Lower price rises with shorter notice time — Bulb Community

Lower price rises with shorter notice time

We’ve been looking at ways we could save our members money on their energy bills. One way to do this is to change our price rise notification period. We aren’t planning a price rise anytime soon but if we do, we will give members 30 days notice which is half the notice time we’ve given previously.

Historically we’ve always given 60 days notice of increasing prices, double what Ofgem require. We did this because we felt it was right to give members enough time to make an informed decision about whether to stay with Bulb or not after the price rise. But now we’ve seen it in action a few times, we can see from the data that 60 days is over the top and actually has a cost for our members.

By giving an extra month of notice we have to increase prices further in the long run in order to operate sustainably. We have to cover the higher wholesale costs by having higher prices later on. That’s because we have to pay high wholesale prices and give our members low prices for an extra 30 days which costs us the difference for 30 days. When you have a million members, that difference all adds up. Instead, if we gave 30 days notice, we’d be able to keep reduce the amount we’d need to increase our prices by.

We’ve analysed how long it takes our members to make a decision after a price increase announcement and it’s well below 30 days. When our prices increased in the past, we have seen a small spike in the number of members choosing to leave Bulb. We've had a look at the data and the majority of members who choose to do this do so in the first 7 days. As it turns out, members aren't using the 60 days notice period to mull things over and make a decision.

Beyond that, members have even longer to choose a new supplier than you might think. By Ofgems rules, if someone told us that they wanted to leave Bulb within 20 working days of our new increased tariff, we have to honour the old tariff and refund them the difference. So in reality, the Ofgem mandated 30 days notice is more like 60 days notice anyway.

So, we think we should decrease our notice of a price increase from 60 days to 30 days. This will reduce the impact of future price rises and won’t materially impact the amount of time our members have to choose a new supplier.

What do you think? A good idea?

Comments

  • 30 days is more than enough notice.
  • I agree...... The rationale for the change to 30 days notice makes absolute sense.
  • Yep, sounds reasonable to me. The main thing to be mindful of is the frequency of price increases. Having a 30 day period may make it possible to have more frequent changes. As long as price increases remains infrequent, then I can't see 30 days being a problem.
  • Thanks for your feedback. Sounds like this is a reasonable change to make.

    We don't plan to increase the frequency of price rises. We avoid them where we possibly can!
  • Seems reasonable reasoning. Would also allow dropping the price quicker too when prices come down.
  • We already give 30 days notice of a price drop, @shaun8818. There are fewer rules from Ofgem when we can save our members money =)
  • It also avoids the competition using the 60 days to their advantage. as in shouting about your increase knowing full well they are most likely to do the same.
  • Hooloovoo said:

    30 days is more than enough notice.

    Agreed.
  • I think it's sounds reasonable
  • +1 to this. The 60 days notice was excessive and seems unworkable with the commitment to drop prices as soon as you can save members £20 a year.
  • Actually for many of the customers on this forum it probably doesn't matter as any up or down pricing doesn't signal an instant switch to another supplier. I for one would take time to find out what other suppliers were doing and compare pricing/daily charge etc before I would contemplate moving.
    I suspect some customers jump ship too quickly only to discover it hasn't saved them any money.

    All that aside 30 days sounds good.
  • scudo said:


    I suspect some customers jump ship too quickly only to discover it hasn't saved them any money.

    Some? I suspect many.
  • I'd suggest very careful consideration of the wording of any email announcement about this change. If this policy change is worded incorrectly customers could easily mistake it for a 30 day warning of a price increase and jump ship :)
  • Lewis_P said:

    I'd suggest very careful consideration of the wording of any email announcement about this change

    Bulb, emailing us about a non-essential piece of information? That'll be the day.
    This forum thread will likely be all we get, or maybe a blog post if they're feeling super generous.

  • mowcius said:

    Lewis_P said:

    I'd suggest very careful consideration of the wording of any email announcement about this change

    Bulb, emailing us about a non-essential piece of information? That'll be the day.
    This forum thread will likely be all we get, or maybe a blog post if they're feeling super generous.
    They might even update the terms and conditions =)

    No, whatever was I thinking writing that ... :s
  • Hooloovoo said:

    They might even update the terms and conditions =)

    No, whatever was I thinking writing that ... :s

    I should probably go and read the Terms again soon to hunt for any changes since I last looked.

    They probably own my soul, but if so the joke's on them as I think I seem to remember selling it a few years ago to buy baked beans.
  • I am completely for pay-as-you-go pricing. I think electricity prices should always reflect the true market price of the electricity as best as possible. Increases can have a damaging effect on some customers who have lower incomes, so it is right that an adequate amount of notice must be given and 30 days is probably about right. That said it sounds like Ofgem is already protecting all electricity customers anyway, by forcing the electricity supplier to lock down the customer's existing lower price whilst they faciliatate a change of supplier.

    With a lot of talk recently about Bulb's financial position, it is important that Bulb strikes a balance between keeping the customer happy and not wasting money by hedging on market electricity rates. So for example, Bulb's current energy prices to its customers should include a very small margin to reserve against future market electricity rate rises, which it can then recover by carefully adjusting its increase.
  • Thanks again for your input on this. We've just updated our monthly wholesale energy update that announces the change from 60 days notice period to 30 days.

    You can also read more about what's going on in the energy markets on the blog :)

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