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Smart switching: will it transform the way we hunt for cheaper energy bills?

Posted by Anna Carlini on 30 January 2019 at 11:43 am

Switching energy providers

We all know that switching can save us money, but it can also be such a hassle to do. Many of us simply do not have the time to wade through comparison websites or wait on the phone with providers for a quote. For others it can be an overwhelming or confusing experience, especially for those attempting it for the first time. Unfortunately this means that switching supplier can often sit at the bottom of our to-do list for months on end, and for all that time we are paying too much on our energy bills. In fact, hundreds of households across the UK are paying over the odds for their energy.

Many argue that the current system of self-switching supplier is not working. General feelings of mistrust are simmering towards energy companies and customers feel more than just unrewarded for their loyalty, but penalised for it. A spate of smaller energy companies collapsing in recent times has added to a sense of uncertainty and insecurity. All these factors have created an environment where people are tuned off to their energy bills and as a result are not switching enough to take advantage of better deals.

But all this could change with the introduction of smart switching.

Not that long ago switching energy companies was revolutionised by the advent of the comparison website. These sites make it easier way to see what tariffs are available and to choose the best option. What is stopping smart switching from being the next big thing to transform the energy switching market?

 

What is smart switching?

Smart switching is an emerging service in which a household can sign up to have their energy bills switched to the best deal available, without them having to do anything themselves. Once you sign up the service searches for the best tariff available and switches automatically. Once a switch has been made the service will notify you, and you would be within the time limit to cancel if desired.

Over the last few years several companies have emerged offering exactly this service and although not yet taken up on a large scale, it holds the potential to change the market. There are of course different variations available; some services will switch you before a contract ends, if it is still saves money after exit fees are deducted, whereas others will only switch you after the end of a contract. But it is possible to shop around and find an offer which works for you. Either way it is easy to see the appeal in the service. You can even set preferences, such as choosing only renewable energy tariffs or only suppliers part of the Warm Home Discount scheme, which can reduce unpleasant surprises and offer some control.

Implications

Of course it is impossible to know whether this will become the new norm, but let’s take a moment to speculate on what the market would look like if smart switching became commonplace. It is already in the pipeline for this to expand into other subscription areas such as insurance and internet providers but in these times of online subscription services, it is feasible that this idea catches on in many other areas of our lives too. Could our weekly online shop be switched between supermarkets offering the best deals? Perhaps our online streaming services could automatically switch to follow our favourite shows? Trivial things perhaps, but one day we might rely on switching services to ensure we get the best value for our money in many different aspects of our lives.

Of course questions could be raised here around the issue of conflicts of interests. It would certainly make many people think twice if these services were funded by energy suppliers. However, so far there is little to suggest this happening. Furthermore the experience of automatic switching for the individual may be somewhat disorientating. It may be hard to keep track of who you are currently with (although this is sometimes the case anyway!).

Some would perhaps argue that automatic switching without first requiring permission takes away your autonomy and choice. For example, what if you are automatically switched to a supplier you do not trust?

Furthermore some people would feel upset by the idea of becoming further reliant on technology- do we really need to take every single decision out of our own hands? And of course this would further marginalise those without access to the internet.

The implications for the energy supplier market would also be extensive. For a start there would not be a huge need for advertising, as software is not influenced by colours or messaging, but there would be a very concrete incentive to offer the lowest prices. The supplier offering the best deals would see significant increases in their take up. However this also threatens a scenario where companies continually undercut one another, to the extent where they are unsustainable. An unsustainable market is an unstable one.

It is of course difficult to say what could happen if this technology becomes widespread. But as we see the emergence of these companies at the same time as the internet of things grows, it does raise the faintest possibility that perhaps this could be the low maintenance energy switching of the future, ensuring we always receive our energy for the best price.

Please comment below if you have any experience with an automatic switching company or whether you think you ever will.

 

If you have a question about anything in the above blog, please ask it in the comments section below.

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Comments

2 comments - read them below or add one

dominator99

dominator99Comment left on: 5 April 2019 at 12:56 pm

I have come across an instances of  comparison web sites artificially inflating my energy cost to show a bigger discount to encourage a switch. So I now use the same energy consumption figures for multiple comparison websites to make sure they all agree on my energy consumption cost; this 'weeds out' the dishonest ones

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Malcolm M

Malcolm MComment left on: 31 January 2019 at 11:23 pm

Switching companies exist to make a profit for themselves. How would an "automatic" switching company prioritise energy supplier A, who pays a commission of £100 per switch, against energy supplier B who pays £50 per switch, if their energy prices are largely similar?

Wouldn't we, as intelligent consumers who subscribe to Yougen, not wish to undertake our own research using current "trusted" comparison sites to check out and compare their current best-buys and therefore there would be little saving of our time or convenience?

For those who are not as dilligent, I can see unseen charges/fees being imposed, and another PPI-type scandal in the future.

MoneySavingExpert's Energy Club has for sometime alerted the subscriber (householder) to possible better energy deals, but sensibly it is the householder who actively decides to undertake the switch, and both consumer and MSE may benefit by each gaining half the commission provided by the energy supplier. 

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