Energy giants consider loyalty plans to help millions
- 31 January 2017
- From the section Business
Two of the Big Six energy providers are considering introducing a loyalty programme to alleviate the extra expense of standard tariffs.
The move is aimed at the 10 million customers currently paying too much for energy but who are reluctant to switch.
Both Npower and EDF Energy told MPs that they were considering starting reward programmes to help customers who stay with them.
Npower said that could include a free boiler service for such customers.
It follows pressure from the Business Secretary, Greg Clark, last month.
He told MPs on the Business and Energy Committee that customers who had been on standard variable tariffs for a long time should be rewarded, rather than necessarily being persuaded to switch supplier.
Simon Stacey, the managing director of domestic markets for Npower, told the same committee that his firm was now actively looking at the idea.
"For example, could we provide our standard customers with a free boiler service? We've done a trial of that, to see whether it resonated with customers," he said.
"We want to try and reward customers in a way they wouldn't expect."
Dan Hopcroft, the residential sales director of EDF energy, said it too was looking at a loyalty proposition.
The Competition and Markets Authority (CMA) has said that up to 10 million customers have been on expensive standard tariffs for at least three years.
Simeon Thornton, project director at the CMA, told the MPs that 56% of consumers have never switched supplier, or don't know if they have.
Earlier this week the regulator, Ofgem, announced that it was going to start trials to see whether there are more effective ways of persuading people to change supplier.
It follows recommendations from the CMA, who carried out a two year study into the market.
As part of the trial, suppliers will be asked to tell reluctant switchers that they could benefit from a cheaper deal from a rival supplier.
They will also experiment with different names for standard tariff, such as "emergency tariff" or "out-of-contract tariff".
The trials are likely to start later this year, and could involve as many as tens of thousands of consumers.
At the moment suppliers are obliged to show their own cheapest tariff on bills, but not the tariffs of rivals.