Energy switching trial to cut 50,000 bills

energy bill Image copyright Getty Images

A special switching deal to help people reduce their energy bills is to be offered to about 50,000 households.

The regulator Ofgem will run a trial - to be launched in the next few weeks - which could offer savings of up to £300 a year for each customer.

It will be based on the idea of "collective" switching, where large numbers of consumers swap supplier in one go.

Eligible customers will have been on a standard tariff for over three years.

About 57% of households are currently on such tariffs, which are the most expensive.

Despite previous incentives to switch to cheaper fixed-term deals, many people have been reluctant to do so.

Ofgem said it had already chosen one of the big six energy suppliers to run the trial, but it has not revealed which one.

It will also appoint a consumer partner to help with the switch - possibly a switching site, or a consumer group.

Ofgem said it would be easier for customers to take part in the trial than in typical collective switching deals.

That is because they will not need to enter the details of their existing tariff.

What is collective switching?

Image copyright Getty Images

A number of organisations, including switching sites, newspapers and even local authorities, have helped groups of several thousand people move supplier in one go. The economies of scale enable them to negotiate lower prices.

It is claimed that some groups have saved more than £350 a year for each member by switching collectively.

However, critics say the deals on offer are not necessarily the cheapest on the market.

Fresh campaign

The government announced at the weekend that it was considering sharing information with energy suppliers, to let them know which households claim state benefits.

This would enable such households to have their bills capped by Ofgem, alongside 5 million other vulnerable customers, who are now on the "safeguard" tariff.

At the same time, Ofgem is launching a new trial to persuade customers on expensive standard variable tariffs to change supplier.

As many as 250,000 households will be sent two letters or emails from their energy firm, telling them about three cheaper deals they could benefit from. This will include tariffs from rival suppliers.

A similar trial last year resulted in a trebling of switching rates.

In 2017, 18% of consumers switched their electricity suppliers and 19% switched their gas suppliers, the highest rates for nearly a decade.

The government is pressing ahead with plans to cap the bills of 11 million consumers who remain on standard variable tariffs.

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