Does Co-op deal look tempting to energy switchers?
The UK’s first major collective energy switching scheme has just been concluded. But has it been a winner?
Co-operative Energy emerged yesterday as winner of the much-heralded Big Switch campaign launched by Which? and 38 Degrees.
The collective bargaining scheme aimed to find cheaper energy deals for more than 280,000 people who signed up. But the Co-op – which won the auction by offering the lowest tariff – will offer its deals to 30,000 people on a first come, first served basis.
Nigel Mason of Co-op Energy said: "We have used the auction as a launchpad for our new fixed rate tariff for people who want certainty about the rates they pay. Peopleneed to stay with us for 12 months and that allows us to offer a slightly reduced unit rate for both gas and electricity."
The winning deals will be £1,048 a year for the average household if they pay by direct debit, and £1,144 a year if they pay by cash or cheque. On average people could save £119 if they pay by direct debit, or £183 if they pay by cash or cheque.
Co-op Energy was launched a year ago as an ethical alternative to the existing Big Six firms. It says it is committed to fair pricing and lower carbon energy, and is wholly owned by its customers, who are given a share of profits every six months.
The firm currently has just 25,000 customers, so if 30,000 of those who signed up for Big Switch accept the company's deal, it will double their customer base at a stroke. On the basis of boosting Co-op's business, the Big Switch has been a huge success.
But if anyone who signed up misses out, they will be offered EDF Energy's Blue +Price Promise tariff at £6 more. That's a deal that's already available to anyone. For that reason, experts have labelled the Big Switch scheme a flop.
Ann Robinson of uSwitch.com said: "The outcome is disappointing. 280,000 people signed up, and yet the winning deal will only be offered to 30,000 on a first come, first served basis. This means that the lucky few will be leaving the process with a deal that is not the cheapest plan on the market, while those who get the fallback offer will be getting a tariff that is already available and that they could have signed up to weeks ago."
Ed Davey, the Energy Secretary, is a big fan of the concept of collective purchasing. "I want to see more schemes enabling consumers to club together to buy energy. The Government is working with Ofgem and other key organisations to make sure we remove any barriers and encourage new initiatives to get off the ground," he said.
To that end he has summoned key parties – including Age UK, Which? and Ofgem – to a meeting on 23 May. In other words, while this first high-profile scheme hasn't been a massive success, it's encouraging enough for more to appear.
Missing from Mr Davey's meeting is Mike Shamash, founder of the not-for-profit company thePeoplesPower. It is working with community organisations such as Bolton Community Homes and Grand Union Housing to use collective purchasing to get better deals for vulnerable people.
"We hope that the success of Big Switch will help spread the potential benefits of collective switching," Mr Shamash said. "We want to bring lower tariffs to people suffering from fuel poverty and financial exclusion."
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