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?