Power
to Switch
A report into consumers’
views and experiences of
switching energy supplier
Consumers’ views and experiences of switching energy supplier
Contents
Page
1.Foreword
2
2.
Executive Summary
3
•
Research Methodology
•
Key Findings
•
Recommendations
3.Introduction
7
4.
Consumer Context
9
5.
The Development of Competition in the Northern Ireland
Domestic Energy Market
5.1.Electricity
5.2. Natural Gas
5.3. Home Heating Oil
6.
Consumer Switching - The Findings
16
6.1. Choice of fuel
16
6.2. To switch or not to switch?
16
6.3. Knowledge about switching
19
6.4. Who switches? 20
6.5. Experience of switching
21
6.6. Marketing
21
6.7. Comparisons with GB
22
6.8. Home Heating Oil
23
10
7.Conclusion
27
8.
Recommendations 28
9.
Appendix A - Survey Questions
29
10. Appendix B - Socio Economic Groups
31
11. Appendix C - Consumer Council information on switching
32
energy supplier
Please note an executive summary is available in larger print or
other formats on request.
1
Consumers’ views and experiences of switching energy supplier
Consumers’ views and experiences of switching energy supplier
1.Foreword
2. Executive Summary
Energy is at the centre of our daily lives. It is essential
for us all as we rely upon it to provide light and
heat for our homes. However, the cost of energy
has been rising in recent years and this looks set to
continue given global trends and the need to build
an infrastructure to support renewable energy. High
energy prices combined with relatively low wages have
given Northern Ireland (NI) the highest number of households in fuel poverty in
the United Kingdom (UK).
Our research suggests that competition in domestic electricity and gas is
One possible means of addressing the problem of rising energy prices in Northern
Ireland is the recent advent of competition, with its potential to drive down
prices and improve service. With our statutory remit to report on energy issues
the Consumer Council (CCNI) wanted to understand how consumers in NI are
responding to competition.
developing steadily as increasing numbers are switching and there is high
awareness that it is possible to switch. However, this high level of awareness
does not correspond with the level of confidence in the switching process and
this appears to inhibit some consumers from switching.
Consumers have a variety of reasons for not switching. Below are the main
ones expressed:
• It is too much hassle (31 per cent);
• Being content with the current supplier (29 per cent); and
• Mistrust of a new supplier (18 per cent).
While it is a positive development that around 135,000 electricity and over
This report finds that 96 per cent of electricity customers knew that they
could switch suppliers and switching is on the increase. However, despite this
only 28 per cent of electricity customers have actually switched supplier. This
report suggests that a switching culture will only develop in NI when there is
increased consumer proficiency and confidence in switching. We also reveal the
importance of learning from the experience in Great Britain (GB) and ensure that
less ‘savvy’ consumers are not left behind as competition develops.
10,000 gas consumers have switched to date, our research suggests that there
The Consumer Council’s two main priorities of supporting consumers to mitigate
the impact of cost of living pressures, and improve consumers’ knowledge of
their rights, means that energy costs and fuel poverty remain a particular focus
for our work. We will continue to work with Government, the Utility Regulator
(the Regulator) and energy providers to ensure there is an understanding of the
real pressure energy costs place on consumers. We will also seek to reduce costs
at every opportunity, but within the context of ensuring consumers’ long term
energy needs are met. This report is another example of our contribution to this
challenge. We remain committed to giving consumers a voice and making that
voice count.
• Less likely to use the internet to compare home heating oil (oil) prices;
is not yet a switching culture amongst the majority of NI energy consumers.1
It is welcome to see that for those who had switched electricity or natural gas
supplier it was largely a positive experience. However, a significant factor that
mirrors the GB experience of energy switching is that lower socio economic
groups are less likely to switch electricity or gas supplier. Furthermore they are:
• Less likely to seek competitive quotes; and
• More likely to purchase expensive 20 litre oil drums.
This suggests that those most likely to be in fuel poverty are least likely to take
advantage of competition to reduce their energy costs.
Despite a well developed competitive market and a large number of suppliers,
two thirds of oil consumers always buy from the same supplier. Whilst this
1. Domestic electricity customers in NI and natural gas customers in Greater Belfast and Larne have been able to switch
supplier since 2010.
Antoinette McKeown, Chief Executive
2
3
Consumers’ views and experiences of switching energy supplier
would suggest that those consumers are not making a purely financially driven
decision, evidence from our consumer panels suggests that such an approach
can prove financially advantageous.
Consumers’ views and experiences of switching energy supplier
Independent research:
We have used statistics from a number of independent sources to illustrate the
context in which the CCNI research was conducted.
