Switching recovery from pandemic peak trips up in August

September 11, 2020

Following several months of improvement from a low point during the COVID-19 pandemic, there was an unexpected decrease in energy supplier switching during August 2020. Energy market data shows that in previous years the market normally experiences an increase in switches between July and August.

Change of supplier (CoS) data released today from the Energy Market Data Hub (EMDH) shows 509,000 CoS completed last month. This is a four percent decrease compared to August 2019 and six percent less than July 2020.

The addition of August’s switches completed brings the total number of switches in 2020 so far to 4.022 million – 100,000 fewer switches than the same eight-month period in 2019.

Energy market data shows that in previous years CoS rates increased from summer into autumn, and we are eager to see if the typical spike from August to September appears.

Chart showing number of changes of supplier in switching up to August 2020

It is a similar story for CoS started in August 2020. Significantly fewer CoS started occurred compared to both July 2020 and August last year, with 601,000 switches started amounting to 12 percent less than July 2020 and 9 percent less than August 2019.

In terms of switching types, switching to challengers from the Big Six or other challengers has increased compared to August last year despite an overall decrease in switches completed as mentioned above. However, switches to Big Six suppliers from challengers and other Big Six suppliers decreased.

  • Big Six to Big Six switches dived to 99,000 – 27 percent less than August 2019 and 20 percent of August 2020’s total switches completed,
  • Big Six to challenger switches reached 209,000 – 2 percent more than August 2019 and 41 percent of August 2020’s total switches completed,
  • Challenger to Big Six switches landed at 57,000 – 17 percent less than August 2019 and 11 percent of August 2020’s total switches completed,
  • And challenger to challenger switches reached 143,000 – 20 percent more than August 2019 and 28 percent of August 2020’s total switches completed.

Switching between the Big Six has been consistently low since March, partly due to E.on’s acquisition of npower. There have been switches between the two, as they are still operated as separate brands, so we have included them in this report, but we have seen over 75 percent reduction in npower-E.on switches this year. We have excluded switches related to E.on loading npower customers to their new E.on Next brand.

A lexical statement on ‘the Big Six’

Last month, Utility Week asked ElectraLink for our perspective on the shifting nature of the Big Six category of suppliers. Paul Linnane, Head of EMI, said the following:

“ElectraLink recognises that there is a lively debate about whether the Big Six still exist within the ranks of leading companies.  We recognise that the interested parties have different perspectives of the energy market which are all equally valid. At present we are still evaluating moving from a very simple retail CoS perspective and from that perspective the phrase “Big Six” is still relevant.

Ofgem’s monitoring page still elevates the Big Six above other suppliers. There is an increased focus on these particular companies reflected through the Consolidated Segmental Statements reporting, and while this continues, it remains a factor in how we categorise CoS within our reporting. If and when Ofgem begins to reflect the changing nature of the market, we will revisit this indicator and how we segment suppliers.

“Secondly, but equally important for us, is how these brands operate in the market. SSE’s retail business still operates as a standalone brand in marketing, for example: when a customer is looking to switch they will see the option to switch to SSE rather than OVO-SSE or whichever combination it might be presented as. Same for Eon-npower. Until both mergers are more advanced and the company branding is updated to reflect the outcome of these merger and acquisition processes, customers are still under the impression that they can switch to npower and SSE as suppliers.

“Thirdly, our decision is also influenced by the CoS dynamics themselves. Many advertising campaigns and price comparison websites highlight the savings that can be made from changing from a standard variable tariff to a new tariff.  Given the work Ofgem has completed with disengaged customers and the fact that just under 50 percent of the market has not switched supplier since 2012 (most still being with the regulated incumbent when deregulation occurred), it’s still relevant to use the term ‘Big Six’ to represent the significance of this legacy.

“Number of customers, volume of supply, and revenue are factors which we monitor to influence our terminology in our switching data, however we try to take a view on the market from the perspective of a household looking to switch for the first time. Whilst we recognise that this is the most disruptive period within the energy market since deregulation, the term ‘Big Six’ from a household perspective still has relevance. We continue to review this on a monthly basis and are aware that this will most likely change sooner than we expect.”

For more information on changes of supplier figures, contact communications@electralink.co.uk.

—————————————————————————————————————————

NOTES:

The above figures relate to electricity CoS in Great Britain only.

We do not include CoS from Supplier of Last Resort (SoLR) processes or trade sales in our monthly CoS reporting. We account for only voluntary switches, or instances where the customer made an active decision and took action to change supplier.

Switches started refers to the number of valid switches started, also known as CoS raised.

All data is provided by ElectraLink’s Energy Market Insights (EMI) from the EMDH.

ElectraLink has been granted the governance protections to hold, transfer and analyse CoS and other data.

Back