Electricity Supplier Switching: A Conceptual Model Based on Migration Theory

Abstract

Electricity sector liberalization is moving forward with the purpose of efficiency, better customer service, and lower prices; however it has not fully succeeded yet, neither in Europe nor in the rest of the world. While service provider switching is an indicator of successful liberalization, it also means customer loss and acquisition from the electricity suppliers' point of view. Therefore, it has a significant importance for both the market regulator and market participants including customers and suppliers, making it a concept that should be understood thoroughly. This paper aims to build a conceptual model of electricity supplier switching behavior to be tested for a relatively neglected customer segment in the business to business market [B2B]: small and medium enterprises [SME]s. The model can also be used for business to consumer [B2C] segment because of the similar behaviors of small organizations and individuals. The model proposed in this study is mainly based on the study of Bansal et al. (2005) who adopt push, pull, and moorings [PPM] migration model to switching, using the similarities between human migration and customer switching. An extensive literature research is conducted to support and contribute to the existing PPM model and to have an extended version of it.