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Ten years of competition in the energy market have turned most Dutch into switchers

Over the past ten years, 55 percent of all Dutch consumers have switched energy contracts at least once. This has been revealed by the Trend Report on Competition and Consumer Confidence in the Energy Market for the first half of 2014, published by the Netherlands Authority for Consumers and Markets (ACM). Exactly ten years ago, consumers were able to choose their energy provider for the very first time. Anita Vegter, Member of the Board of ACM, explains: “Because consumers switch, companies are stimulated to compete on service, price, and new services.”

Lower energy costs

Consumers that have switched are more likely to switch again. Lower energy costs are still, by far, the most important reason for switching. Consumers are not always aware that the special discount expires at the end of the contract of the special offer. Last year, 12.7 percent of all consumers switched. Those that have thus far never switched (38 percent) can potentially save the most: as much as EUR 390.

Special offers vary

Consumers mainly use price comparison websites and the energy companies’ own websites if they want to find out more about all special offers. However, the actual switching is mostly done through the energy company itself, whereas consumers could be better off if they switched using a price comparison website. What consumers are not always aware of is that special offers can vary. For example, consumers find a special offer on a price comparison website. They go to that energy company’s website only to find out that that particular offer is not available there. The reason is that special offers can vary per sales channel. And that is why it is so important that consumers extensively research the various offers first.

Consumer information portal ConsuWijzer, which is operated by ACM, is currently running the consumer awareness campaign ‘If you snooze, you lose’ (in Dutch: ‘Niets doen, kost je poen’), aimed at stimulating consumers to make a conscious and informed decision when choosing between offers. On ConsuWijzer’s website, consumers can find the ‘Switching Coach’ (in Dutch: ‘Overstapcoach’), which is a tool to help consumers that wish to switch energy contracts or energy providers.

Furthermore, consumers are not always aware of the fact that their current energy contracts often have much higher prices than those they are able to get with special offers. When switching, consumers predominantly look at price (72 percent), and the welcome gift (16 percent). Choosing green energy is important to 14 percent of switchers.

Easy-to-understand and easy-to-compare

All offers from energy companies to consumers must be easy-to-understand, and consumers must be able to compare these with other offers. Only then will they be able to choose the offer that meets their needs best. “If consumers are able to make well-informed decisions, it generates competitive pressure on all market participants. Providers will then have to do their best in order to attract new customers, but also have to keep doing their best for their existing customers,” says Ms. Vegter. The ACM document ‘Provision of information in the consumer energy market,’ which was released earlier this month, explains exactly what information must be given to customers. Energy providers have committed themselves to  develop and provide offers that are tailored to the individual customer’s needs, ensuring that everyone gets an offer that fits their personal situation (the so-called Customized Offer, in Dutch: ‘Aanbod op Maat’).