Electricity Switching Hit Four-Year Low in May

After a flurry of switching in March and April, energy customers mostly stay put last month. Data from Electralink shows that only 418,000 moved to a new electricity supplier last month, down a third from April.

After slumping during the pandemic, energy switching rebounded in March and April as consumers dodged price hikes from energy giants following the increase in Ofgem's price cap. 

But that momentum wasn’t sustained in May, and switching hit its lowest level since July 2017, excluding the usual January freezes.

However, customers’ appetite for small and mid-sized energy companies hasn’t waned. 122,000 households ditched a large company for a challenger last month—nearly a third (29%) of all switches. “An established name is not necessarily the key driver of customer preference,” Electralink observed.

Over the last three years, legacy energy brands—including British Gas, EDF, E.ON and Scottish Power—have been losing customers at the rate of about 1.5 million per year, or 5% of the market. This took their market share down to 55% at the start of April 2021. It could fall under half next year.

The biggest winners of this exodus have been small energy suppliers, posting net gains in eight of the last 12 months. They've won customers with rock-bottom prices and green claims, but small suppliers are also prone to collapse in the fiercely competitive market. More than 20 have failed since the beginning of 2018.

Electralink forecasts that switching in June 2021 will likely resemble that in June 2019 and 450,000 households will find a new energy supplier. However, news that an unnamed large supplier will increase its prices may trigger a scramble for the door in the latter half of the month, Electralink said. 

We suspect they’re referring to green challenger Bulb, which will add an average of £69 to its customers’ bills from 21 June, after already raising prices by £91 in April. Bulb has posted massive gains over the last few years, becoming the fastest-growing company in Europe and signing up around two million households in the UK. Chief executive Hayden Wood has said customers are “voting with their feet for green energy, fair prices and excellent service.” We’ll see if they reverse direction when the next price hike bites.