The experience in GB is that marketing practices by energy suppliers dissuaded
consumers from switching. In contrast, our research shows that generally
consumers were content with marketing so far in NI and it can be helpful in
raising awareness of competition. However, we are still in the early stages of
competition development. The Consumer Council has seen an increase in
Key Findings
• 96 per cent of electricity customers and 86 per cent of natural gas
customers know they can switch;
complaints for natural gas and electricity, particularly in electricity where a
significant number of complaints have been taken in relation to delays and
• 28 per cent of electricity customers and 20 per cent of natural gas
customers have switched their supplier;
other problems with the switching process. There have also been complaints
received about marketing in public places. The Consumer Council will continue
to work with suppliers and the Regulator to identify the cause of the complaints
and try to ensure such issues are addressed.
• 97 per cent of those who had switched thought switching was easy;
• 67 per cent of those who have never switched have never even
considered it;
Research Methodology
Quantitative research:
• 67 per cent of oil customers always buy from the same supplier; and
• Social class group ABC12 is more likely to have switched electricity or gas
supplier, obtained a competitive quote for oil, find it easy to compare oil
prices and have used internet oil price comparison sites.
The Consumer Council commissioned Millward Brown to conduct an omnibus
survey (see questions in Appendix A). Fieldwork was conducted between
2 October 2012 and 1 November 2012. There was a total sample of 1014,
weighted to be representative of the NI population in terms of gender, age,
Recommendations
social class and region. Of these, 846 are involved in decisions about energy
The Consumer Council is committed to ensuring that all consumers have
within their household.
the knowledge and confidence to switch energy supplier if they wish. We
Focus groups:
will continue to develop information, such as our ‘Switch-On’ guides3, so all
Six group discussions were held with consumers in Armagh, Ballymoney,
Belfast, Cookstown, Derry/Londonderry and Fivemiletown with the use of a
topic guide, allowing consumers to speak freely on the subject of switching
consumers can make informed decisions on their preferred energy supplier. We will continue to target the most vulnerable consumers and work with others
to ensure the following recommendations are put in place.
energy supplier.
2.
3.
4
See Appendix B for Socio-Economic Groups
See Appendix C for current Consumer Council information on switching energy supplier.
5
Consumers’ views and experiences of switching energy supplier
1. The energy industry should provide more information and support to
increase the knowledge, awareness and confidence of consumers on the
Consumers’ views and experiences of switching energy supplier
3. Introduction
benefits and process of switching;
2. The energy industry and the Regulator must remain active in developing
safeguards to ensure the problems experienced in GB do not occur in NI;
3. The energy industry should target lower socio economic groups and
consumers in fuel poverty to promote the benefits of switching energy
supplier and shopping around for oil;
4. Government, local Councils and energy advice organisations should support
and encourage pilot approaches that provide oil-dependent consumers with
The General Consumer Council for Northern Ireland (CCNI) is an independent
consumer organisation, working to bring about change to benefit Northern
Ireland consumers. Our aim is to ‘make the consumer voice heard and make
it count’.
In the field of energy we have a statutory role contained in the Energy Order
(NI) 2003 to undertake consumer research, make proposals, provide advice and
information and represent consumers on energy matters.
alternative purchasing options, such as fuel brokering4 and low cost loans.
For a number of years energy prices have been increasing. Since 2002, the
This may help address the issue of consumers on low incomes buying 20
cost of electricity has increased by 55 per cent6 and home heating oil by 285
litre oil drums5; and
per cent7. At the same time the number of households in NI in fuel poverty has
5. Energy suppliers and the Regulator must continue to work together
with the Consumer Council to identify and address the reasons for the
increase in electricity complaints that has accompanied the introduction of
competition.
increased from 27 per cent to 42 per cent8. An increase in the overall cost of
living has meant that consumers here have seen their overall spending power
diminished in recent years. Figures for November 2012 show the annual cost
of living increase, as measured by the Consumer Price Index, rose from 2.2 per
cent to 2.7 per cent, the first upwards move since July 2012.
Competition within the domestic energy market is viewed by many as having
the potential to put downward pressure on energy prices and at the same time
improve service. However, the GB experience demonstrates that competition
can also create dangers for consumers such as poor marketing practices,
a range of confusing tariffs and a risk of neglecting the needs of vulnerable
consumers. Therefore, it is vital that as competition develops here, consumers
are well represented.
This report explores how NI consumers are reacting to competition between
energy suppliers. This research will enable the Consumer Council and other
stakeholders in the energy industry to understand and respond to the needs of
energy consumers.
4.
5.
6
Energy brokering schemes aim to negotiate reduced prices and new payment methods for domestic oil purchases within defined geographic neighbourhoods and time limits, so as to assist fuel poor households.
Consumers relying on heating oil emergency drums spend 41 per cent or 61 pence per litre more than the cost of the
average 500 litre oil refill and between 136-151 er cent more for their oil than those using natural gas, source CCNI Gas v
Oil Cost Comparison Brief, March 2013.
