A simples guide

Collective energy switching explained

If you’ve never switched energy supplier before or, it’s been a while since you last switched, you may be able to save money by switching now. So far in 2016, we have saved our customers over £54 million!

 

Despite the availability of such great savings, recently announced figures from Ofgem showed that 88% of UK households were still with the so called Big Six suppliers. Worse, of these, 71% of gas customers are still on the more expensive standard tariff. Unfortunately, this is a case of simply spending money you don’t need to.

So switching is the way forward and as well as switching individually, there may also be an opportunity to join a collective switching group in order to buy energy as part of a cooperative at cheaper rates.

We have saved our customers over £54 million so far in 2016!

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What is collective energy purchasing?

Collective purchasing happens when a group of consumers get together to buy an exclusive plan from a gas and electricity supplier. This is usually arranged by a third party. In the past third parties have included councils, comparison sites and national newspapers.

The idea behind it’s quite simple – with more bargaining power a group should be able to negotiate better deals from an energy provider than an individual household could.

Collective purchasing schemes were popular in 2012 following endorsement by the government which also ran its own scheme in October that year. However, after the initial fanfare, many of the schemes didn’t attract the participation organisers had hoped for. With energy prices back in the news there has been more recent renewed interest in such schemes.

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What then is collective switching?

A collective energy purchasing scheme first needs to gather together a pre-determined number of people to make any attempted negotiation worthwhile.

Assuming enough people have signed up to the scheme, it then closes and what is known as a reverse auction for the energy supplier and a plan is carried out.

This means energy suppliers who want to supply the group bid against each other. Whichever supplier offers the best deal is then selected by the organisation that’s in charge of the scheme.

The reason the plan is first closed is to allow time to assess the group’s energy needs, as well as making sure a plan can be chosen that suits the energy needs of the majority of the group.

People who sign up to the scheme generally aren’t under any obligation to take up the deal once the terms have been decided, however it’s a good idea to make sure you check before you register. Once the plan has been announced you can decide whether it’s right for you and if so switch.

These types of deals could also be more attractive to groups living in more rural areas, where energy costs may be higher. As an individual, a cheap deal may be hard to find, but by joining together in the community, a cheaper price could be negotiated. The more of you there are the better the outcome is likely to be.

Will collective switching always give the best deal?

As we’ve said, if you’ve not switched recently, any type of energy switch – collective or individual – is likely to save you money. How much money will depend on your personal circumstances, as well as which tariff you’re currently on.

We can’t tell you what the best deal will be but we can say that it may be worth a look.

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So, what should I do?

If you’re interested in finding a collective switching scheme, a simple search online should find you some. Be sure that the scheme is reputable and that you understand it fully before you sign up.

If you’re still interested in saving on your energy bills but unsure about a collective scheme, visit our comparison service instead. If you’ve got your current bill to hand all the better - in only a few minutes we’ll show you just how much you could save.

**Total sum of savings calculated from CTM dual fuel customer switches from Jan-Jul 2016