Sign up & Campaign for a New Way of buying Energy

Primrose

I've just read some publicity about a new "not-for-profit" scheme for the Community Purchasing of energy supplies. The idea revolves around the fact that individual consumers and small businesses have little bargaining power when it comes to purchasing. Consequently, businesses and individual households in the same locality are buying goods/services from different suppliers at different prices and at different times. For example, when it comes to buying electricity, gas or heating oil, we tend to operate individually. This means that homes in any given neighbourhood will almost certainly have their energy supplied by different companies and be subject to diverse plans and tariffs becase each household or business only has the purchase power of one, they literally pay the price for this. Community Purchasing has been established with the aim of changing this by putting consumers in the driving seat and using their combined purchasing power to secure terms which they could never achieve alone.

The concept is straighforward. By registering - at no cost - at www.communitypurchasing.com or calling them on 0845 508 3141, individuals and businesses can join a community who want to save money. Using this combined buying power, Community Purchasing will approach energy suppliers to negotiate discounts for its members. They recognise this consumer-led approach is a radical departure from what we are all used to but believe the benefits to individual consumers could be significant. For the concept to work, it is vital for people to register. There is no fee for doing so, and no obligation. More info from www.communitypurchasing.com.

Woby_Tide

is this the emperors new clothes for the Pipeline card?

Primrose

I don't know. The publicity material I saw was sent out to our Parish Office for local display. This organisation is based at PO Box 2168, Buckingham MK18 9AH if that's any clue.

Hammock99

It doesn't look as if they are the same organisation and I've signed up without any problem. The theory is sound and I'm sure if they get enough people to join, they will get somewhere.

Hammock99

Primrose - I called Community Purchasing (CP) this morning and spoke to the guy who set it up. I have summarised a long conversation as best I can…

• CP was set up because it’s well recognised the energy market is uncompetitive (Ofgem confirmed this in a report they released in October) and nothing’s going to change unless consumers do something themselves.
• Government intervention hasn’t worked and independent suppliers, who account for just 1% of the market, go bust quickly (recent casualty BizzEnergy).
• Ofgem confirmed that switching suppliers by the active minority will not drive down prices for inactive consumers and that even active consumers would have to spend their whole time switching suppliers just to keep ahead.
• These companies unsurprisingly are working to maximise their profits (which Ofgem couldn’t tie down). There’s nothing wrong with that and it won’t change, so what’s left?
• Ofgem made it clear in their report that the Big 6 try to keep customer numbers close to current levels and they try not to get too far out of line with competitors’ prices for fear this would trigger a significant loss of consumers. There we have the answer - good old-fashioned market forces. Basically consumers need to be better organised in order to change the level of customer numbers between suppliers.
• The industry has led us to believe the multitude of tariffs, which don’t last long, (online, dual, first units at high price, next lot at another, night/day, region, standing charges, payment method etc.) somehow benefit consumers and give the impression of meaningful choice. This is smoke & mirrors.
• Until we see some real competition, there’s no way of knowing what the correct price should be for our gas and electricity. There’s one way to find out – market forces. The problem is that, although we all need electricity, there are other consumables which are far more exciting. By signing up to CP, the hope is that it releases cash to spend on other things (like food in some cases).
• With regard to Pipeline, the only thing in common is organised buying power. The markets are quite different. Electricity/gas is a far more regulated market and, although it’s uncompetitive, the main players are very sensitive to customer numbers because in many cases they have to buy forward.
• Will it work? Without doubt it can work, but only if sufficient numbers sign up. It’s early days but thus far the response has been overwhelmingly positive.

Hope this throws some light on things.

Premier_2

Hammock99 wrote: »

...Will it work? Without doubt it can work, but only if sufficient numbers sign up. It’s early days but thus far the response has been overwhelmingly positive.

How?

Where are they planning to buy this power from other than the existing major sources?

Ebico, for example, have 40,000+ customers already and are unable to source cheaper energy. Also it has to be supplied via a licenced supplier, hence why ebico work in partnership with SSE who hold the supply licence.

Pipeline had allegedly 500,000 people signed up and that still couldn't get petrol any cheaper. With 500,000 people signed up, one would presume Scammel also looked into the possibility of sourcing cheaper energy for those signed up before he decided to try and fleece them with a UW deal.

1carminestocky

Premier wrote: »

How?

Where are they planning to buy this power from other than the existing major sources?

Ebico, for example, have 40,000+ customers already and are unable to source cheaper energy. Also it has to be supplied via a licenced supplier, hence why ebico work in partnership with SSE who hold the supply licence.

Pipeline had allegedly 500,000 people signed up and that still couldn't get petrol any cheaper. With 500,000 people signed up, one would presume Scammel also looked into the possibility of sourcing cheaper energy for those signed up before he decided to try and fleece them with a UW deal.

People in glass houses and all that :rolleyes: For anybody with 'average' domestic fuel consumption I'd be very suprised if UW isn't cheaper than Ebico (it certainly is in my area)....

Premier_2

People who live under bridges and all that :rolleyes: ^^^^^^^^

Primrose

Hammock - thanks for your very thoughtful reply and for Premier's comments about Pipeline's 500,000 sign-ups. It's dispiriting that so far these organisations haven't been able to influence the cost of energy but I'm a great believer that one has to keep plugging away at trying to sharpen the competition of these companies, otherwise consumers never make any headway in trying to gain more competitive prices for their fuel.

Hammock99

The following extracts from Ofgem highlight the problem (and potential solution)..

• Central to this is that consumers appear unsure or sceptical about the savings to expect. A majority believe the savings are not worth the hassle of switching or that the savings will only last a short time.
• It is apparent that we cannot rely on switching by the active minority in energy supply to drive down prices for inactive consumers.
• 70 per cent also find the number of tariffs on offer confusing and just over half find it too hard to work out whether they would save anything if they did switch.
• Although there are exceptions, most suppliers seek to sustain customer numbers at close to current levels, primarily to maintain balance between their upstream and downstream positions.
• Suppliers are also aware, however, that they cannot get too far out of line with competitors’ prices, for fear that this would trigger a significant loss of consumers.

It's clear that operating as an independent supplier doesn't work (Ofgem also confirmed this). The idea of Community Purchasing is therefore not to become another independent but to coordinate the buying power of consumers and to work with existing suppliers who want their business. Right now it's organised chaos, thanks to confusing tarriffs and disorganised consumers. We can wring our hands and complain or do something based on a known sensitivity - the allocation of customer numbers between the big 6. Thus far, despite huge media and institutional pressure, these avenues haven't worked and that will not change. Short of outright nationalisation, which won't happen, consumers have to vote with their feet but in a coordinated way. Time for a new approach.

BallandChain

Thanks to Primrose for bringing this organisation to my attention. I've just signed up and my first reaction was "I hope it isn't another Pipeline scam". Let's hope something good comes from this as Pipeline was just a pipe dream.

Edited to add: They mention on their website that they are campaigning for simpler and more transparent tariffs. That got me thinking, have you ever received in the post any price list for your gas or electricity? I never have and how are you supposed to keep up with all the various tariffs if they are only available online? Indeed, it makes you wonder if the tariffs online are just a selection. Not everyone has internet access so these people are not kept in the loop.

Banks always send out a list of their charges with a statement so why aren't energy companies made to disclose their charges/prices?