6.
7.
8.
Power NI standard tariff
Consumer Council oil survey
NI Housing Executive - House Condition Survey 2011
7
Consumers’ views and experiences of switching energy supplier
To produce the report we undertook a questionnaire survey and spoke to
consumers directly in focus groups. We would like to acknowledge and thank
Consumers’ views and experiences of switching energy supplier
4. Consumer Context
all those consumers who took part.
The report provides a snapshot of consumers’ attitudes to competition in the
Consumer Council research9 shows that half the adult population here is
domestic energy markets. It outlines recommendations which we believe will
worried about making ends meet and over half are worried about making ends
help energy companies operate in a competitive market that will deliver on its
meet in the future. Furthermore, only half are managing to keep up with bills
potential to benefit all consumers.
and debt without difficulties and more than one in four stated that they are
worried that they, or someone in their household, will lose their job within the
next year.
The increase in the cost of energy is a major source of pressure for consumers.
In our report, ‘Consumer 2010’, the Consumer Council noted the impact of
energy prices on consumers and tested their views on the emerging competitive
market. At that time it was estimated that 78 per cent of consumers in arrears
with their electricity or gas bill, were classified as suffering from fuel poverty.
Competition in the energy market provides consumers with more choice on
price and service. However, to take advantage of this consumers need to be
proficient in making informed choices. In 2010, we reported that 64 per cent
of consumers said they had started shopping around more since the economic
downturn10, following years of consumer apathy. Furthermore, consumers need
to be aware of the pitfalls inherent in complex tariffs. The Consumer Council
recently undertook qualitative research into financial capability and product
choice. This showed that the choice of products consumers eventually made
was often based on trust, loyalty and word of mouth as they rarely had the
information or the confidence to choose a suitable alternative. In addition, they
often do not read the terms and conditions even though often they know they
should; the primary reason for this is because they do not understand them and
find the jargon too complicated11.
Whilst consumer confidence in knowing their rights has improved in recent
years there is a still a long way to go. In 2011, 21 per cent of consumers said that
they did not feel confident in expressing their consumer rights12.
9.
10.
11.
12.
8
The Consumer Council, Consumer Proficiency Research, 2011/2012
The Consumer Council, Consumer 2010 Report
The Consumer Council Financial Capability Panels Research, October 2012
The Consumer Council, ‘Canny consumers?’ report, September 2012
9
Consumers’ views and experiences of switching energy supplier
5. The development of
competition in the NI domestic
energy market
Consumers’ views and experiences of switching energy supplier
(formerly Energywatch) in GB, the Consumer Council has seen an increase
in the number of complaints about energy suppliers and there is concern
that as in GB, vulnerable consumers may be less able to take advantage
of competition.
Competition between suppliers within each of the domestic energy markets
5.1 Electricity
(gas, electricity and oil) has developed in different ways because of the different
Power NI remains the dominant supplier of electricity in NI but this dominance
infrastructure required to deliver each utlity into the home and the timing of
is diminishing. At the end of 2011 Power NI had over 87per cent of domestic
the introduction of competition in each market. Without the need for a tangible
customers but by the second quarter of 2012 this had fallen to 85 per cent. By
network and in the absence of economic and social regulation of competition,
the end of September 2012, more than 135,000 domestic electricity customers
the oil industry has developed based on the principle of supply and demand. had changed supplier. The net change of supplier in the domestic sector was
From a consumer perspective this model does not necessarily provide a high
on average around 5,000 per month switches in 2011. The average increased to
standard of service which takes account of customers’ location, vulnerability or
6,000 switches per month in the period January – May 2012 and to more than
ability to pay.
10,000 per month switches from June to September 2012.14
With regards to the electricity and gas markets, in recent years the technical
systems and legal framework required for switching supplier have been
developed and improved by the industry and the Regulator, with Consumer
Table 1. The total number of domestic electricity customers in NI 15
Council input. In October 2011, natural gas ‘Pay As You Go’ meter customers
were able to switch for the first time and in May 2012 the completion of the
End 2011
Standard Credit
Keypad
Total
‘Enduring Solution’ project ensured that there is no limit to the number of
Domestic customers
492,951
(63%) 292,797
(37%)
785,748
(100%)
electricity customers who can switch their supplier.
Today, domestic customers in NI have the choice of four electricity suppliers
and those in Greater Belfast and Larne have the choice of two gas suppliers.
However, competition in NI’s domestic electricity and natural gas markets is still
in its infancy and each remains dominated by the original supplier.
