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31 Oct 2013

Why making it easier to switch is no incentive for the energy companies to change their behaviour

Posted on October 31, 2013 by

So the energy companies are being given a major bashing for increasing their prices and all they can offer in mitigation is to point the finger in the direction of other sectors, while muttering “well we don’t make as much money as they do”. They have collectively adopted a communications strategy that is the equivalent of staring at your shoes and shrugging your shoulders as the headmaster tells you off.

And whilst we might think it shows a lack of respect and that they aren’t really taking the situation seriously, there is good reason for it – because it’s worked every time before. The pricing debate blows over as the nights draw in and our attention moves inevitably to more important things, like whether it will snow at Christmas.

But, this time there seems to be an appetite to take the argument further, with MPs now focusing on how difficult energy companies make it to switch supplier and demanding it be made more simple.

So, is this going to rattle the cage of the big suppliers and spur them into some sort of proactive action, or is it actually a red herring? Well, we’ve already moved on from the pricing debate so they must be over the moon. And have you noticed that the Government’s communication is not actually aimed at influencing suppliers to make changes? It’s putting the onus on the consumers to act and switch supplier.

It’s a neat trick because then we only have ourselves to blame!

But the real reason that this ‘pressure’ will be met with the same indifference we’ve come to expect from the big six, is because switching itself is already an easy process but only a fraction of us do it.

Look at the recent changes in banking in order to make it easier to switch accounts. Even with banks like Natwest and first direct offering over £100 to make the leap, relatively few people have so far.

Where energy companies need to be challenged is not in the ease of switching, but how they communicate their pricing in order to make the decision of who to switch to more transparent.

Have you ever tried to compare energy suppliers and their products like for like? On the surface it looks a doddle – fixed rate for 12 months, variable rate, duel-energy discounts etc. But dig a little deeper and one offers you a £15 discount for giving them both energy accounts, another offers £90, there’s a £50 cancellation fee here and a £30 cancellation fee there. How can that make sense?

Energy companies don’t make it difficult to leave, they make it impossible to work out what joining them actually means. It’s much more difficult to legislate against a company that seems to not want your business.  Funny how they all look the same as well, isn’t it?

In this sector there is currently no benefit or incentive in acting or communicating differently from one another.

Allowing consumers to switch in 24 hours is not going to change the market but forcing energy companies to be clear about the cost savings over fixed periods of time just might.

And that then opens the door for the first of the energy companies which chooses to grab a significant PR and communications opportunity.

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