Electricity Switching down 15% year on year in May and SSE reports drop in profits

Switching levels fall during lockdown

May’s data when added with April’s shows that consumers seeking to switch their electricity supplier became less active during the lockdown even as record low wholesale prices and increased usage were good incentives to shop around for the best deals.

According to the data more than 410,000 customers switched their energy supplier in May, a 15% decline on the previous year. It also shows that in the first five months of 2020, close to 2.5 million customers have move to a new energy supplier, a 5% drop when compared to the same point last year.

Challenger suppliers continue to snap up consumers

Of all the electricity switches recorded in May the majority (37%) were from larger suppliers to smaller and mid-tier ones.

Challenger brands continue to take customers from the bigger players due to improved tariffs and customer service. Their smaller size also makes them far more flexible and less exposed to dramatic market shifts and regulation changes.

In May, the net gain by small and mid-tier suppliers was 101,750 or 25% of all switches.

13% of all switches went in the opposite direction whilst 27% were consumers switching from one large supplier to another. The remaining 23% were between small and medium sized suppliers.

Read more: Why is now a good time for smaller Energy Suppliers to get new customers?

Lowest month for switching since January 2019

The data also highlighted that May was in fact the slowest month for electricity switching since January 2019. In that month just 382,655 switches were recorded.

“While it is not surprising that switching levels are slightly down during the lockdown, there will be many people who will face financial difficulties as a result of the pandemic, so it is important to remember there are ways you can save money on your energy bill, either by checking you are on the right deal with your current supplier or by shopping around. More importantly, I’d encourage everyone to make sure that your homes are energy efficient which is the best way to keep your bill down for the longer-term and help the environment,” said Audrey Gallacher Chief Executive at Energy UK.

SSE reports drop in profits

Energy supplier SSE has reported that it suffered a decline in profits because of the sharp decline in demand for electricity created by the COVID-19 pandemic.

The company reported pre-tax of £587 million a fall from the £1.3 billion reported in the same period last year, a 55% drop. The company also reported a 5% dip in its capital and expenditure to £1.3 billion.

SSE chairman Richard Gillingwater said that it was too soon to predict the impact of coronavirus on earnings and customers, but guidance had been given that the coronavirus could impact of operating profit of £150-250 million before mitigation.

Further Reading

Challenger Energy Suppliers should improve their mobile experiences says new report

Feed in Tariff costs could soar to record highs due to Covid-19 and exceptional weather conditions

The UK economy shrank by a record 24% in April, Energy Supplier calls for changes to the Price cap increase

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