Earlier this week, the European Consumer Organization BEUC provided an informational brochure on the EU energy market. This brochure sheds light on the five main barriers that keep consumers from switching their energy suppliers and thus from better value tariffs. The extent of forgone benefits depends on the member state and can range between 29 € and 389 € per person on average.
These are the five main barriers:
- Inadequate consumer information: Consumers often lack crucial information about which energy tariff they use, its contract conditions well as their personal energy consumption level. Additionally, consumer often do not know about the time effort and costs of switching and do not have a useful tools to compare suppliers which makes it even more difficult for them to obtain the best deal.
- Aggressive selling practices: Unfair marketing practices are common in the energy sector and include doorstep selling as well as cold calling. In such cases, consumers are provided with incomplete information leading them to make more expensive choices.
- Complex and bundled energy offers: Energy offers are becoming increasingly intransparent for consumers due to complex pricing structures. Offers may additionally include insurance or telecom services as well as discounts which makes the price composition more complicated.
- Switching fees: There are often switching or termination costs, which may be particularly high or difficult to understand and track for consumers. This reduces potential savings from switching.
- Complicated administrative process to switch: Some suppliers have unreasonable lengthy or excessively bureaucratic switching procedures discouraging consumers to switch. Depending on the country, the period for switching from one supplier to another can significantly exceed the legal provision of three weeks.
Source: BEUC The European Consumer Organization