Consumers will be able to switch energy suppliers in just three days by the end of the year under radical new switching rules unveiled by Ofgem today.
In the latest assault by the regulator on high gas and electricity prices, Ofgem has said the new system will boost consumers’ confidence to vote with their feet if bills are too high.
“Consumers can change their bank in seven days, their mobile phone in just a couple but have to wait significantly longer to switch their energy supplier,” said Dermot Nolan, chief executive of Ofgem.
“We know that consumers want a reliable and efficient switching process and that concerns about it going wrong can put them off shopping around for a better deal.
So following the steps we have made to make the market simpler, clearer, fairer, we are now leading a programme which will deliver faster, more reliable switching.”
Under the current system, it takes around five weeks to switch energy suppliers, including a statutory two week “cooling off” period in which consumers can return to their previous company. Ofgem has said the cooling off period will stay but switching must take place three days after the two weeks have ended.
The regulator said it wants to introduce next day switching by 2018.Energy UK, the industry trade body, insisted that switching is “already simple...as over quarter of a million customers find every month.
In a statement it added: “Energy UK has been working for some time on speeding things up with the organisations that operate the gas and electricity switching hubs and it is great that Ofgem and others are all on board.
This is a collaborative programme with lots of participants involved and there are now 24 suppliers of energy so real choice and competition for the customer.”
Ann Robinson, director of consumer policy at uSwitch.com, said: “Today’s announcement is exactly the sort of game-changer that is needed to encourage consumers to engage with the energy market. By speeding up the time it takes to switch energy supplier, households will feel the benefits of moving to a new tariff even sooner.”
Last week Ofgem wrote to Britain’s Big Six energy suppliers to ask why falling wholesale prices had not been reflected in a drop in consumer bills.
The regulator pointed out that, despite a sharp fall in market prices for energy due to a mild winter, consumer bills remained high.
“Suppliers are yet to reduce their prices for existing customers to reflect the wholesale cost changes,” it said. Mr Nolan said this “could be seen as further evidence that competition is not working for consumers as well as it should be”.
Some analysts have estimated that Big Six suppliers, all of which raised their bills last winter, could afford to cut prices by £77 or 6 per cent in light of falling costs.
Last week Ofgem said that next-day gas and electricity prices this summer were at their lowest level since 2010. Compared to last year, gas prices are 38pc lower and electricity prices have dropped 23pc.
Long-term prices - those at which the major suppliers buy most of their energy - had also fallen. “Compared with last winter, gas and electricity prices for the coming winter are around 16pc and 9pc lower respectively than last year,” Ofgem said.
Ofgem has already called for a full Competition and Markets Authority probe into the energy supply market on the grounds competition is not working properly, raising the possibility that suppliers could be broken up.
telegraph.co.uk
In the latest assault by the regulator on high gas and electricity prices, Ofgem has said the new system will boost consumers’ confidence to vote with their feet if bills are too high.
“Consumers can change their bank in seven days, their mobile phone in just a couple but have to wait significantly longer to switch their energy supplier,” said Dermot Nolan, chief executive of Ofgem.
“We know that consumers want a reliable and efficient switching process and that concerns about it going wrong can put them off shopping around for a better deal.
So following the steps we have made to make the market simpler, clearer, fairer, we are now leading a programme which will deliver faster, more reliable switching.”
Under the current system, it takes around five weeks to switch energy suppliers, including a statutory two week “cooling off” period in which consumers can return to their previous company. Ofgem has said the cooling off period will stay but switching must take place three days after the two weeks have ended.
The regulator said it wants to introduce next day switching by 2018.Energy UK, the industry trade body, insisted that switching is “already simple...as over quarter of a million customers find every month.
In a statement it added: “Energy UK has been working for some time on speeding things up with the organisations that operate the gas and electricity switching hubs and it is great that Ofgem and others are all on board.
This is a collaborative programme with lots of participants involved and there are now 24 suppliers of energy so real choice and competition for the customer.”
Ann Robinson, director of consumer policy at uSwitch.com, said: “Today’s announcement is exactly the sort of game-changer that is needed to encourage consumers to engage with the energy market. By speeding up the time it takes to switch energy supplier, households will feel the benefits of moving to a new tariff even sooner.”
Last week Ofgem wrote to Britain’s Big Six energy suppliers to ask why falling wholesale prices had not been reflected in a drop in consumer bills.
The regulator pointed out that, despite a sharp fall in market prices for energy due to a mild winter, consumer bills remained high.
“Suppliers are yet to reduce their prices for existing customers to reflect the wholesale cost changes,” it said. Mr Nolan said this “could be seen as further evidence that competition is not working for consumers as well as it should be”.
Some analysts have estimated that Big Six suppliers, all of which raised their bills last winter, could afford to cut prices by £77 or 6 per cent in light of falling costs.
Last week Ofgem said that next-day gas and electricity prices this summer were at their lowest level since 2010. Compared to last year, gas prices are 38pc lower and electricity prices have dropped 23pc.
Long-term prices - those at which the major suppliers buy most of their energy - had also fallen. “Compared with last winter, gas and electricity prices for the coming winter are around 16pc and 9pc lower respectively than last year,” Ofgem said.
Ofgem has already called for a full Competition and Markets Authority probe into the energy supply market on the grounds competition is not working properly, raising the possibility that suppliers could be broken up.
telegraph.co.uk
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