What is collective energy supplier switching?

Collective switching is a process where a group of individuals can negotiate to get a better deal on their energy costs. In most cases a third party representative will act on behalf of the group, such as a charity, business or local council. The idea behind collective switching is that bulk purchases usually result in a cheaper overall tariff for each individual.

This is how it all works:

Collective Switching Benefits:

As mentioned above, collective switching means that you and other individuals bulk buy your energy so it works out cheaper per unit that on an individual account. In a recent report released by the government, household’s can save an average of £131 on their bills. Homeowners can feel happy that they are getting the best possible deal around on their energy bills. People involved in the scheme can also benefit from additional benefits too such as discounts on energy saving products.

The Process of collective switching:

Once you have your group of individuals together, you need to register with a scheme organiser so they can get an idea of how many people are interested in joining. The scheme organiser will then start to negotiate on behalf of your group. Organisers usually set up an online auction where energy companies can bid to become the chosen supplier for your group. Once the auction is over you can choose to accept or reject the offer on the table. Only when you accept a new rate are you tied to a supplier – in the meantime you can register interest with as many schemes as you like. Once you have settled on a scheme, your organiser is responsible for switching you over and you should not be without power at any point.

Necessary Information:

Before you call to register with a scheme you need to make sure you have all the relevant information. This can include:

• Name
• Address
• Contact details
• Current supplier and tariff
• Annual energy consumption
• How you pay your bill (direct debit, cash, cheque, prepayment)

Do I need the third party supplier?

If you want to set up the scheme by yourself and cut out the third party supplier, you need to act as your own licensed energy supplier. It is certainly a route you can choose to take and many groups have formed their own independent collectives. Take a look at the online software provider ichoosr. It offers you an online sign up space and is a place where you can host the auction for your group.

It sounds too good to be true?

Every scheme has its pros and cons and collective switching is not without its own snags. There are several points to highlight when it comes to the pros and cons of collective switching:

Saves money but not energy: If your goal is to reduce your energy use in your home then you may want to save the money you save from collective switching to put towards a renewable energy system. The collective switching scheme will save you money but it won’t make any difference to the way your use energy in your home. That is up to you.
Scheme competition: It is important that you research each scheme before you get started because each one offers a slightly different deal. You might think a larger corporation such as Which?’s Big Switch is better than a smaller local community-based group.

Competition: You need the competition in your auction to get the best deal, so make sure there is a large number of suppliers involved in your auction. Competition will drive the best price for your group.

Fees: Who is the organisation charging, you or the supplier? Some of the organisations will charge you a finder’s fee whereas others will make money by charging the supplier per household they manage to switch. There maybe a local charity that provides collective switching to make money. You need to understand the fees behind your choice before you agree to a deal.
Personal research: It is always a good idea to do your own research and price comparisons. Collective switching won’t always get you the best deal.

Are you apart of a collective switching group? How did you choose your scheme? Have you already begun to see the reward on your bills?

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