Energy bills: customer switching hits six-year high

image source, Thinkstock

Energy customers changed suppliers last year at the highest rate in six years, as they increasingly shopped around for the best deal.

Bill payers switched providers 7.7 million times, saving potentially more than £200 a year, according to Ofgem.

However, looming price rises by some of the UK's biggest suppliers would test how competitive the market was, the regulator said.

Firms were not doing enough for about two thirds of customers, Ofgem added.

Price rises

In the coming weeks, standard gas and electricity tariffs will go up at Npower, Scottish Power, Co-operative Energy and First Utility, while EDF will raise electricity prices.

Ofgem chief executive Dermot Nolan said the increase in customer switching should act as a "warning" to such suppliers.

"If they fail to keep prices under control or do not provide a good service, they risk being punished as customers vote with their feet," Mr Nolan said.

"While today's figures show good progress, the market is not as competitive as we would like."

About two thirds of energy customers remain on standard tariffs or pre-payment deals, which often offer far worse value, the regulator said.

image source, Getty Images

Analysis: Joe Lynam, BBC business correspondent

Despite intense competition, multiple government and consumer group initiatives and soaring fuel bills, not enough people switch suppliers with any regularity.

Last year saw 7.7 million switches - but that's not 7.7 million households, since some people change gas or electricity providers separately.

It is progress, though. As ever the easier and quicker it is to switch the more of it will occur.

Small and medium-sized firms have put great store on the full roll-out of smart meters, which they hope will allow customers to switch in 23 hours, rather than the 21 days it still takes.

Half of households have never switched suppliers, proving that you can lead a horse to water....

Claire Osborne, energy expert at price comparison site uSwitch, said many customers could guard against bill hikes by swapping providers.

By shopping around and switching to a fixed deal, they could "protect against any more unwelcome price rises", she added.

It now takes three weeks to switch suppliers, down from five weeks three years ago, according to Ofgem.

Customer complaints about switching dropped 36% last year, suggesting companies are also managing the process better, the Energy Ombudsman said.

'Works for everyone'

Lawrence Slade, chief executive of the trade association Energy UK, said the high rate of swapping showed "competition was working for more and more households".

"The industry is committed to ensuring the market works for everyone and is taking action to engage with loyal customers," he said.

Last week, British Gas, which is freezing gas and electricity prices until August, said it was facing strong competition from more than 50 suppliers.

Some energy providers have blamed rising wholesale costs for the increases.

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