Collective Energy Switch Trial a Success

By : Business Save |September 21, 2018 |Energy, Energy Blog |0 Comment

Collective Energy Switch Trial a Success

A ‘collective switching’ test run by gas and electricity regulator Ofgem has proved a success. Elderly customers and those previously loyal to a particular energy supplier saving upwards of £261 on their annual energy bill each.

Approximately 50,000 people were involved in the collective switching trial. Eligible customers being those who had typically been paying for their energy via the same variable tariff for six years with one of the UK’s ‘Big Six’ suppliers.

Scheme Hailed a Success Despite Low Numbers

The trial involved Ofgem sending letters to eligible energy consumers. The letter explained how to save money by switching suppliers through the collective switch scheme. This enabled them to get onto a cheaper tariff and thus save money. However, only 1 in 5 customers actually acted on the information. Although Ofgem says the figure of 22% that did make the switch to a cheaper tariff means the trial was a success.

The switching percentage for people in a control group who did not receive a letter with information on how to find a cheaper tariff via the scheme was just 2.6%

Collective Switching For Stronger Bargaining Power

The idea behind collective switching is that it increases the negotiating power of the group making the switch. For energy suppliers to receive such an influx of customers, they are usually more willing to offer lower rates.

Sometimes an auction is held for the group’s commitment, with the best bids winning the collective switch. Ofgem’s collective switching is supposedly much easier to partake in than other types of collective group bargaining schemes. Why? Because the customers don’t need to reveal the details of the current tariff they are on.

Rob Salter-Church of Ofgem said of the successful trial:

“The results of this trial demonstrate that offering a simplified collective switch and providing personalised savings can be a big help in giving these customers the confidence and reassurance they need to start a switch.”

However there has been some criticism of collective switching. Critics are quick to mention that a collective switch doesn’t always guarantee the best deal. Shopping around suppliers yourself will potentially yielding an even better tariff.

Ofgem Helping the ‘Hardest to Reach’ Households

Ofgem has also revealed that they plan on conducting an even bigger trial in the autumn. This time it will be involving 200,000 households. This trial and the energy cap which Ofgem has proposed to help those paying for energy via the more expensive default tariffs are helping British households get the best out of their energy deals.

The Government’s Minister for Energy, Claire Perry, said:

“Millions have been on poor value deals for far too long. It is great to see Ofgem helping the hardest to reach households switch to better value deals.”

If you want to learn more about the different energy supplier options and tariffs available for you, get in touch with Business Save’s team of highly experienced energy experts.

 

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