Energy Prices — House of Commons, 2017-03-16
Topic: Energy
John David Penrose (Conservative, Centre-right): There are many reasons why switching has not caught on to anything like the degree that we need it to if we are to transform the sector. I understand that one factor may very well be this problem with the introduction of smart meters, but there are others, too. My hon. Friend was quite right to point that issue out, and I will mention some others later on in my speech As I said, there are 30 or more newish energy firms snapping at the heels of the big six, and they understand that loyalty matters. Obviously, some are more impressive than others, but they all have one thing in common: they are hungry. They know they have to impress and delight their clients, because they cannot rely on exploiting a "back book" of long-term customers to stay fat and happy. The figures are stark. Roughly two thirds of all customers—at least 20 million households—are on the expensive, rip-off deals: the standard variable tariff. A minority of customers switch to a different energy supplier regularly, but most of us do not. The amount of switching has been creeping upwards, but much of the change has come from the same bargain hunters churning round and round in ever faster circles between different energy firms. The number of households that have rarely or never switched remains stubbornly high, which suits the big six just fine. So, what is the answer? How do we put energy customers in the driving seat? Do we give them the same power to choose a new supplier as easily as we switch to a different brand of toothpaste or coffee? How do we make them compete to delight us, rather than quietly exploiting us First, we have to make switching a lot easier. Choosing that different brand of toothpaste in a supermarket is easy: we just pick a different tube off the shelf. Too many people find switching to a different energy firm scary and stressful, and are frightened off as a result. Even the price comparison sites, which have an interest in making the process as simple and as easy as possible, say that huge numbers of customers abandon their search when they are asked a basic, essential question such as what is their current energy usage. Others think that switching is likely to go wrong, and that they might end up cold and shivering in a home without power if the move does not happen smoothly My hon. Friend the Member for Bury North (Mr Nuttall) has already mentioned the impact on some households of the new smart meters. Others simply have not got the time to switch. Many of us lead busy lives, juggling careers, childcare, school runs and goodness knows what else. Switching our energy supplier can easily become one of those things that we all know we should do, like washing the car or joining a gym, but we never quite get round to doing. The difference is that other products do not automatically switch us to a super-expensive brand of toothpaste or coffee unless we tell them not to. They do not expect us to be on our toes all the time to stop them changing the terms of our deal and ripping us off when we are not looking. For toothpaste, coffee and almost everything else, loyalty and inertia work in the customer’s favour; they are on our side. That does not apply to energy. If we relax, they will have us Fortunately, there are some simple things that make switching easier, less stressful, simpler and not so scary. The main one is making our customer data easily available to a new energy firm if we give them our permission. That way we do not have to fill in endless online pages with information that we cannot remember or that we have not got. At the moment, the information can take days to come through, and the big six throw all sorts of obstacles in the way. They have no interest in making it easy or simple In future, we should just be able to ask our new firm to get it from our existing supplier in a few seconds, with a click of a mouse or a tick of a box—simple, quick, easy and safe. The number of people switching will go through the roof if we do that.