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Chart of the Week

2020

Is switching recovering after lockdown lows?

Kate Hill Senior Analyst

Energy UK’s electricity switching statistics for October show that there were 591,156 supplier switches during the month. This figure is down 6% on October 2019, and is the lowest switching seen in an October since 2016. Yet, switching has reached a high for 2020 despite COVID-19, even though that high is down on what we have seen in previous years.   More generally though, we have seen a steady rise in the annualised electricity switching rate over the last four years with it reaching 22% in Q320. While this usually represents an increase in consumers choosing to engage in the market for the first time, Ofgem’s Consumer Survey for 2019 reported a rise in the proportion of energy consumers that are repeat switchers, from 12% in 2018 to 18% in 2019. With 11mn consumers estimated to be on default tariffs under the domestic tariff cap, engagement can be influenced by the savings available to customers from switching to a more price competitive proposition. The gap between the cheapest tariff on the market and the default tariff cap reduced to the lowest (£219/year) in October 2020 since February 2019 (£207/year) as the price cap fell to £1,042/year on average from 1 October. This has reduced from a gap of £404/year in April 2020. Increased awareness of consumption in the winter months, alongside changes to the price cap have typically been triggers for seasonally higher levels of supplier switching in previous years. While the switching rate seems to be dampened in October, through reduced savings alongside a fall in ...

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