The big switch: Consumers urged to act together to undercut Big Six
Energy bosses tried to explain their price rises to MPs last month. Now their customers can vote with their feet by changing supplier
More than a million households are poised to swap energy suppliers in a move of unprecedented magnitude in Britain.
In a dramatic escalation of pressure by the Government on energy suppliers over their soaring prices, homes across London and in 77 local authority areas, helped by the Department for Energy and Climate Change, can change their fuel provider this Tuesday.
Ed Davey, the Climate Change Secretary, said "people are fed up with the Big Six" and that collective switching was a way for families, particularly the fuel-poor, to regain control over their energy bills.
Collective switching can secure greater discounts because companies can offer cheaper prices to a large group of people – a form of collective bargaining. It also allows smaller firms to break into the market because they can attract a lot of customers at once.
Householders need to register by midnight tomorrow and on Tuesday energy firms, through local authorities or third party websites, auction their best prices to registered customers. Although 77 local authorities are managing the auctions, anyone in Britain can sign up, meaning potentially millions could pull the plug on the Big Six.
Anger over above-inflation price rises by British Gas, EDF, Npower, E.ON, SSE and Scottish Power has been sustained since September, when Ed Miliband, in his party conference speech, pledged a Labour government would freeze utility bills for 20 months. The policy triggered a rush by suppliers to ratchet up prices. Firms have also blamed the Government's green taxes for price hikes as high as 9.1 per cent. British Gas price rises of 8.4 per cent for gas and 10.4 per cent for electricity take effect on Saturday.
Mr Davey said he had changed his supplier from EDF to Sainsbury's Energy in a smaller-scale collective switch in June, saving him £240 this year. So far collective schemes have led to 21,000 households switching their supplier, saving a total of £2.7m and an average of £131 per home. Thousands more registered but decided not to switch, instead using the offer to bargain with their existing supplier.
Mr Davey said: "The more people get involved, the more people get a much bigger discount that means they can take on the Big Six.
"There is a lot of evidence that a lot of people are saving a lot of money. We are particularly targeting it at the more vulnerable and fuel-poor. A lot of people are worried about switching, because they feel they may not get a good deal. Many people don't trust energy companies and who can blame them?
"No one trusts the Big Six because of their appalling performance, doorstep selling or frankly high tariff rises. This is one of the reasons we forced them to be more transparent, forcing more competition. This is one of our methods, to enable people to use a third party who they can trust."
The website uswitch.com reported a 600 per cent increase in switching in October. An Independent on Sunday ComRes poll found that 70 per cent of people believe it is "quite easy" to change power supplier, while 13 per cent say they have switched in the past month. People can sign up to the Big Community Switch, Big London Energy Switch or local authority websites tomorrow before the auction takes place on Tuesday. The websites will transfer people to ichoosr.com who power the scheme.
The day after the auction, information on the winning supplier will be available online, and from 29 November households will receive a personal offer. People with limited access to the internet are being encouraged to register through their local authority.
The Department for Energy and Climate Change is in discussions with Cornwall Energy about ways to get more independent suppliers involved in collective switches. Last night, the Big Six faced further criticism after it was revealed they had only completed a fraction of the green and social measures they are required to carry out, despite taking more than £1bn from customers.
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