By Chris Gauld, CEO, Spark Energy
The Department of Energy and Climate Change (DECC) has announced that switching energy supplier is about to become quicker, with energy companies committing to halving switching times by the end of the year – from five weeks to around two and a half weeks.
This move comes after Energy Secretary Ed Davey last October challenged suppliers to slash switching times as part of the Government’s pledge to help energy customers get the real benefits of increased competition. While saying this was “great news”, Mr Davey said his long term ambition was 24 hour switching.
I’m encouraged by and supportive of his stance on this and agree that 24 hour switching is very much achievable, but I think the timescale for this to happen doesn’t have to be a long term ambition.
Our industry should work to help to make this happen soon, and we need all parts of our supply chain, particularly in the supply of gas, to be aligned to make this a reality.
The industry has to work harder to improve the speed and crucially the simplicity of switching – fixing the former without the latter would be an own goal.
To do this will unlock savings, satisfaction and trust for customers. As things stand, I don’t think customers fully “get” the complexity, chronology and imperfections in the switching processes, and that’s hardly surprising. It would take a Philadelphia lawyer to understand all of it.
According to new research by Ofgem, 21 million consumers are missing a trick when it comes to energy shopping – almost half of those surveyed by the regulator don’t shop around, while over half were confused by energy tariffs. This results in 95% of customers remaining with the Big Six energy companies, rather than shopping about. It means that competition is hindered and means customers miss out.
The survey also found that 45% don’t feel they could save much money by switching and 24% thought it would be too much of a hassle. We have to change these perceptions.
It shouldn’t be this hard to change suppliers confidently – but it is, and the energy supply industry must tackle that. As a customer experience, switching suppliers should be fast and seamless as standard. This requires industry process change.
At present it takes too long for supplies to change between suppliers and there are too many things that can go wrong, get delayed or be inaccurate before a customer is fully settled and being accurately billed by their new supplier.
I think this is because the customer has never been at the heart of the energy supply industry. It’s obvious that has to change.
There’s a mindset that needs to change in the industry and some technical things need to be altered to enable faster switching to happen.
Electricity is the simpler, and we can already switch in seven days if needed. Gas is a little more complex. The timelines involved between the new supplier, existing supplier and the network relies on flows of information being sent within the restrictions of the industry, which if reduced will enable faster switching. However we all need to work together to make this happen between the suppliers and National Grid.
Very often the issue is to do with meter readings, consumption or property data which must be provided to the incoming supplier from the outgoing supplier. At the moment, it can take over 60 days for the various flows to find their way through shared industry systems, and this data can be wrong, late or not even appear at all.
It’s really tough on the small suppliers outside the so-called Big Six energy companies as we rely on receiving accurate and timely data to get it right first time and get off to a flying start with the newly-switched customer, allowing us to please them from day 1 – the way it should be if we are to help fulfil the Government’s increased competition ambitions.
As a niche supplier to the lettings market, we aim to be live and set up supplying a property as soon as it becomes empty so that the landlord and agent can benefit from no billing during voids, partner manager support for change overs and automation of tenancy notifications.
We and they also want to make sure that tenants inherit better prices and services from us on the day they move in.
The longer it takes to switch the less able we are to establish supply as soon as the property goes empty and sometimes even before the next tenant is found. As a result agents and landlords can miss out on our tailored services and tenants miss out on savings and an easier move in experience.
For the same reason, opening meter readings are usually estimated and inaccurate because so much time has passed since the decision to switch supplier that the reading taken on that date is obsolete.
If switching time was brought down to 24 hours both problems would be solved.