Consumers have already seen a positive impact of competition in the current
price differentials between electricity and natural gas suppliers, which can be
as much as 14 per cent13. Furthermore, consumer choice has increased with
new tariffs, special offers and new innovations such as ‘online’ payment options
becoming available. However, mirroring the experience of Consumer Focus
13. Airtricity – Home Electricity Saver 24 tariff
10
14. Utility Regulator, Energy Retail Report, 2012
15. Utility Regulator, Transparency Report, February 2013
11
Consumers’ views and experiences of switching energy supplier
Consumers’ views and experiences of switching energy supplier
Table 2. Market share of domestic electricity customers in NI16
5.2
Natural Gas
The natural gas market in Northern Ireland is split into two geographical areas.
Customers
End 2011
Oct 2012
Market share
End 2011
Oct 2012
Competition exists only in the Greater Belfast and Larne areas since 2010. There are currently two competing suppliers - Airtricity Gas Supply Limited
(NI) (formerly Phoenix Supply) and firmus energy. In the other area, along the
Power NI
431,276415,639 87.28%
85%
Airtricity
61,221100,88812.39%
13%
a monopoly.
Budget Energy1331 13,588 0.27%
1.7%
Where competition exists Airtricity Gas Supply (NI) had 92 per cent of domestic
South-North Pipeline and North-West Pipeline20, firmus energy maintains
customers at the end of 2011 but this had decreased to 86 per cent by the
end of the second quarter of 2012.21 The price difference between Airtricity
When Power NI was the only supplier it offered three main tariffs. Now across
Gas Supply (NI) and firmus energy is up to 10 per cent in the Greater Belfast
all suppliers there are 28 different tariffs with a range of payment and billing
and Larne areas. However, in those areas without competition, NI natural gas
methods and contractual periods. The difference between the lowest and
customers do not have the option to switch supplier.
highest tariff is currently 14 per cent which, using the average NI consumption17,
gives an annual saving of £71.
As competition has developed the Consumer Council has seen a large increase
in the number of electricity complaints. Between 1 April 2009 and 1 April 2012
the number of electricity contacts made to the Consumer Council increased
by 57 per cent. The number of formal stage 2 complaints18 investigated by the
Consumer Council has also increased sharply from 12 in 2009 - 2010 to 83 in
2011-201219.
Table 3: Natural gas, domestic and small Industrial and
commercial market share in Greater Belfast and Larne
(December 2011)
Airtricity firmus energy VAYU
TOTAL
16. Utility Regulator, Transparency Report- February 2013
17. NI average domestic electricity consumption is 3,300 kwh, source: Utility Regulator
18. CCNI classifies a complaint as stage 2 when the company has been allowed reasonable time to resolve the complaint
and the consumer remains dissatisfied.
19. The Consumer Council, Complaints Report 2009-2011 and 2011-12
12
Customers %
130,182
91.85
11,535
8.14
120.01
141,729100
20. Known as the ‘Ten Towns’ of Derry/Londonderry, Limavady, Coleraine, Ballymoney, Ballymena, Antrim, Craigavon,
Armagh, Banbridge and Newry.
21. Utility Regulator, Energy Retail Report, 2012
13
Consumers’ views and experiences of switching energy supplier
5.3 Home Heating Oil (oil)
Oil is the source of heating for 68 per cent of NI homes, rising to 82 per cent
in rural areas22. According to the Northern Ireland Oil Federation (NIOF) there
are around 300 oil distribution companies in NI. Though there are numerous
suppliers across NI at a whole, at a local level, especially in rural areas, there is
often limited choice as shown in Figure 1 below.
Consumers’ views and experiences of switching energy supplier
Oil prices vary depending on market conditions. This includes changes to: the
price of crude oil; the cost to refine the product; the cost of marketing and
distribution; the profits of refiners and wholesalers; the time of year (the price
can be more expensive in winter as demand is high during cold weather); and
competition from suppliers across the region.
Consumer Council research23 indicates that oil is 33-45 per cent more
expensive than gas, using the average retail unit price for each fuel. Our
Figure 1: The distribution of oil suppliers in NI by
Council area
research also shows that on average consumers using oil spend an estimated
£637 extra per year than the average gas consumer.
The research also highlights that the cost of oil can vary considerably
depending on consumers’ ability to afford larger refills and other energy
efficiency variables, such as boiler efficiency rating. For example, consumers
relying solely on 20 litre emergency oil drums spend 41 per cent or 61 pence
per litre more than the cost of the average oil refill. The same consumers would
be paying a staggering 136-151 per cent more for their oil than those using
natural gas.
The oil industry is not subject to economic regulation which does apply to both
the gas and electricity sectors. In order to ensure oil consumers are afforded
similar levels of protection as gas and electricity consumers, the Consumer
Council and the NIOF have agreed a Customer Charter. It provides clarity on
levels of customer service that will be afforded to oil consumers, including
clarity on payment methods and billing.
