Abstract
Overview
Introduction
Energy competition has been a feature of the UK landscape for more than 10
years, yet official OFGEM statistics create the impression that only 50% of
the market have embraced competition by switching supplier. Our structured
analysis shows that the true figure is much higher. Retailers and regulators
need to know the true position when considering policy and strategy options.
Scope
- A review of switching behaviour based on OFGEM' s Domestic Retail Market
Report June 2007 and Datamonitor proprietary datasets
- An analysis of the winners and losers in the switching game
- An investigation of the strategies and tactics being used to combat churn
- An identification of the dilemma facing policy makers based on this
revised perspective of the state of switching
Report Highlights
If we look at households connected to both the electricity and gas grids - 80%
of them have embraced competition and made a change to their energy supply
arrangements. If we include electricity only customers this figure drops to
70%. From either perspective a significant deviation from the oft quoted 50%.
With retailers, and the regulator, still working to the 50% vision of
switching the market is experiencing a level of sales and marketing activity
which fails to take into account that the non-switched segment is now a tiny
fraction of the market. This in turn has led to the high churn rates (20%)
being experienced by retailers.
SSE has been the clear winner in the switching game through its aggressive
pricing policy enabled by its cost to serve advantage. All players are however
innovating to better retain customers in the face of fierce competitive attack.
Reasons to Purchase
- Understand the true state of switching - an essential for policy and
strategy formulation
- Gain a new, and more accurate, perspective on market opportunities
- Learn from the experience of players in the fight against churn
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