Power firms warned of mass defections

More than half of all electricity consumers could switch suppliers when the market is thrown open to competition next year, according to a survey published yesterday. The survey coincided with reports that Total may pull out of the deregulated domestic gas market. Michael Harrison and, below,
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Electricity companies could be hit by mass customer defections when competition is introduced next April with as many as 12 million households switching suppliers, says the Coopers & Lybrand accountancy firm .

A survey released yesterday shows that 55 per cent of customers would definitely switch or consider doing so while only 29 per cent are committed to staying with their local supplier.

The best chance of holding on to customers, suggests the report, lies in teaming up with nationally known brands such as Virgin or offering services such as electrical appliance repairs.

The survey is likely to send a chill through the industry since the estimate of the level of customer defection is significantly higher than that predicted either by the 14 public electricity suppliers or the industry regulator, Offer.

Geoff Green, head of energy, water and transport at Coopers & Lybrand, said there was little evidence of much loyalty among customers of the regional electricity companies even though a majority of consumers said they were satisfied with the service they got.

Mr Green warned suppliers it would be unwise to rely upon a combination of inertia and apparent customer satisfaction to protect their markets.

Competition is due to begin next April in parts of Scotland, Yorkshire, East Anglia and Kent and Sussex and then roll out to all 22 million domestic consumers by September.

Several suppliers have begun preparing for competition by setting up their own energy marketing businesses. Scottish Power, which owns Manweb, the electricity supplier for Merseyside and North Wales, and Southern Water, has formed an alliance with the Automobile Association to sell energy.

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