22. NI Housing Executive- House Condition Survey, 2009
14
23. The Consumer Council, Cost of Gas - v - Oil brief, March 2013.
15
Consumers’ views and experiences of switching energy supplier
6. Consumer Switching The Findings
Consumers’ views and experiences of switching energy supplier
• For almost half, the saving required was between 10 and 15 per cent; and
• Only two per cent said price was not a factor.
Figure 2: Key factor motivating a switch
6.1 Choice of fuel
93%
Electricity is available to all households in NI but consumers will use either
natural gas or oil for central heating24. Our research showed:
• 14 per cent of households surveyed used natural gas;
4%
2%
1%
• 46 per cent of the households surveyed in Belfast city had natural gas
supplied to their homes; and
• Outside the city of Belfast the vast majority of households (89 per cent) used
Don’t
know
Other
Cheaper
oil to heat their homes.
Better
product
6.2 To switch or not to switch?
Those who have not switched
It is generally accepted that the higher the rate of switching amongst
We wanted to find out from those who had not switched,
consumers the more competition is working. Unlike GB, which is seeing
what stopped them from doing so. The results show:
switching rates fall , NI is currently experiencing an increase in the number of
25
customers switching. In order to maintain a high level of switching stakeholders
need to understand why some people switch and why others do not.
Those who have switched
• The most frequently cited reasons for not switching
were that it was too much hassle (31 per cent) or that
they liked their supplier (29 per cent);
• Other reasons for not switching were that almost one
We asked those who had switched what motivated them to do so. Our research
in five (18 per cent) thought the new supplier would
showed that:
eventually put the price up; and
• For nine in 10, a cheaper product was the key factor for switching;
• Of those who had switched either their natural gas or electricity, one in
five required a saving of less than 10 per cent in order to choose to switch
“They said yo
u get 14%
discount off
NIE … and
8% less for th
e second
year and whe
n it
comes to the
end of
your second
year you
can look aro
und and
change again
if you
want to see if
they’ll
be another d
eal … so
it’s saving us
money.”
Cookstown
Consumer Pa
nel
• Around one in 10 (12 per cent) felt they did not know
enough about it or they were just too busy (nine per
“Cost, obviou
sly
the cost.”
Derry
Consumer Pa
n
el
cent).
supplier;
24. For more information on converting from oil to natural gas see the Consumer Council report ‘Customers’ Experience
of Natural Gas in Northern Ireland’ (June 2012)
25. Consumer Focus, ‘Switched On?’ January 2013
16
17
Consumers’ views and experiences of switching energy supplier
Consumers’ views and experiences of switching energy supplier
6.3 Knowledge about switching
Figure 3: Why consumers have never switched
A prerequisite to someone switching energy supplier is
It is too much hassle
31%
Like current supplier
29%
Believe new supplier will put the price up
18%
Don’t know enough about it
12%
Too busy
9%
Think supply might not be reliable
6%
Don’t believe the advertising
4%
Bad experience switching in other services
3%
Didn’t know you could
2%
Other
Don’t know
awareness that switching is possible and how to go about
it. Clearly it is also helpful if the consumer is aware of the
benefits of switching and all the implications it will have
for them.
“Well I’d be a
fraid
maybe if you
had to
move back th
ere may
be a charge.”
Cookstown
Consumer Pa
nel
• 96 per cent of those surveyed know that it is possible
for NI households to change electricity supplier;
9%
7%
“It’s just I’m to
o lazy to
switch.”
Figure 4: Consumers who know that
it is possible for NI households to
change electricity supplier
Fivemiletown
Consumer Pa
nel
• Amongst those who had never switched
jump
st in case you
ju
id
a
fr
a
’m
“I
the
ing pan into
out of the fry
any
’t going to be
fire that it isn
e
n’t going to b
cheaper, it is
as a
eficial to me
n
e
b
re
o
m
y
an
me to
he people co
and
consumer. T
’re very slick
y
e
th
d
n
a
r
o
the do
and
from a script,
g
in
d
a
re
e
’r
they
ing that
lieve everyth
e
b
’t
n
o
d
st
I ju
y when
e, particularl
r
people tell m
to the door o
s
e
m
o
c
y
d
o
someb
ing
ed in a shopp
h
c
a
ro
p
p
a
e
you’r
centre.”
mer Panel
Belfast Consu
supplier a significant proportion
(29 per cent) did not know what level of
switching;
• A fifth (22 per cent) claimed that price would
not be a factor;
• Of the remainder, most would require a
saving of less than 20 per cent to switch
supplier; and
t
es
W
th
u
So
th
ty
or
N
as
lf
Be
i
tC
Al
)
es
y
l(
• Of those who had not switched supplier,
two in three had not even thought about
thought about switching but had not done
18
96%
saving would prompt them to consider
switching. Most of the remainder had
to
how easy it is
r
e
d
n
o
w
st
“I ju
ow how
I wouldn’t kn
..
