Most of us will have received a quote from an energy supplier offering terms for a fixed deal. This can be from an initial enquiry or a renewal quote directly from the company, to you as the customer. If you have then used a price comparison site and found the same energy company, offering you the same terms but cheaper, then you have seen collective energy switching in action.
If one potential customer tries to strike a better deal directly with a supplier, the chances of success will be low. When a large group of potential customers tries to negotiate, the chances are much better. This is the basis behind using a collective to leverage the energy suppliers.
Energy comparison sites often operate using this collective switching model. They can act as a representative for a large number of potential customers. This is how they can access the best deals available. This is also how one company can end up offering multiple rates, across different comparison sites.
How long have they been around?
The idea has been around for a number of years but really only became popular after government endorsement in 2012. Although take up was much lower than anticipated, collective switching has been seeing something of a revival over the last few years.
Are price comparison sites the only place to find these deals?
No, but they are the most common. As comparison site user bases continue to rise, the potential for an energy company to scoop up a large portion of customers increases. This is a big driver in convincing the suppliers to make deals and to keep the market competitive.
Comparison sites have become very adept at creating the conditions to get the best deals. However, they are not the only way to take advantage. In theory, anyone able to organise a large base of potential customers can start a collective. National newspapers, local councils and even blocks of flats have done so. When negotiating, the organiser uses the number of members in the collective to drive a harder bargain.
Once a deal is struck, it is usual for each member of the collective to be given a time limit in which to accept or decline the deal. It is also likely that a limit on the number of customers that can take advantage will be imposed.
Each deal will be made between the collective and an energy supplier. That deal will then only be available to members of that group. The offer received can also depend largely on your geographical location. A local community collective of 2000 people in Central London is likely to get a vastly different offer to a 2000 strong collective in Lanarkshire.
If the terms offered do not suit you, you are under no obligation to switch your energy deal to that offered to the collective.
Who can set it up?
Any group or organisation is able to set up a collective energy switching deal.
The organiser of the collective first needs to outline the requirements and size of the group. The number of potential customers a collective can offer will be the main driving force in determining how good a deal the energy suppliers are likely to offer.
With the details published, energy suppliers can bid against each other and propose a tailored deal to the organiser. The collective will get a better deal and one which is tailored to that group.
The needs of the group usually start and end with price. Other needs include groups which may prefer to have a green supplier, or more payment options.
If you would rather join a collective instead of creating one, you will certainly have options. As mentioned above, website comparison sites are the prevalent deal makers and are easy to join. Outside of those, check with your local authority or housing association. They are the next best route into a collective.
Are they worth it?
Since the latter part of 2018 collective energy switching has grown in popularity. This is largely down to the success of comparison websites. Energy companies competing for customers is good news for the consumer. The success of schemes like this are important to keep prices as low as possible. With comparison sites and regular switches now the best way to get a great deal, it is worth joining a collective.
Your own circumstances will dictate the kind of collective you should be looking for. Due to the sheer scale of the customer base, comparison sites work well for most people. Having more customers leads to more leverage when negotiating with the energy suppliers.