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Switching Energy Suppliers: It's Not All About the Money

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  • David Deller, Monica Giulietti, Graham Loomes, Catherine Waddams Price, Anna Moniche, and Joo Young Jeon

Abstract

Many consumers do not take advantage of lower energy prices available in liberalized retail markets. We provide evidence to explain why consumers may leave substantial amounts of 'money on the table' in this way. We observe real decisions made by over 7,000 consumers in a collective switching auction, supplemented by their responses to a survey. We identify factors which may inhibit switching and show that expectations of high switching rates in an unregulated market may be unrealistic. Our findings have important implications for the design and regulation of energy markets, including imposition of price caps on 'default' retail tariffs in 2019 in the UK and parts of Australia.

Suggested Citation

  • David Deller, Monica Giulietti, Graham Loomes, Catherine Waddams Price, Anna Moniche, and Joo Young Jeon, 2021. "Switching Energy Suppliers: It's Not All About the Money," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-26.
    • Handle: RePEc:aen:journl:ej42-3-waddams
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    Citations

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    Cited by:

    1. Amenta, Carlo & Aronica, Martina & Stagnaro, Carlo, 2022. "Is more competition better? Retail electricity prices and switching rates in the European Union," Utilities Policy, Elsevier, vol. 78(C).
    2. David P. Brown & David E. M. Sappington, 2022. "Vertical integration and capacity investment in the electricity sector," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(1), pages 193-226, February.
    3. Esplin, Ryan & Best, Rohan & Scranton, Jessica & Chai, Andreas, 2022. "Who pays the loyalty tax? The relationship between socioeconomic status and switching in Australia's retail electricity markets," Energy Policy, Elsevier, vol. 164(C).
    4. Huisman, Hester M. & de Haan, Evert & Mulder, Machiel & Wieringa, Jaap E., 2024. "The combined effect of regulators’ and retailers’ actions to stimulate consumer participation in retail energy markets," Energy Policy, Elsevier, vol. 184(C).
    5. Moniche-Bermejo, Ana, 2022. "Do collective energy switching campaigns engage vulnerable households? Evidence from The Big Switch," Energy Policy, Elsevier, vol. 167(C).
    6. Karle, Heiko & Schumacher, Heiner & Vølund, Rune, 2023. "Consumer loss aversion and scale-dependent psychological switching costs," Games and Economic Behavior, Elsevier, vol. 138(C), pages 214-237.
    7. McGowan, Féidhlim & Papadopoulos, Alexandros & Lunn, Pete, 2023. "Who switches and why? A diagnostic survey of retail financial services in Ireland," Papers WP748, Economic and Social Research Institute (ESRI).
    8. Nogata, Daisuke, 2022. "Determinants of household switching between natural gas suppliers: Evidence from Japan," Utilities Policy, Elsevier, vol. 76(C).
    9. Alena V. Pivavarava & Christel Koop, 2023. "The adoption of digital practices by economic regulators: mapping digital pathways for consumer e-participation," Economics Series Working Papers 1013, University of Oxford, Department of Economics.

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    JEL classification:

    • F0 - International Economics - - General

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