…
it
r
o
it
n
o
m
etween
ity is a unit b
much electric
onitor it.”
the two to m
el
onsumer Pan
Cookstown C
97% 96% 99%
93%
anything about it. A small number (six per
cent) had decided against switching, while a
very small number were planning to do so in
the future.
• Of those who use natural gas 86 per cent were aware that depending on
where they lived it was possible to change their supplier; and
• Just over half of those who have never switched supplier did not think there
was enough information available about switching energy supplier. This view
was most prevalent amongst those under 25 and those belonging to socioeconomic groups C2DE.
19
Consumers’ views and experiences of switching energy supplier
Consumers’ views and experiences of switching energy supplier
6.4 Who switches?
6.5 Experience of switching
As well as the reasons people are switching we wanted to find out who
The experience of switching by those people who
was switching.
have been through the process will influence
• One in five natural gas customers had switched within the last year;
• Just under three in 10 had switched their electricity supplier, two thirds
(64 per cent) within the last 12 months, with a further five per cent in the
process of switching at the time; and
whether they switch again and may influence
others as their experience is passed on to friends
and family.
• The vast majority felt it had been at least easy, if
not very easy, to switch;
• Those aged 35 –49 were most likely to have switched, while there was a
correlation with the socio-economic grouping, with those from middle class
groups ABC1 more likely to have switched.
• Almost seven in 10 believed they had saved
money by switching, with around a further two in
10 who could not tell yet; and
“I honestly d
id it because
it
was so easy.
I mean if it h
ad
been a lot of
hassle with it
, if
I had to start
making phon
e
calls and fillin
g in forms I
wouldn’t hav
e bothered.
I
knew I was sa
ving a bit of
money but b
ecause he did
it
all there and
then I thoug
ht
well happy d
ays, save me
the
hassle!”
Ballymoney C
onsumer Pan
el
• For a similar number, their expectations of
Figure 5: Age group of consumers who have changed
electricity supplier
Yes
16 - 24
28%
21%
30%
25 - 34
35%
34 - 49
50 - 64
65+
ABC1
C2
DE
30%
18%
switching had been met; some one in six didn’t
know yet and for a few (six per cent) they had
been partly met.
6.6Marketing
In order to gain new customers, competing
suppliers have to market their product and services.
Customers’ experience of marketing from energy
suppliers in GB in the early stages of competition
was quite negative. Suppliers were accused of
32%
28%
23%
misleading consumers and of heavy handed tactics
in their selling techniques, particularly in marketing
and sales at the doorstep and in public places.
Furthermore, GB experienced an explosion in the
number of different tariffs on offer. The
20
“It was easy ju
st. The guy
came to the
house and he
did
it all on the la
ptop and wit
h
in
like two or th
ree weeks it
was
switched ove
r.”
Belfast Consu
mer Panel
“... It was just
the fact that
they
had rung us
on a certain
d
a
y
and if we we
ren’t there th
en we
missed it, an
d then they se
nt
more and mo
re letters and
they
expected you
to be there fo
r
that phone c
all.”
Fivemiletown
Consumer Pa
nel
21
Consumers’ views and experiences of switching energy supplier
Consumers’ views and experiences of switching energy supplier
idea was to offer choice but it ended up causing
o bother.
“I’ve had n
e
came to th
y
u
g
e
th
n
Whe
n’t
now, I was
door, you k
n’t
and he was
d
te
s
re
te
in
e
nything. H
pushy or a
ry
er man, ve
was an old
id,
l, and he sa
a
n
io
s
s
fe
pro
’t
s fine, didn
right, that’
all.”
push me at
el
sumer Pan
Belfast Con
confusion amongst consumers and actually inhibited
places, such as shopping centres are now being used
here and it is important that they help consumers
make the right choice. The discussion in the
6.7 Comparisons with GB
the late 1990s. Despite significant differences in the
2. Some suppliers are failing to meet statutory switching
3. Some customers are experiencing problems during the
switching process;
4. Customers in vulnerable positions have the worst switching
requirements, for example regarding timescales;
experience; and
5. Poor experiences have a big impact on future behaviour.
markets (mainly their size and the limited distribution
of natural gas in NI), it is highly likely that, given the
level of complaints the Consumer Council is already
In Northern Ireland we are already experiencing some of the same issues.
receiving, there will be some similar experiences in
current GB switching landscape with the current
wn
Fivemileto
Panel
Consumer
1. Switching rates are down by a quarter since 2008;
NI to those in GB. It is interesting to compare the
irtricity
ow about A
n
k
’t
n
id
d
“I
at my
uy landed
until the g
door.”
consumer panels was generally positive towards the
current marketing practices of energy suppliers in NI.
