In November 2013 a new EU directive was introduced which was designed to enable all energy customers to switch their supplier within 21 days.
Under the directive energy suppliers are required to report to Ofgem on the proportion of switches that take place by the date requested by the customer.
Ofgem expect to receive regular information, by supplier and market segment, on average switching times, delays and reasons for failure to meet the three-week requirements.
In the interest of transparency, Ofgem have said that they are “minded to publish information on industry performance on a regular basis.”
Any switches that do not take place on the date agreed will be classified as having failed under the EU directive.
Ofgem want to have at their disposal a number of supplier licence penalties to tackle persistent breaches of the 21-day switching deadline and are therefore proposing changes to Standard Licence Condition (SLC) 14A1 of the gas and electricity supply licences to ensure that:
“Suppliers take all reasonable steps to ensure that a customer’s switch to a new supplier happens within three weeks”
Ofgem’s own analysis of the period Q1 2012 to Q1 2013 found that:
- 20% of electricity switches and over 80% of gas switches took more than three weeks to complete
Ofgem have said that the “significantly worse performance” in gas reflects difficulties with the central gas industry systems that support switching which are subject to a major overhaul.
Ofgem have also noted that there exists significant variation in performance amongst individual suppliers suggesting that there are in-house problems exacerbating these inefficiencies and that as a result there is significant scope for suppliers to do more to improve performance.
Ofgem however do not intend to stop there. With the advent of the 2015 smart meter roll out, due to be completed in 2020, Ofgem want to introduce “reliable next day switching”.
Facilitating such an ambitious target would however require fundamental changes to the current market operations, something that has not been attempted previously.
Ofgem recognise that they would need to implement the following:
- Supply Point Register – a turbocharged Data Transfer Network (DTN) built around the Data Communication Company’s (DCC) technology facilitating instant messaging between participants.
- Central Objection Register – introducing a much-needed central database of contractual terms and objection statuses enabling instantaneous responses to applications for transfer. This represents a fabulous opportunity to remove the current controversial arrangement that enables suppliers to misuse the objection ‘window’ to actively prevent legitimate transfers.
- Gas Confirmation Window – Currently there exists a two-day gap between the end of the objection window and the switch. This would be reduced so that the objection window closed at 5pm on the day before the transfer. This would be mirrored in electricity, so a transfer request could be made the day before the requested switching date. When combined with the objections reform noted above, a transfer request could be made up to 5pm on the day before the switch
Ofgem’s ambition is to have 1-day switching in place by the end of 2018 potentially revolutionising customer confidence in the market, for now however the move to 21-day switching is the first change that business energy customers should experience.
We will of course be publishing data on individual supplier performance in meeting the 21-day target however until this data becomes available you can view our Ease to Leave guide to understand supplier performance in this area and how straightforward each supplier currently makes the change of supplier process.
Even under the current market arrangements Business Juice can make your switching process simple and seamless call us on 0800 051 5770 to find out how, we’d love to hear from you.