers.

The trend among big suppliers to move away from SVTs comes in the wake of prime minister Theresa May’s commitment to deliver an energy price cap, “bringing an end to rip-off energy prices once and for all.”

However Clitheroe stated: “A price cap will not help engagement in the energy market; only removing standard tariffs can do this.  If every customer was on a fixed priced product, millions more customers would be prompted to look for the best deal every year, competition would flourish and the market would work for all.”


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