Key findings from Consumer Focus research into switching in GB
March/April 2012:
switching. Doorstep selling and marketing in public
GB has had competition in gas and electricity since
ut
ought abo
th
r
e
v
e
n
“I
ame to
until they c
switching
the door.”
el
sumer Pan
Derry Con
6.8 Home Heating Oil
position in NI. In January 2013, Consumer Focus
Switching oil supplier involves a very different process to switching natural gas
published a report on its research into customer
or electricity supplier. Each time the consumer needs a refill of oil they have the
experiences of switching.
opportunity to compare suppliers and choose a new supplier. For over 60 per
cent of oil consumers here this happens at least three times a year. Compared
to GB, oil consumers in NI buy their oil more frequently - 26 per cent buy four
to six times a year compared with 10 per cent of GB customers26.
The frequency of purchase and the large number of locally based suppliers
suggests that the motivation for choosing a particular supplier may be driven
by different factors than the choice to switch natural gas or electricity supplier. The savviest consumer will not only have knowledge of the local oil supplier
market but also the inclination and means to take advantage of it. It is not
enough to know there are a lot of suppliers available, consumers also need to
26. Office of Fair Trading ‘Consumers’ Experience of Off-Grid Energy’- 2011
22
23
Consumers’ views and experiences of switching energy supplier
Consumers’ views and experiences of switching energy supplier
take the time to find out what each supplier can offer and to have the financial
• Those belonging to socio-economic groups DE
resources to buy in bulk to get the lowest price. Our research shows that when
and those living in the South or West of NI were
buying oil many customers remain with a supplier because of information
least likely to seek competitive quotes;
gained from friends and family or even because they personally know
the supplier.
• Those in socio-economic groups DE were also
least likely to feel that comparing prices charged
• More than one in three users of oil were aware of at least six suppliers in
their area with a similar number aware of between three and five suppliers;
by different suppliers was very easy with a
significant proportion (23 per cent) unsure if it
was easy or not; and
Figure 6: Consumers’ awareness of the number of oil
suppliers available
• One in five had used an oil price comparison site
on the internet. Those aged 25-49, ABC1s, and
“A company
of mine, I alw
ays
get them, I’v
e been gettin
g
them for I do
n’t know how
long and my
husband alw
ays
says ‘ring aro
und’ but whe
n
I ring them b
ack they kno
w
me that well
they give it to
me for the pri
ce I’ve got it
somewhere e
lse, maybe £
5,
£10 cheaper
anyway.”
Armagh Con
sumer Panel
those living in Belfast City were most likely to
have used such sites.
oil
use the same
ll
a
e
w
y
il
m
“In my fa
s the
aunt she doe
y
m
d
n
a
y
n
a
comp
lectric
rt of like an e
so
,
g
in
th
ly
k
wee
a week
up about £10
p
to
u
o
y
,
rd
ca
come to
and they will
or whatever
top it up.”
her house to
sumer Panel
Armagh Con
• Two thirds of those who use oil tend always to buy from the same supplier with a further fifth usually buying from the same supplier;
• Very few respondents (five per cent) felt that it was not easy to compare prices charged by different heating oil suppliers;
• Just over one in four get quotes every time they buy oil with more than one in two never seeking quotes from other suppliers;
24
25
Consumers’ views and experiences of switching energy supplier
Consumers’ views and experiences of switching energy supplier
7.Conclusion
Figure 7: Consumers who had used oil price
comparison sites on the internet
Competition in the electricity and natural gas industry in NI is still in its infancy,
Yes
20%
Male
Female
19%
20%
16 - 24
25 - 34
35 - 49
50 - 64
65+
but nevertheless is developing steadily. Those consumers who have switched
supplier have found the process easy and have benefited from switching. Competition in the domestic oil market is far more developed. However,
consumers appear to be content to stick with a known and trusted supplier and
12%
20%
27%
25%
this seems to reflect the fact that NI has not yet got a well developed ‘switching’
culture. With more information and awareness of the benefits of switching NI
consumers could reap more rewards across all domestic fuels.
9%
It is significant that the ‘non-switching’ culture is particularly prevalent in
ABC1
C2
DE
Belfast City
North
South
West
27%
18%
the lower socio economic groups, where the benefits of switching could
be more profound. It is important that as competition continues to develop,
9%
vulnerable and lower income consumers are afforded adequate protection
28%
18%
21%
13%
and are equipped with the tools necessary to take advantage of switching. It is
important the suppliers, the Regulator and consumer representatives continue
to work together to ensure that all consumers reap the benefits of competition. d
e in drums an
in
m
y
u
b
ld
u
“I wo
s me
robably cost
p
It
.
p
u
ll
fi
just
fford to
d I couldn’t a
n
fi
I
t
u
b
re
0
o
m
would put £3
I
so
l
il
b
il
o
pay a big
y oil.”
a week into m
mer Panel
Belfast Consu
26
27
Consumers’ views and experiences of switching energy supplier
8. Key recommendations
Consumers’ views and experiences of switching energy supplier
9. Appendix A Survey Questions
The Consumer Council is committed to ensuring that all consumers have
the knowledge and confidence to switch energy supplier if they wish. We
will continue to develop information, such as our ‘Switch-On’ guides, so all
1.
change electricity supplier?
consumers can make informed decisions on their preferred energy supplier. We will continue to target the most vulnerable consumers and work with others
to ensure the following recommendations are put in place.
