Collective purchasing and switching introduced in Britain


Edward Davey,
U.K. Energy
London, U.K. — (METERING.COM) — May 29, 2012 – Collective purchasing and switching is being introduced in Britain with a view to empowering energy consumers to get a better deal on their gas and electricity bills and to save them having to shop around and compare tariffs individually.

According to the advice for consumers published by the Department of Energy and Climate Change (DECC), there is no set model for how individual schemes will operate, although usually this kind of activity would be facilitated by a third party.

In general, collective switching is where a third party actively negotiates a better tariff on behalf of the consumers they represent. Collective purchasing is where the third party/collective is directly purchasing a commodity (e.g. energy efficiency solutions) from the gas or electricity supplier.

In the advice, the DECC envisages a six-stage process the organization would need to follow:

  • Market the scheme to find potential members of the group
  • Gather information about individuals’ energy consumption and requirements
  • Negotiate with the energy suppliers and secure a deal for their group
  • Inform the group about the deal
  • There may be a time limit by which individuals need to accept or reject the deal
  • If the deal is accepted it is likely that the third party will manage the switch of the group to the new supplier.

“I want to help make collective purchasing become a permanent feature of the U.K. energy market,” said Energy Secretary Edward Davey outlining the scheme. “This can be a really useful tool for consumers by making it easier to move to a better deal and to get real savings on gas and electricity bills, as well as helping boost competition.

In the advice for potential providers the DECC outlines the possibility of charging a fee for services, e.g. to the “winning” supplier for each customer that switches to the deal, or a registration fee to the individual. The need for legal advice is also stressed.