Switching.

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Random late night/early morning thought......why don't energy companies offer a switch incentive like banks?

Maybe they do?

Ok they don't use those new accounts to fund borrowing in the same way but I was filling in a survey earlier.......asked why I haven't changed suppliers.

It hit me. What is the incentive?

I only use relatively small amounts and no doubt there ARE better and worse deals but its a thought.
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  • The_Green_Hornet
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    Random late night/early morning thought......why don't energy companies offer a switch incentive like banks?

    Maybe they do?

    Ok they don't use those new accounts to fund borrowing in the same way but I was filling in a survey earlier.......asked why I haven't changed suppliers.

    It hit me. What is the incentive?

    I only use relatively small amounts and no doubt there ARE better and worse deals but its a thought.
    Octopus Energy run a refer a friend scheme where both parties receive a £50 credit.
  • victor2
    victor2 Posts: 7,649 Ambassador
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    As above.
    Plus, some switching sites used to offer a payment for switching through them. Unfortunately those days are gone now. If rates ever settle and the government abandons the financial support it currently gives, maybe competitive fixed tariffs and switching to save money will return.

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  • ariarnia
    ariarnia Posts: 4,225 Forumite
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    yes. right now theres no reason to switch and energy companies dont really want lots more customers (most were actively refusing new customers until not long ago), theres to much risk and unpredictabluty on the markets still. 

    so now the only real incentive is if you want a specific tarrif (like an ev tarrif or the octopus tracker) or for better customer service or to pay a specific way. all practical reasons. 

    but in the 'before times' the incentive would be to fix at a better rate or to get cash back. it was actively bad for you to not consider swiching because the standard variable rate or offers open to existing customers would be worse and more expensive than deals available on swiching. which is why there were so many comparison sites. 

    that will hopefully come back but maybe note for 2 or 3 years and maybe not the same depending on what the government decide to do about the energy markets. 
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  • MattMattMattUK
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    Random late night/early morning thought......why don't energy companies offer a switch incentive like banks?

    Maybe they do?

    Ok they don't use those new accounts to fund borrowing in the same way but I was filling in a survey earlier.......asked why I haven't changed suppliers.

    It hit me. What is the incentive?

    I only use relatively small amounts and no doubt there ARE better and worse deals but its a thought.
    The issue is the the maximum profit the energy suppliers are allowed to make on SVR is 2%, most are making less at the moment. That means on the average household  they are making £48 per year profit so there is not the headroom. They can cross subsidise slightly from the allowed marketing budget but that is also limited. 

    Octopus are still offering the £50 referral bonus but that is not likely an issue at the moment as transfers are so few in number, it is likely going forward they might change to only offering that on switching to fixed tariffs.
  • EssexHebridean
    EssexHebridean Posts: 21,478 Forumite
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    edited 4 February 2023 at 11:21AM
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    It should be remembered that there can still be a definite cost saving benefit to a switch for those using E7, too. 

    Traditionally of course, the cost saving has been the incentive. 
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  • bristolleedsfan
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    Random late night/early morning thought......why don't energy companies offer a switch incentive like banks?

    Maybe they do?

    Ok they don't use those new accounts to fund borrowing in the same way but I was filling in a survey earlier.......asked why I haven't changed suppliers.

    It hit me. What is the incentive?

    I only use relatively small amounts and no doubt there ARE better and worse deals but its a thought.

    Octopus are still offering the £50 referral bonus but that is not likely an issue at the moment as transfers are so few in number, it is likely going forward they might change to only offering that on switching to fixed tariffs.
    Highly unlikely being as Octopus fixed rates never had exit fees bar a 3 year fixed rate they offered some time ago, the energy suppliers that previously limited incentives to fixed rates all had exit fees.

  • macman
    macman Posts: 53,098 Forumite
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    edited 4 February 2023 at 2:41PM
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    The last thing any supplier has wanted for the last 12m is more customers, since they're making a loss on every existing customer. The profit is currently capped at 2%, but most would be delighted to be making only a 2% loss.
    Even Octopus, with it's generous £100 referral awards, has just announced a £150m loss.
    No free lunch, and no free laptop ;)
  • bristolleedsfan
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    For a bit of balance EDF and Eon Next also have £50 each refer a friend currently running
  • Scot_39
    Scot_39 Posts: 1,917 Forumite
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    victor2 said:
    As above.
    Plus, some switching sites used to offer a payment for switching through them. Unfortunately those days are gone now. If rates ever settle and the government abandons the financial support it currently gives, maybe competitive fixed tariffs and switching to save money will return.

    Arguably "competitive fixed tariffs" are what has broken the UK domestic resellers market.

    Because the Ofcom regulation model didn't insist these companies either hedged enough of the supply to back up that fixed price - or have the financial reserves to withstand the losses when the prices rose.

    Energy crisis are not new - we had 3 in 20 years in the 70s,80s and 90s - at least the later in the teen / adult lifetime of many in senior positions in govt and Ofgem / as well as I suspect energy firm boards.

    And so we all currently pay a £61 SofLR levy for those failed companies - who's cheap pricing not everyone did or could benefit from.
  • EssexHebridean
    EssexHebridean Posts: 21,478 Forumite
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    The problem is - that last paragraph is incredibly divisive isn’t it. As far as I can see the majority of consumers in the U.K. didn’t not have the opportunity to switch supplier and benefit from cheaper prices. We’ve seen posters on here previously complaining that “they never switched - were always with big 6 suppliers - so shouldn’t have to pay the levy for the SOLR costs” - but the system does not work that way. Things like infrastructure costs are a communal affair. And as members on a money saving forum, should we be applauding those who never made efforts to save money in a perfectly legitimate way anyway? Similarly - we see people here smugly claiming that “they would never take a referral bonus” - but if you actively want to switch to a particular supplier who offers such a thing, what are you gaining by refusing it? High principles are lovely, but not everyone can afford to maintain such principles. Perhaps those people who turned their backs on the referral bonus have a family member who is with the company in question, desperately struggling for the means to pay their energy bills, and would really have benefited from that £50? 

    I suspect that the vast majority of those who DID switch saved more than £61 by doing so - particularly if they switched regularly to keep their prices as low as they could. 
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