Communication-Based Approach for Promoting Energy Consumer Switching: Some Evidence from Ofgem’s Database Trials in the United Kingdom

Muyi Yang, Yuanying Chi, Kristy Mamaril, Adam Berry, Xunpeng Shi and Liming Zhu
Additional contact information
Muyi Yang: Faculty of Engineering and Information Technology, University of Technology Sydney, P.O. Box 123, Broadway, Sydney, NSW 2007, Australia
Yuanying Chi: School of Economics and Management, Beijing University of Technology, No.100 Pingleyuan, Chaoyang District, Beijing 100124, China
Kristy Mamaril: Faculty of Engineering and Information Technology, University of Technology Sydney, P.O. Box 123, Broadway, Sydney, NSW 2007, Australia
Adam Berry: Faculty of Engineering and Information Technology, University of Technology Sydney, P.O. Box 123, Broadway, Sydney, NSW 2007, Australia
Liming Zhu: Data 61, CSIRO, Eveleigh 2015, NSW, Australia

Energies, 2020, vol. 13, issue 19, 1-16

Abstract: Prompted by rising concern about weak consumer switching and the practice of price discrimination, over the period of 2016–2019, the Office of Gas and Electricity Markets (Ofgem) undertook a series of trials on communication-based interventions to encourage consumer switching in the United Kingdom. The main purpose of this paper is to assess the experience of these Ofgem trials with a view to draw some lessons for policy makers. The analytical framework adopted for this purpose is informed by existing literature on the barriers for consumer switching. The results of the analysis suggest that while the Ofgem trials have made positive impacts on consumer switching, these impacts varied significantly across the trials, suggesting that some interventions were more effective than others. Further, the overall impacts of the Ofgem trials were moderate, as around 70% of participants did not switch suppliers even in the most impactful trial. This reflects a general lack of understanding in the literature about the behaviour-influencing factors, their impacts, and their context-connects. By implication, the difficulty in stimulating consumer switching, as demonstrated by the Ofgem trials, suggests that weak consumer switching and the practice of price discrimination may simply reflect significant competition, rather than a lack of it, especially if retail margins are not greater than the competitive level. In this case, the communication-based intervention aimed at encouraging consumer switching may lead to further price discrimination, especially for the most vulnerable consumers, who are more likely to stay with their incumbent suppliers.

Keywords: weak consumer switching; price discrimination; behavioural economics; communication-based interventions; fairness (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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