Only one in five households who were offered a cheaper energy tariff chose to change provider, according to a collective switching trial from energy regulator Ofgem.
The trial, which ran between February and April of this year, involved 50,000 customers who had been on an expensive standard variable tariff (SVT) offered by one of the ‘Big Six’ energy providers for more than three years.
As part of the trial, Scottish Power and Ofgem sent letters to customers to show how much money they could save by switching to a ‘collective switch tariff’ offered by provider E.ON, as negotiated by price comparison service Energyhelpline.
Just one in five (22.4%) of the households chose to go ahead with the switch, despite the average household saving £300 on a cheaper fixed tariff. This compares to a switching rate of 2.6% amongst a ‘control group’, who were not actively contacted about the cheaper tariff.
One quarter of the switchers in Ofgem’s trial who received a letter opted for the deal via Energyhelpine, while the rest chose new tariffs independently.
Rob Salter-Church, Ofgem’s interim executive director for consumers and markets, comments: “Many customers on poor value default deals rarely switch because they think it’s too much hassle, or might not realise how much they can save.
“The results of this trial demonstrate that offering a simplified collective switch and providing personalised savings can be a big help in giving these customers the confidence and reassurance they need to start a switch.
“It’s particularly welcome to see many of those who typically are less likely to switch, such as older people, taking advantage of the savings available during the trial.
Ofgem says it intends to run two larger trials in the Autumn owing to the success of this trial.