1. The energy industry should provide more information to increase the
knowledge, awareness and confidence of consumers on the benefits and
2.
Have you ever changed your electricity supplier?
3.
When did you last switch?
4.
Do you use natural gas or home heating oil?
5.
Did you know that depending on location, it is possible for some
households using natural gas to change their supplier?
process of switching;
2. The energy industry and the Regulator must remain active in developing
safeguards to ensure the problems experienced in GB do not occur in NI;
3. The energy industry should be targeting lower socio economic groups and
6.
Have you ever changed your natural gas supplier?
7.
When did you last switch?
8.
On price, how much of a saving would be required / was required (as
appropriate) for you to switch your electricity (or natural gas)?
consumers in fuel poverty to promote the benefits of switching energy
supplier and shopping around for oil;
4. Government, local Councils and energy advice organisations should support
and encourage pilot approaches that provide oil-dependent consumers with
alternative purchasing options, such as fuel brokering and low cost loans. This may help address the issue of consumers on low incomes buying 20
litre oil drums ; and
Did you know that it is possible for households in Northern Ireland to
9.
What was the key factor in causing you to switch?
10. How easy or difficult was it to switch?
11. Do you think you have saved money by switching?
12. Overall have your expectations of choosing to switch been met?
27
5. Energy suppliers and the Regulator must continue to work together
with the Consumer Council to identify and address the reasons for the
increase in electricity complaints that has accompanied the introduction of
competition.
13. Have you ever thought about switching your electricity (or gas supplier)?
14. Why have you never switched?
15. Do you think there is enough information available about switching
energy supplier?
16. Do you tend to buy oil from the same supplier every time?
17. How many oil suppliers are you aware of in your area?
27. Consumers relying on heating oil emergency drums spend 41 per cent or 61pence per litre more than the cost of
the average 500 litre oil refill and between 136-151 per cent more for their oil than those using natural gas. Source;
Consumer Council ‘Gas v Oil Cost Comparison Brief’ - March 2013.
28
29
Consumers’ views and experiences of switching energy supplier
18. How often, if at all, do you get quotes from different suppliers before
buying heating oil?
19. How easy or not do you think it is to compare the prices charged by
Consumers’ views and experiences of switching energy supplier
10.Appendix B Socio Economic Groups
different heating oil suppliers?
20. Have you ever used Heating Oil Price Comparison sites on the Internet?
A
Higher managerial, administrative, professional e.g. Chief executive, senior
civil servant, surgeon;
B
Intermediate managerial, administrative, professional e.g. bank manager,
teacher;
C1 Supervisory, clerical, junior managerial e.g. shop floor supervisor, bank
clerk, sales person;
C2 Skilled manual workers e.g. electrician, carpenter;
D
Semi-skilled and unskilled manual workers e.g. assembly line worker,
refuse collector, messenger; and
E
Casual labourers, pensioners, unemployed e.g. pensioners without private
pensions and anyone living on basic benefits.
30
31
Consumers’ views and experiences of switching energy supplier
Consumers’ views and experiences of switching energy supplier
11. Appendix C –
Consumer Council
information on switching
energy supplier
The Consumer Council has produced a series of ‘Switch On’ guides for
consumers to help inform them about energy switching and other energy
issues; these include:
• Switching Electricity Supplier leaflet;
• Switching Natural Gas Supplier leaflet: and
• Home Heating Oil leaflet.
These are part of a suite of energy leaflets that also include information and
advice on:
• Coal;
• Electricity;
• Energy Efficiency;
• Energy advice for Business;
• Energy advice for Students;
• Energy Performance Certificates;
• Natural Gas; and
• Energy advice for Older People;
Also available are Natural Gas and Electricity Price Comparison Tables.
All these documents are available on the Consumer Council website
www.consumercouncil.org.uk, by contacting us via facebook
(Consumer Council Northern Ireland), twitter (ConsumerCouncil) or
by calling 0800 121 6022. 32
33
Elizabeth House
116 Holywood Road
Belfast
BT4 1NY
Complaints line: 0800 121 6022
Tele/Textphone: 028 9067 2488
Fax: 028 9065 7701
Email: info@consumercouncil.org.uk
complaints@consumercouncil.org.uk
Website: www.consumercouncil.org.uk
Consumer Council Northern Ireland
ConsumerCouncil