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Energy switch timescale for deals cut in half

CONSUMERS will be able to switch electricity and gas supplier within two-and-a-half weeks under plans put forward by energy regulator Ofgem.

DERMOT NOLAN: Ofgen chief is promoting consumer  confidence.
DERMOT NOLAN: Ofgen chief is promoting consumer confidence.

The proposals, agreed by the energy industry and due to come into force on December 31, will see switching times halved, to three days plus a 14-day cooling off period.

The watchdog also publishes additional plans today to introduce next-day switching by 2018 at the latest.

Around 62 per cent of people have never switched energy supplier, Ofgem revealed in a March survey. The watchdog added these people were often on old, uncompetitive deals and could save up to £200 a year if they switched.

Ofgem chief executive Dermot Nolan said: "Consumers can change their bank in seven days, their mobile phone in just a couple, but have to wait significantly longer to switch their energy supplier."

He added: "We hope this will give consumers more confidence to get out there and start shopping around."

Currently switching takes around five weeks, which includes a statutory two-week cooling off period that came into force in June.

Ann Robinson, director of consumer policy at uSwitch.com, said: "The announcement is exactly the sort of game-changer needed to encourage consumers to engage with the energy market.

"By speeding up the time it takes to switch energy supplier, households will feel the benefits of moving to a new tariff even sooner.

"With half of households yet to switch their energy supplier, it is clear there are barriers that need to be broken down. For many of these, it will be a question of confidence and fear of the unknown.

"However, measures such as those outlined today should improve this and provide people with greater reassurance."

The regulator has been working with energy suppliers and the Department of Energy and Climate Change (DECC) to speed up switching times.

Gas and electricity supplier lobby group Energy UK said it welcomed Ofgem's proposals.

Ofgem's additional proposals to introduce next-day switching by 2018 at the latest will still include the 14-day cooling off period, but this will begin after a customer has changed supplier.

Next-day switching will be made possible by the upgrading of old IT systems first developed in the 1990s, said Ofgem.

The latest figures from the DECC show 1.3 million electricity customers and 866,000 gas customers changed supplier in the final quarter of 2013.

Secretary of State for Energy Ed Davey said: "Energy companies have already confirmed they will meet my challenge to halve switching times by the end of the year, but I want to see them get to 24-hour switching as soon as possible. We are already seeing more people switching to get the best deal on their energy, and many are switching away from the 'big six' to smaller suppliers.

"Making the process much quicker will encourage more to shop around, increasing competition and driving down bills."

An average UK household paying for combined gas and electricity by direct debit from one of the Big Six suppliers is now facing an annual bill of £1315, compared to £819 five years ago.

The steady rise in prices has been blamed by suppliers on rising costs on the wholesale market, but last week Ofgem challenged energy companies to explain to customers why falling wholesale prices have not been passed on to household bills in the same way.

Wholesale costs make up nearly half of a household energy bill.

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