Friday, August 21, 2015

The Annual Utility Supplier Merry Go Round

Summer is the time when we have to rotate all of our utility suppliers (gas, electric, waste etc).

When I was young we lived in simpler times. There was only one supplier for electricity, There was only one supplier for gas. There was only one supplier for what passed as telecommunications (some arrangement of paper cups attached with string if I recall). Those state owned monopolies generally provided  reliable service but they were inflexible and not particularly good value. You took whatever service they prescribed for you and you paid the price they saw fit to charge.

Today all is deregulated and competition is king. Advertisements constantly tout the advantages of one supplier over another and not a week goes by without sales folk calling to our door to encourage us to change suppliers. Living in a large urban area we are blessed with a surfeit of choices for just about every household utility. Competition is actively encouraged by the government and is supported by strong regulations which make it simple and cost free to switch suppliers. A single phone call or  single visit to a web page is usually all that is required.

Competition has certainly brought advantages. The competing suppliers are far more responsive and flexible than the old state monopolies. The passage of time and march of technology makes it hard to make direct comparisons but I am pretty sure that services are also far cheaper in real money terms. Frictionless switching has given rise to the almost universal practise of offering significant discounts to new customers. A new customer being generally defined as someone who has not used that particular supplier for one or more years.

These new customer discounts are the reason why at this time every year we need to ride the annual utility supplier merry go round. In order to ensure the best price for our utilities we need to switch suppliers every single year. Regardless of how pleased we were with last years suppliers we must without fail abandon them as soon as our "new customer" status expires in order to avail of a competitor's new customer deal. Fear not we shall doubtless be back once the exclusion period has passed and we can once again claim to be new. There are enough suppliers to ensure we can always avail of a new customer discount from somebody.

It strikes me as an odd business model that practically forces customers to change suppliers each and every year but I can see how difficult it would be for any one supplier to break the cycle. We humans are lazy by nature and it is well reported that many customers never or rarely change suppliers. The utilities offer these juicy discounts in the hope that we will neglect to change and stick with them once the discount period has passed. If any company did not offer discounts then they would get no new customers at all and if they tried to offer a better rate to long standing customers they would lose money. As a customer I find it a nuisance to have to ride this merry go round every year but I am pleased to be able to avail of the discounts. Happily there are websites which do the hard work of price comparison and make it very easy to select which of the available offers is best value for our particular usage pattern.

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