Switching Energy Suppliers: It's Not All About the Money

Many consumers do not take advantage of lower energy prices available in liberalized retail markets. We provide evidence to explain why consumers may leave substantial amounts of money on the table in this way. We observe real decisions made by over 7,000 consumers in a collective switching auction, supplemented by their responses to a survey. We identify factors which may inhibit switching and show that expectations of high switching rates in an unregulated market may be unrealistic. Our findings have important implications for the design and regulation of energy markets, including imposition of price caps on default retail tariffs in 2019 in the UK and parts of Australia.

Automated summary

Many consumers are not taking advantage of lower energy prices in liberalized retail markets. Factors inhibiting switching were identified and the expectation of high switching rates in unregulated markets may be unrealistic. The findings have implications for energy market design and regulation, including the imposition of price caps on default retail tariffs in the UK and parts of Australia in 2019.