'Surprise call from Ed Davey, Energy Minister – on collective switc' blog discussion

danny_x

This government is so dogmatic about "choice", but it's just a con. I've just been through the switching process (again), and the saving is likely to be only a couple of quid, if that. It's certainly not worth all the waste of time and the hassle each year. It would be more useful if the utilities had to try to retain customers, so people got the same incentive for not switching as the switching sites give for switching.

So much money is being wasted on the people who devise the complicated tariffs, plus all the people in call centres and admin dealing with new accounts, closing accounts and subsequent queries. And, of course, it's us who have to pay for this waste.

We'd be better off if they were renationalised, and just set efficiency targets to keep the prices down.

Decorian

I just read a blog post from 38Degrees who have started organising this.
They say the deadline for signing up is end March and they will then do a reverse auction to secure the deal.

Once the deal is secured, there is no obligation to sign up to it, but if it is cheaper you can then switch.

Seems to me that all of these efforts would be better if they were synchronized.

Rafter

Martin,

Lovely in principle, but would it really work in practice?

Energy companies, banks, insurers all rely on customer inertia to fund their 'best' deals, hoping to attract sufficient numbers of non-switchers to make the numbers stack up. So any group buying co-operative will receive a less than 'best buy' rate and find it hard to attract customers.

Rather than create a whole new enterprise with staff and risk, it would seem to be better for MSE or an organisation like quidco to enhance their offer so that when your current tariff ends, the service automatically finds you the best open market deal and with a single click you can switch supplier or potentially give customers the option of delegating switching to the service so it happens automatically. The same could be done for insurance and other products. It should be illegal for suppliers to withold their products from such a service.

Hopefully in time so many consumers would use these kind of systems that the difference between the prices for new and existing customers will reduce and all consumers will get a fairer deal.

This will also mean that serial switchers will be less subsidised by 'loyal' customers.

R.

rhyski

Which? and 38degrees appear to have started the ball rolling....

http://www.38degrees.org.uk/page/s/the-big-switch#petition
http://www.whichbigswitch.co.uk/

(From the website)
"The Big Switch is a new way for us to take the power back from big gas and electricity companies. We’ll bargain as a group with gas and electricity companies to persuade them to give us the lowest price.
First you sign up using the form above to register your interest in taking part in The Big Switch. Then expert negotiators at Which? will start bargaining with the energy companies using a ‘reverse auction’.
Companies will compete to give us the cheapest electricity and gas. Once the deal has been secured, you’ll be notified via email and you can choose whether or not to accept it."

and more info on the Which? website here..
http://www.which.co.uk/news/2012/02/join-the-big-switch-to-cut-your-energy-bills-278444/

smala01

What energy company would have the man power or IT systems to be able to "switch" a batch of many 10,000's customers in a short time.

I consulted for a major energy company a few years ago. The fallout rate for a switching customer (needed to call an operator, or in some way fell out of the automated system) was 1 in 3.

It would take many months - even years to get that number of customers switched without effecting "normal" business.

Even if an energy company agreed to this tarrif, it would have to recruit lots of "temp" staff - the service level for those 1 in 3 "fall-outs" would be terrible.

MSE be careful for what you wish for.

P.S. A better solution would be to threaten a mass switch (motivation) but then negociate an MSE tarrif with each of the major providers. (switch tarrif not provider)

Smala01

jamesd

rhyspaulburton, what I wonder is how much profit is being made out of any consumers who switch. Full disclosure of who gets paid how much is a key trend in the financial services business and something that I'd want here as well.

I wasn't impressed with the ethics of Which a few years back. When canceling a subscription they tried to pitch their switching service to me as a benefit of membership, even though it was available to all. Deceptive practice like that scores very negatively.

I rather like the transparent pricing described on the 38 degrees blog comments by Nick Grealy. Not quite as simple as he describes it because of nuclear and other obligations but transparency is definitely lacking at the moment so I don't even know how much my energy providers are charging for their services to me as distinct from what they are paying for energy sources.

Errata

Wouldm't a 'one price fits all' mean that those who currently benefit from regional priceing be subsidising some users?

Ken68

I do wonder why the trade unions havn't already cashed in on collective switching.
Or even the Co-op with it's huge membership.

Rafter

There is an emerging trend that some are calling 'the end to inefficiency' from the states.

Consumers give websites like mint.com details of their finances and the site will automatically tell them if they could get a better deal elsewhere.

The next stage is that consumers will actually give a website the authority to swtich for them to get a better deal.

As long as competition law can keep up I think this has to be a good thing. As others have pointed out the army of marketing people, call centre staff and commission to price comparison services needed to maintain the current 'competitive' market is hugely wasteful when compared all customers getting a fair price in the first place and having no need to switch unless service is poor or someone comes up with a better product.

MSE_Martin

Rafter wrote: »

Martin,

Lovely in principle, but would it really work in practice?

Energy companies, banks, insurers all rely on customer inertia to fund their 'best' deals, hoping to attract sufficient numbers of non-switchers to make the numbers stack up. So any group buying co-operative will receive a less than 'best buy' rate and find it hard to attract customers.

Rather than create a whole new enterprise with staff and risk, it would seem to be better for MSE or an organisation like quidco to enhance their offer so that when your current tariff ends, the service automatically finds you the best open market deal and with a single click you can switch supplier or potentially give customers the option of delegating switching to the service so it happens automatically. The same could be done for insurance and other products. It should be illegal for suppliers to withold their products from such a service.

Hopefully in time so many consumers would use these kind of systems that the difference between the prices for new and existing customers will reduce and all consumers will get a fairer deal.

This will also mean that serial switchers will be less subsidised by 'loyal' customers.

R.

We effectively do that - we remind people about switching - we have the tart alert - yet I think it needs more.

Which are trying this but theirs is a bulk buying not regular buying model.