2009 a record year for customer switching


Philip Lewis,
Global Energy
Think Tank
Helsinki, Finland — (METERING.COM) — December 22, 2010 – 2009 was a record year for electricity customer switching, with a global average switching rate of 6.12 percent – around one percentage point higher than two years ago, according to the World Energy Retail Market Rankings 2010.

The publication, from the VaasaETT Utility Customer Switching Research project, found that of the 33 markets followed by the project in 2009/2010, nine substantially increased their switching rates. Australia, and in particular Victoria, continued to lead the world in switching activity, increasing to record levels of 25.3 percent for electricity and 27.4 percent for gas, and becoming the only country to rank in the “super hot” category, where activity (in the current year) is over 20 percent and has been consistently at or above this level for at least three years.

Four markets were ranked “hot” (annual switching approximately 15 percent or higher) – New Zealand, Queensland, Great Britain and Ireland. For the first time since the start of global electricity market liberalization, Great Britain was knocked off the top spot in Europe, by Ireland, a former laggard in terms of customer switching. In 2009, nearly 21 percent of all electricity customers in the Republic of Ireland switched supplier, 2 percent more than in Great
Britain. Between February 2009 and February 2010, Bord Gais Energy won nearly 21 percent of the residential electricity market in Ireland, by far the world’s most successful marketing campaign ever for an electricity retailer, measured in terms of the percentage of residential customers in the market who were won over a 12 month period.

Switching also increased in other medium activity markets, such as Finland and Sweden as well as lower activity markets such as Italy, the Czech Republic, France, Greece, Portugal and Slovenia. However, in Austria, Germany, Belgium (Flanders, Wallonia and Brussels), Norway and the Netherlands, switching trends were at similar or lower levels to 2008, limited in part by reduced price volatility and a generally uneventful market.

Other markets remained dormant, for now, but the evidence shows a general increase in the momentum of switching activity globally. The trend is typically upward, and active utility customer switching can no longer be considered an Anglo Saxon or Nordic only phenomenon.

For the first time social media marketing was shown to be a major trigger and channel for utility customer switching, notably in Ireland.

The publication also highlights switching myths, and in particular the absence of relationships between the level of switching and the time taken to switch suppliers, and the level of switching and the number of contracts a customer has to sign to switch. A single biller regime can be seen as a preferred market characteristic, but not one of the more important determinants of an active electricity market, says the report, which was authored by VaasaETT Global Energy Think Tank CEO Philip Lewis and research analyst Sean Brennan.