SEM Chart of the Week
Making gains: Electricity switching
The Commission for the Regulation of Utilities (CRU) published its January 2020 Customer Switching Report for the Electricity and Gas Retail Markets on 12 March. In this edition of SEM Chart of the Week we compare electricity supplier’s net switching positions, and what new suppliers are making gains in retail market share.
Figure 1 displays the monthly net gains or losses of electricity suppliers operating in either domestic or business spheres. Looking at the wider picture, the number of monthly electricity switches for January 2020 saw a 10% year-on-year decrease at 25,518. Of these switches Bord Gáis Energy recorded the largest net loss with -2,450, the biggest decrease it has seen since November 2017. The supplier hasn’t posted monthly net gains since February 2019 and recorded its lowest volume of gained switches in five years. In January, the largest proportion of electricity switches were from Electric Ireland (28.76%), who continue to slowly lose market share.
Comparatively, the past four months recorded “other” suppliers as having the largest net gains, with January seeing this category of suppliers attaining 3,921 electricity switches. Iberdrola entered the retail electricity market in 2019 and have been acquiring market share by offering some of the lowest tariffs to customers, so it’s safe to assume they make up a significant portion of the others category. SSE Airtricity, PrePayPower and Panda Power all saw marginal net gains in January, with SSE Airtricity accounting for 18.15% of gaining switches, the second highest proportion behind Electric Ireland with 22.79%.
A key driver behind switching behaviour continues to be pricing. Since the start of March, we have noted price drops from various suppliers including SSE Airtricity, Bord Gáis Energy and PrePayPower, who all look to take advantage of falling power prices by releasing desirable tariffs. Iberdrola have been offering some of the lowest tariffs on the market since they entered last year and the others category listed by the CRU is likely populated with Iberdrola customers. Upcoming switching updates from the CRU may demonstrate pricing as a primary incentive, and based on the trend above, this is likely to continue into the future