When a large group of people get together and switch their energy suppliers as a group, it is known as a collective switch. Those who wish to change their energy providers are often able to negotiate a better deal on gas and electricity tariffs when switching with a higher volume of people, compared to when switching as individuals.
Many people may be apprehensive about the idea of a collective switch, but the reality is that energy consumers only stand to benefit from taking part in. In fact, the government’s Department for Energy and Climate Change (DECC) actively supports collective switching, because of the benefits that households can receive from taking part, and also as they help to raise awareness of the benefits of switching in general.
There are typically four steps to a collective switch:
This is the period of time during which consumers, such as yourself, have the chance to express their interest in taking part in a collective switch. At this period in time, it is often unclear exactly how much each individual could save from switching collectively, as deals must be negotiated after all participants have registered. It’s worth remembering that even after you register for a collective switch, you are not under obligation to actually go through with the switch at the end of the process.
An auction is then held with energy suppliers, in which they bid for the collective group’s custom. Suppliers will often put forward cheaper deals during this auction than are typically offered on the market, as the business of a group of customers is worth more to them than individual switchers alone. This auction is the reason that collective switchers commonly end up with market-beating energy deals, as suppliers are bidding head-to-head.
Once the auction is completed, each person who registered for the collective switch will receive a personal offer. This will state in more detail what each participant’s energy bill cost is likely to be based on their individual consumption habits and the best offer from the auction. Even at this point, you do not have to accept the offer if you don’t want to.
This is a pre-defined period of time that you will have to decide whether you want to take part in the collective switch, and accept the deal offered to you. Typically, the acceptance period will last a few weeks, giving you plenty of time to weigh up your options and make sure you’re getting the best deal available.
It is sometimes the case that organisations decide to arrange a collective switch for consumers to sign up to, which is referred to a collective switching scheme. For instance, energy price comparison websites have been known to do this in order to utilise their industry knowledge and standing negotiate a deal on behalf of their customers.
A collective switching scheme may have different features than a collective switch organised by the consumers themselves, for instance different deals negotiated for those in different regions of the UK. The advantage of signing up to a collective switching scheme is that not only do you, the consumer, have to do very little in order to take part and make the most of getting a better energy deal, but you can also trust in the organisation to hold the auction and negotiate on your behalf.