Government plans to make switching between energy firms simpler will create a marketing bubble across the battle for billpayers, but should not improve apathy towards the large Six because the “cost and time of switching” hasn’t ever been the principle issue, industry observers warn.
Plans to enhance energy switching is not going to change perceptions of the industry, in line with industry insiders.
The comments are available response to plans announced today (31 October) to make it easier for consumers to exchange energy providers within 24 hours, in place of the five weeks it currently takes. The govt. says switching could help people save as much as £400 a year and improve competition, which some MPs claim is non-existent end result of the perceived monopoly of the market by its biggest players.
Ed Davey, energy and climate change secretary, said three of the large Six – EON, Scottish Power, SSE – had already come forward to support the initiative, adding others will be told they have to, without increasing consumer bills. The measure is among the the govt is introducing to attempt to provide customers more control in their fuel costs amid rising prices.
Davey claimed he was concerned that it was the “smartphone generation and the web savvy” that were getting the perfect deals on the expense of the “fuel-poor”.
He added: “The energy industry should change to lay consumers up to the mark. Meaning making it easy for individuals to vary supplier to save cash, it means regular market assessments to review their behavior, and it means tougher penalties for market manipulation and putting an end to opaque finances.”
Industry observers say the clampdown is probably going to bear similarities to the financial sector, where a up to date move to enhance switching between banks saw many ramp up their marketing to draw new customers. The energy sector’s “marketing bubble”, however, can not dampen its negative perceptions, in keeping with Kevin Peake, group marketing director at Clifton Asset Management and previous Npower marketing director.
Peake adds: “Time and price of switching [suppliers] hasn’t ever been trouble – [its really been about] apathy and absence of cost or price differentiation.
“It’s not as easy as bank accounts as you will need meter data and that’s not available like banking data – ultimately the market will only correct itself with the potential of smart metering.”
Richard Lloyd, Which? executive director, echoed the worries, adding there’ll be “no great applause” from the millions of customers worrying about rising energy costs for the federal government committing to make the regulators “simply do their job”.
The plans to enhance switching are portion of a review of energy competition and costs outlined earlier today. The inittaive is being led by industry watchdog Ofgem, that’s expected to report annually on three areas: the barriers to entry for smaller suppliers, review prices and profitability and assess how easy it can be for billpayers to exchange suppliers.
The energy industry welcomed the plan, with British Gas claiming it might encourage more customers to have interaction with Britain’s competitive energy market”. The utilities firm besides rivals Npower, SSE and E.ON have ramped up their media spend in recent weeks in an try to cut through to homeowners on factors akin to service, amid industry-wide price hikes.