Market forecasters Cornwall Insight anticipate that falling energy wholesale prices coupled with reduced government support will provide suppliers the chance to offer discounted offers for the first time since the energy crisis, in the summer of 2021.
Since the start of winter, the price cap and the support package has left the standard variable tariff lower – the default option for households – cheaper than almost all other energy tariffs.
This has effectively constrained the savings households can make by switching.
Seeing no incentive to switch suppliers and save money, household switching rates dropped from an average of 496,000 electricity supply points moving per month in 2019 to just 85,000 per month in 2022.
Using the average switching rates from the two years up to October 2019 as a baseline, Cornwall Insights 5.5m switches that might have been expected did not occur since the energy crisis began.
However, with subsidy rate for the Energy Price Guarantee rising to £3,000 in April, and decreasing wholesale prices lowering supplier costs, Cornwall Insight predicts suppliers will be able to offer fixed tariffs that compete with the capped government prices – reviving the benefits of switching suppliers.
Such an outcome is subject to wholesale market volatility, early indications are that suppliers may be able to offer competitively priced tariffs within a matter of weeks.
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