Britain’s first attempt to introduce collective purchasing, or group buying, in an attempt to drive down energy bills has seen over 75,000 people sign up to the campaign organised by consumer magazine, Which?
Although similar programmes have been run with some success elsewhere in Europe, this is the first time that a large group of people have got together and used their collective buying power to drive down prices and get the best deal possible on their utility bills.
Both the coalition government and the opposition have backed the scheme, which all parties agree could be the new way for everyone in the UK to buy their gas and electricity and exercise some control over spiralling power bills.
Although Which? is delighted with the number of people who agreed to sign up to the “Big Switch” so far, the magazine is hoping that more names can be added to the group in an effort to secure an even better deal from utility companies for those taking part.
The exact amount that participants end up saving won’t be known until the closing date for the sign-up, but the more people on the list the bigger the savings consumers can expect. By buying gas and electricity in bulk for all the homes signed up to the scheme, Which? reckon they can save consumers a significant amount on their annual power bills.
Once the registration period ends in March, the magazine will ask all the major utility companies in the UK to bid for the contract to provide those in the scheme with their gas and electricity; a lucrative contract and one that no gas and electricity provider will want to miss out on.
The lowest bidder will be awarded the deal, and consumers can then start enjoying their cheaper power – as well as finding a better way to spend the money that would usually have been put aside for bills.
Richard Lloyd, executive director of Which? anticipates that their scheme will have attracted well over 100,000 people by the time the registration period is over, calling on anyone who is angry at their rising power bills to sign up and put themselves in control. Any company bidding on the huge contract is guaranteed a healthy number of new customers, so it is in their interest to offer a competitive rate.
Consumers can even sign up now to see what kind of rate the scheme manages to secure without being under any obligation to switch if the deal isn’t what they imagined or if they simply change their mind. Once the lowest bidder has been confirmed, Which? will contact every household that registered to tell them what the winning deal is and every bill payer then makes the decision whether to go ahead with the switch or not.
Which? is hoping that many customers who have never switched energy suppliers before, about 60% of consumers, will be more willing to try through a scheme like this, which offers them support and advice.
Unlike most gas and electricity deals, which can offer different rates to people in different parts of the country, the Which? scheme is being run on a UK-wide basis, so everyone will pay the same no matter what costs are involved in delivering the gas or electricity to your home.
Any switch involves having to pay a penalty to your old energy provider for breaking the contract you have with them, and the Big Switch is no different; Lloyd reminded consumers that they will need to include this penalty when calculating if the offer produced by the scheme is worth taking.
Lloyd also added that until all the bids were received, it was impossible to know what conditions may be attached to the price by the energy provider. Consumers may be asked to sign up for a minimum period or pay by direct debit in order to ensure the best price, but the executive director is still confident that the contract they secure will be a big improvement on most utility deals currently available.