Falling energy prices should lead to competition returning to the UK energy market this spring and summer, with an estimated 5.5mln households having held back from switching providers while the government has been supporting bills.
That's according to Cornwall Insights, which predicted the number of households switching their energy supplier "could rise from July", as falling energy wholesale prices are coupled with reduced government support.
The government support runs up until April, which in combination with the price cap has removed the incentive for people to switch suppliers.
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, Cornwall Insight's Kate Mulvany said,
Meanwhile wholesale prices have decreased, meaning lower costs for suppliers.
This means there is "a good chance that suppliers will be able to offer fixed tariffs that compete with the capped government prices, reviving the benefits of switching suppliers".
"Although 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."
The main energy provider on the market is Centrica PLC (LSE:CNA) (Centrica PLC (LSE:CNA)), owner of British Gas, which publishes results on Thursday. Its shares are little moved today but up 26% over the past year.
Obviously switching would be good for price comparison sites like Moneysupermarket.com (LSE:MONY), GoCompare.com, which is owned by Future PLC (LSE:FUTR), and Uswitch.
Uswitch director of regulation, Richard Neudegg, said the return of fixed deals to the energy market “would finally give consumers the freedom of choice over their supplier with an option to lock in more certainty on pricing".
Though prices are still high compared to past years, wholesale prices stabilising still left an opportunity for suppliers to start offering more competitive rates.
“However, the market stabilisation charge implemented by Ofgem, which hits suppliers with charges every time a customer switches provider, alongside other measures, is actively disincentivising suppliers from offering competitive deals," he said.
“It is not OK for customers to have their options artificially suppressed when the market otherwise would be making decent options available that gives additional certainty or savings.
“During the energy crisis, providers have not really felt the threat of customers voting with their feet, risking complacency. A return to fixed deals will bring the benefits of competition back to the market, giving consumers the chance to pick or switch their supplier on the basis of who offers the best deals and customer service.”