University professor says switching pays

13 April 2007
Some electricity customers remain loath to switch even when presented with manifest price-saving benefits, a study from economists at Warwick University has shown.

In spite of the increased availability of online switching tools and increased take-up of the opportunity to directly compare prices like-for-like, many customers retain blind loyalty to their existing provider, the survey found.

But when customers do not demand enough of their existing suppliers, the effect can be that falls in wholesale prices are not passed on to them, researchers argued.

"Some consumers remain reluctant to switch, even in the face of substantial financial benefits," noted Warwick's Professor Waterson, who led the study.

If customers used their switching power more effectively, they could drive lower price differentials among competitors in the electricity industry, the researchers suggested – resulting in a better deal for consumers across the board.

But the gap between the cheapest and most expensive suppliers remains as wide as 30 per cent for high energy users, suggesting that some companies are able to continue charging significantly more than competitors.

Although four million customers took the plunge and switched suppliers in 2006, another ten million are sticking with their supplier, reported's energy product manager Geoff Slaughter.

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