Energy suppliers face biggest customer switching boom in four years

Energy utilities are bracing for an expected surge in consumers shopping around for a better deal.

After years of falling wholesale prices, energy suppliers are beginning to raise their tariffs as energy costs begin to climb.

The Institute of Customer Service has warned that bill payers are turning in their droves to internet search engines after a flurry of energy tariff hikes reignited interest in switching suppliers.

The consumer group’s analysis of Google Trends data shows that searches for price comparison sites spiked to four year highs in January, the month in which searches of “change energy supplier” consistently peaks over the year.

The findings were revealed after a rash of energy price rises spread through the retail market in recent months.

Three of the Big Six energy suppliers - EDF Energy, Scottish Power and Npower - have raised the price of their standard tariffs and last week challenger brands Co-operative Energy and First Utility both announced hikes of 5pc and 9.7pc respectively.

Ed Kamm, managing director of First Utility said: “After a period of low wholesale prices, energy and industry policy costs have increased quite substantially over the past year and that unfortunately means we need to reflect this in the price of our variable tariff.

This will only impact a small proportion of our customers thanks to our focus on providing customers with great value fixed-price tariffs.”

British Gas is the only supplier to guarantee its prices will stay in place until August.

Jo Causon, chief executive of the ICS said the utilities most vulnerable to a heavy customer losses are likely to be those which struggle with customer service.

The consumer group’s research shows that one in three consumers say that customer service would prompt them to switch suppliers, and the same proportion said that the customer service reputation of companies is also a key driver.

“It is clear that good is no longer good enough within the utilities sector – customers are less likely to recommend their supplier and more interested in switching than ever. This means the companies must act now to keep their customers loyal, or risk losing market share,” Ms Causon said.