Collective switching only one way of getting cheaper energy bills

by Simon Ward on 11 June 2012  |  7 comments
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Which? and Energyhelpline.com have now closed their first collective energy switching schemes. But these are not the magic answer to our ever-increasing energy bills.

As we all know, our energy bills have soared over the past decade, as Cliff D’Arcy demonstrated in detail in Why energy bills have trebled in eight years.

As a result, over the past 12 months the Government, both directly and via the regulator Ofgem, has been lobbying the ‘Big Six’ energy companies to reduce prices and simplify their mind-boggling number of tariffs.

It has also prompted both consumer group Which? and, subsequently, price comparison service Energyhelpline.com to launch collective switching schemes. These promised to bargain with energy companies to deliver cheaper prices for customers that signed up.

As my colleague Reena Sewraz explains in First Utility launches UK's cheapest energy deal, Which?’s Big Switch delivered a cheapest deal that was actually more expensive than the cheapest deal already on the market. And that was after both British Gas and SSE pulled out, citing the £40 fee that Which? was being paid by the energy companies for switching. There was another snag too, as the cheapest deal was only available to 30,000 customers.

Having said that, the Big Switch did deliver significant savings for many customers. And, crucially, by holding roadshows in town and city centres, Which? signed up many people who were paying far more than they needed to and wouldn't ordinarily think of switching.

How the Huge Switch fared

Energyhelpline.com had a bit more success with its Huge Switch. It negotiated £45 cashback for anyone switching their dual fuel to First Utility's iSave v.10 tariff, reducing this already market-leading tariff further.

It also obtained £50 cashback on First Utility and EDF’s cheapest fixed rate tariffs. Overall, Energyhelpline.com says it has helped 38,580 customers save an average of £176 apiece, adding up to a total of over £1.5 million. But, to me, the fact that the 'savings' offered were cashback feels more like a sop to the scheme than a genuine desire on the part of the energy companies to offer savings.

A host of smaller collective bargaining organisations have also sprung up, including thePeoplesPower. This particular group is going to cap numbers at 20,000 and will start to negotiate with the energy companies when it has 5,000 people on board.

Regulation needed

While these collective switching schemes are, for the most part, laudable, they are not a magic solution to our dissatisfaction with the energy industry.

The disappointment many people felt over the results of the Which? Big Switch was understandable to an extent. However, these schemes are only another option to consider when you’re trying to save money on energy – they are not the be all and end all.

What this notoriously customer-unfriendly industry needs is heavier regulation to ensure it’s far easier for us to get the best deal. In the meantime, use collective bargaining, but do your own research as well and compare the quotes you get. Remember that you're not obliged to take an offer from a collective switching scheme.

It’s hard work but that’s the way the industry wants it. Hopefully it won’t be the case for too much longer.

More on energy bills

Compare gas and electricity prices and see if you could save

First Utility launches UK's cheapest energy deal

EU exposes UK's steeply rising energy prices

How to avoid the next big energy price rise

Why energy bills have trebled in eight years

Feed-in-tariffs: can you still profit by going green?