Energylinx News

September 20, 2012

Collective Switching: the Aftermath

ENERGYLINX: Earlier this year, the idea of energy customers collectively switching their suppliers caught the UK by storm, instigating several major campaigns; however, 7 months on, what has become of collective purchasing within the UK energy market?

The buzz surrounding collectively switching energy suppliers began in February when consumer group Which? announced the launch of their Big Switch Campaign. The idea itself was simple: to register the details of as many customers as possible, and then use said number as a means of representing those potential customers in a reverse auction - in which this seemingly guaranteed number of potential customers would be 'sold' to the lowest bidder amongst competing energy suppliers.

This notion was first explored by Dutch firm Consumentenbond to unparalleled success, and so in May Which? sponsored the UK's largest reverse energy auction ever. Although interest peaked at 287,365 registrants, Co-Operative Energy's subsequent auction-winning tariff was capped at 30,000 customers, and provided an average savings of around £223 per year.

While the Big Switch campaign was hailed as a substantial success, Which? also received criticism for the move. Industry leaders British Gas argued that such campaigns only served to confuse consumers and cloud the market via the launch of single-serving, incomparable rates that would leave consumers out to dry. In addition, critics argued that the Big Switch campaign actually cost customers money - as it prevented customers from switching suppliers for almost 4 months, whilst they could have enjoyed an immediate savings had they opted to switch individually. Above all else, however, Which? was blasted for its inability to provide Big Switch participants with the nation's best deal.

In fact, the Big Switch campaign's winning single-serve tariff as offered by Co-Operative Energy - coming in at a yearly average of £1,048 for most households - was unable to match the savings of First Utility's iSave v10 tariff, which could have collectively saved those customers an additional £340,000 annually. It was in an attempt to respond to these oversights that energyhelpline.com hastily organised a second reverse auction, unsurprisingly dubbed 'the Huge Switch'.

Although accompanied by substantially less mainstream publicity, the Huge Switch managed to save 8,540 customers an average of £131 on their annual energy bills in only one week, as well as an added incentive of £45 cashback. Energyhelpline.com is apparently allowing registration for its next reverse auction - although 3 months on, one has yet to be publicly scheduled.

Indeed, the mainstream media would have customers believe that this short-lived collective switching movement has already died out; however, several smaller campaigns were organised throughout the summer that stem from similar ideology.

Last year, the Community Interest Company (CIC) thePeoplesPower was launched out of Cromford for the sole purpose of utilising collective purchasing as a means of saving UK energy customers money. The young organisation has since launched a campaign - currently hovering at 2,853 registrants - that seeks to follow the reverse auction models as explored by the preceding Big Switch and Huge Switch campaigns, to take place in September. However, it appears as if this latest collective switching campaign is very much alone in this pursuit, as no other major campaigns appear to be scheduled any time in the near future.

In truth, in the wake of the ambitious, large-scale collective switching race, a series of much more manageable and local ventures have emerged somewhat more effective. In areas surrounding South Lakeland and Peterborough, small-scale reverse auctions found relative success throughout the summer months, in which suppliers have acted as partners to local council authorities by authorising deals in which area residents stand to receive £150 to £200 annual savings. Both campaigns were eclipsed, however, by the localised switching campaign taking place in Cornwall.

Sponsored by the Eden Project, Cornwall Together is the largest county-specific collective switching campaign yet. Officially launched by Energy Secretary Ed Davey in July, it has been speculated that the campaign could save Cornish homes and businesses around £3.7m in energy costs if able to generate enough interest. Cornwall Together is currently still attempting to increase its outreach before making any attempts at collective bargaining with energy suppliers; however, local organisers are hopeful that the average Cornish energy customer could see their bills reduced up to 15%.

Yet as the original notion of collective switching continues to live on in the form of smaller, more concentrated projects, the idea has simultaneously evolved from this arguably effective method by way of a new pilot scheme taking place on the Isle of Wight.

In an attempt to make the island 100% energy independent within the next 8 years, energy giant Scottish and Southern Energy (SSE) have partnered with the Ecoisland project to launch the Ecoislands Community Energy Scheme. The scheme, available only to residents of the Isle of Wight, offers subscribers £1 cashback every month - which they can either use as a discount on their energy bills or donate to the island's energy independency scheme. The collective power from residents, then, can be seen via SSE's pledge to fund the Ecoisland project based upon how many islanders switch to the scheme - ranging from paying £100 for every 10 customers who switch to £1m for every 100,000 customers.

This evolution of the collective switching movement does not necessarily save consumers money in the long run; however, it does illustrate the regional collective power of energy customers working towards improving their own energy environment.

Overall, it would be fairly ostentatious to assume that collective bargaining with regards to switching energy suppliers has declined - indeed, it appears as if it has merely segmented into a series of far more local, grassroots movements. That being said, these types of localised schemes are not available nationwide, and it cannot be ignored that energy bills are once more on the rise.

While collective switching is indeed based in the correct ideology, the mixed results of 2012's various collective campaigns suggest that customers still stand to save the most money by pursuing switching energy suppliers individually. If you feel as if you may be paying too much for your household energy bills, try using our 100% free and impartial energy comparison tool now.

Posted on September 20, 2012 at 04:16 PM