Npower ordered to co-operate in Ofgem's next collective switch trial
Energy regulator Ofgem has ordered big six provider Npower to co-operate with its upcoming collective switch trial, aimed at helping thousands of the supplier's customers to find a better deal.
Ofgem is currently testing collective switching – something MoneySavingExpert.com has long been a supporter of – and wants 100,000 Npower customers to take part in its autumn trial.
But according to the regulator, Npower "refused or failed to send particular communications to a number of its customers". As a result, Ofgem has now ordered the supplier to comply.
Last month, Ofgem announced the results of its first collective switch, offered to 50,000 Scottish Power customers.
It wants to run a larger scale trial with 100,000 Npower customers this autumn, to "test whether even more customers could benefit from this approach".
Suppliers are required to allow their customers to take part in Ofgem's programme of trials, which are currently testing the best ways to help those on the most expensive tariffs save money – typically by encouraging switching.
MSE has long been a supporter of collective switching and we know it works. We're currently running our 11th collective switch and have helped hundreds of thousands save in our previous events – check our Cheap Energy Club for the latest deals.
Why is Npower being ordered to comply?
According to Ofgem, last month it issued Npower with a formal direction requiring it to allow 100,000 customers that have been on its standard variable tariff (SVT) – costing a typical £1,230/yr – for three years or more to take part in the collective switch trial.
As it failed to do so, Ofgem today issued a 'provisional order' requiring it do so. Npower is legally bound to comply with the order.
Rules requiring suppliers to participate in Ofgem trials were introduced following the Competition and Markets Authority investigation into the energy market back in 2016 – which identified more than 30 measures to increase competition.
"Npower is denying customers the opportunity to take part in the next collective switch trial"
Ofgem executive director of consumers and markets Mary Starks said: "While the price cap will tackle poor value default tariffs, consumers can still save money by switching to better deals. We are exploring ways to make that easier, including the simplified collective switch.
"Npower is denying customers the opportunity to take part in the next collective switch trial. It is disappointing that we are having to resort to legal action. This should send a clear message to all suppliers that they need to live up to their responsibilities to help all customers get a better energy deal."
Ofgem is proposing to introduce an energy price cap of £1,136/year – based on typical use – in December that will set a limit on the amount providers can charge for standard and default tariffs.
In the regulator's first collective switch trial last month, some 11,000 customers switched from their SVT, saving about £300/yr on average.
What does Npower say?
An Npower spokesperson said: "(We are) committed to improving customer engagement and we have said to Ofgem that we'll undertake a collective switch trial of 50,000 customers immediately and this is now unfortunately delayed.
"We are disappointed that, at the final hour, we have not been able to agree some detailed points with Ofgem, including their request to undertake an even bigger trial of 100,000 customers. Npower will respond quickly to the action Ofgem has taken in order to allow us to move ahead with the trial as soon as possible."
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