New launch means consumers have a handful of auto-switching options

A sixth auto-switching service has been launched.

Switchcraft founder Andrew Long told New Power Report that the company would be funded by commission from energy suppliers. That would mean users may not have the potential to switch to all suppliers, but Long said he considered that more people would use the service if it was free. He said consumers were used to the price-comparison website model, which was commission-based, and “the bulk of savings come from not being on standard variable tariffs”. Finding the cheapest deal was “fine tuning” the cost, and people accepted they would not get “absolutely the cheapest deal”. He expected in practice service users would be switched annually as fixed deals ended.

Long was wary about ‘time of day’ tariffs, . “We will have to do some work on considering how appropriate they are for auto-switching,” he said. But more broadly, he was sceptical about the idea. “I think they make the market more opaque for the customer, and I don’t think domestic demand-side response will deliver much response.” He said the industry should not expect domestic customers to be taking part in an electricity market that “can be intensely volatile”. He said it was “cheeky of suppliers to get customers to take on their market risk”.

Long’s plan is to offer customers auto-switch arrangements for other services and he said energy is “a test market for us”. He has broadband, insurance, and “anything that can be searched on a price comparison site” in mind.

Next in line is insurance, which Long said was “lots of work and more involved than energy” to get comparable data. He hopes to add that this year.

Are we auto-switching yet?

Of the auto-switch services that started up in 2016, Flipper  was acquired by Wessex Water after it briefly entered administration last year and Swuto appears to have disappeared. Of the more recent entrants to the auto-switch market, customer levels so far are as follows:

  • Switchd takes a regular payment from members instead of commission. It said it has about 1,000 customer accounts.
  • Labrador  runs on a commission-based model. It said it has seen 12,000 unique visitors to its site since February and it has converted 10% to accounts.
  • Look After My Bills  is also funded by commission. Its website says it has recruited more than 1,700 new subscribers over the past month but it is not clear whether they are switchers or website users.

Subscribers: login to read a longer version of this interview, and interviews with Jane Lucy of Labrador and Nigel Evans of Flipper.

Further reading

Octopus Energy chief: auto-switching is no way to build industry trust

New auto-switching company Labrador says ‘customers should know smart meter data puts them in control’

Auto-switching: what now for Flipper?

Wessex Water acquires auto-switch company Flipper

Third domestic auto-switch service enters UK energy market

Auto-switching services for energy customers: can they help build customer trust?

New auto-switch services launch: will they change the game for energy customers?

 

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