Ignorance in The Independent. Again

The \”big six\” energy firms were last night accused of maintaining a \”stranglehold\” over millions of consumers, after new figures showed that they each control more than two-thirds of the market in different regions across the UK.

Err:

The official figures show that companies supplying electricity to homes where they inherited the network from the former utility boards are operating a near monopoly, making a mockery of the idea that customers routinely switch firms to get better deals.

70% of a geographic market is less of a monopoly than the 100% they used to have. Showing that some have indeed switched.

Anyway, what matters is not market share. It\’s whether that market share is contestable. Having people who could conceivably nick your customers keeps you in line just as people actually nicking your customers does.

7 thoughts on “Ignorance in The Independent. Again”

  1. Moving suppliers is fairly easy, but (because competition is working) I guess most customers are looking at possible savings under £10 a month. Many people will reasonably take the view that it isn’t worth the bother, for the same reason they don’t check prices in 3 supermarkets before doing the weekly shop, or get 5 quotes every time the car needs a bit of work.

    BTW, is the following version also valid?
    ‘The “big three” political parties were last night accused of maintaining a “stranglehold” over millions of voters, after new figures showed that they each control more than two-thirds of the votes in different regions across the UK.’
    Is this therefore evidence that lack of competition is resulting in us being ripped off by them, and we need to encourage voters to change allegiance?

  2. Perhaps we need a law to force each party to move all its supporters onto its cheapest policies or at least include a section on all their correspondence to inform supporters when other parties offer a better deal?

  3. It takes twenty seconds to see that this is nonsense.
    Prior to denationalisation British Gas had 1005 of the Gas market and 0% of the electricity market. It now has less than 50% of the domestic gas customers and more than 20% of domestic electricity customers.
    So more than 70% have switched gas or electric suppliers or both – some more than once.

  4. Alex,

    Moving suppliers is fairly easy, but (because competition is working) I guess most customers are looking at possible savings under £10 a month. Many people will reasonably take the view that it isn’t worth the bother, for the same reason they don’t check prices in 3 supermarkets before doing the weekly shop, or get 5 quotes every time the car needs a bit of work.

    I’ve had calls from the electricity companies about switching and in each case, I’ve asked them to quote me unit rates and the difference as calculated is tiny. The only way you save is taking the introductory offer, staying for the qualifying period and jumping to another offer, which isn’t worth most people’s time and trouble.

  5. @ Tim Almond et al
    When this freedom of choice came in there were lots of salesmen approaching me to incite me to change my supplier telling me that they would save me a lot of money but, apart from British Gas, none of them would actually quote me any prices whatsoever. The BG guy at my London Terminus had numbers to hand out. I decided to stick with British Gas. Since then I have been ‘phoned by several shills and a nice Lithuanian knocked on my door trying to persuade me (still without comparative data) to switch to RWE.
    Now, if I was unemployed and my time had zero value that might have been stupid as I could have spent many hours seeking out the cheapest tariff, but I do work and Alex is right

  6. The proper test of lack of competition/customer stickiness is how many people still have two single-fuel contracts.

    Going dual-fuel is always, invariably, cheaper than sticking with BG and the former LEB, while the savings from other sorts of switching are pretty marginal (because perfect competition or because monopoly, according to taste…)

    Assuming John77’s numbers are right, and hence only 30% of people are still on the BG/LEB combination, then we indeed have a market.

    (also, if your older relations – since this certainly will be where most of the non-switching lies – are still on the BG/LEB combination, then making them switch over to dual-fuel will save them a packet)

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