The value of switching on to energy savings

The publication last month of a report for the Utility Regulator into the effectiveness of competition in Northern Ireland’s retail energy market has helped to stimulate some commentary around the impacts that competition has delivered for energy consumers here.

At surface level the report, produced by independent consultants Cornwall Energy, suggests energy markets in Northern Ireland are not large enough for real competition to exist; that low customer numbers will only support a low number of suppliers; and that there is a weak consumer response in general towards switching.

As a prospective energy supplier looking to consider whether you should open up shop here, you could be forgiven for concluding that it’s really not worth the effort.

However that hasn’t been our experience of the Northern Ireland energy market.

SSE Airtricity has been operating here as an energy supplier since the commercial electricity market was first deregulated in 2002. Our rate of customer growth at that time would be considered modest when compared to growth rates in a domestic energy market today however, as modest as it was, over time we grew our commercial base to a scale where original market entry was not only justified but it also made our entry in June 2010 into the domestic energy market the natural next step.

For the first time ever, householders across the country now had a choice of electricity provider as well as the opportunity to switch their provider and benefit from a range of new market-leading savings.

The consumer benefits which have resulted from SSE Airtricity’s market entry are tangible. Since we entered the domestic electricity market more than 160,000 customers have made the choice to switch their electricity supply to our company. When combined with our customer numbers in Greater Belfast’s natural gas market, we’re now providing energy to over 300,000 homes and businesses here.

Our customers have realised electricity cost savings of around £20 million so far by switching to our introductory energy tariffs. And we’re continuing to drive competition with market-leading electricity discounts and offers that could save individual households around £100 each just from switching. Apply that across the board in all of Northern Ireland’s over half a million homes and the country could switch and save a total of almost £60m*.

And those savings don’t have to come at the cost of compromising on service. Customers who have switched on to SSE Airtricity for energy savings have stayed for our award-winning and innovative service – a point borne out in the Cornwall Energy report which demonstrates that consumer satisfaction levels towards energy suppliers since competition remain extremely high with respect to customer service, trust in suppliers and flexibility of payment methods.

So, if the switching benefits in terms of savings and continued quality of service post-switching are so obvious for Northern Ireland consumers why do we still see such a high level of inertia in the domestic switching market?

During its recent ‘Switching Week’, the Consumer Council highlighted that switching levels in Northern Ireland have remained low in comparison to the rest of the UK and Ireland, with just 28 percent of electricity customers making the switch since the market opened for competition in 2010.

This is where the questions being asked in the Cornwall Energy report can help frame a debate for enhanced competition as we look forward to 2015. For instance, would there be an appetite for an in-dependently accredited comparison and switching site for gas and electricity? And what steps can be taken to ensure that consumers are well-informed and have clear and easily-understood information about different suppliers, products and service offerings?  

As the company that has driven the switching market in Northern Ireland and that has delivered proven savings for the benefit of consumers, these are just some of the questions that we will continue to provide innovative answers to in 2015.

* Based on available customer savings by switching to SSE Airtricity introductory products from total Power NI domestic credit and KeyPad customer accounts that have not yet switched supplier, Utility Regulator Quarterly Transparency Report published August 2014.

About the author

Stephen Wheeler Managing Director, SSE Ireland

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