DECC Press Release - Next steps on collective purchasing for a better energy deal

28th May 2012

The Department for Energy and Climate Change (DECC) have issued the following press release on collective energy purchasing schemes.


Davey: Next steps on collective purchasing for a better energy deal

Energy Secretary Edward Davey has published practical advice for energy consumers looking to get a better deal on their gas and electricity deals through ‘collective switching’, and guidance for organisations wanting to launch their own collective energy purchasing schemes.

Businesses, consumer groups, local government groups, housing organisations, charities and energy regulator Ofgem also attended a round table meeting chaired by the Energy Secretary in Westminster to discuss how to help consumers club together to cut their gas and electricity bills.

Edward Davey said:

“I want to help make collective purchasing become a permanent feature of the UK energy market. This can be a really useful tool for consumers by making it easier to move to a better deal and to get real savings on gas and electricity bills, as well as helping boost competition.

“Now I want to see more providers coming up with schemes with the scale and reach to help the most vulnerable consumers. Local authorities and housing associations could have real role to play here, helping their tenants cope with living costs.”

Richard Bates, Director of Empowered Consumers at Consumer Focus, said:

“Many consumers are put off by the prospect of having to switch energy by themselves. Collective switching – where an intermediary can do the hard work on their behalf - offers an alternative, straightforward way of switching. And because the intermediary can aggregate together consumer demand, it can give customers much more muscle in markets than they have when switching alone.

“Other countries have already shown that collective switching can deliver significant consumer benefits, chiefly greater convenience and better value. There is real scope for similar schemes to be developed in the UK and we hope many organisations will be interested in finding out how this innovative model can work in their area.”

The meeting, which was chaired by the Secretary of State, saw officials, industry and consumer representatives put their heads together on building momentum behind ‘collective purchasing’, whereby consumers sign up en masse with third party organisations to get better deals from energy suppliers.

The roundtable heard presentations from Which? on their Big Switch scheme, which has almost 290,000 people signed up; Cornwall Together on their scheme involving the Eden Project, Cornwall Council and Cornwall and Isles of Scilly NHS among others to buy gas, electricity, and heating oil collectively and target fuel poverty; and iChoosr, which has pioneered collective switching for utility services in Belgium, The Netherlands and Germany.

Organisations listed to attend included Age UK, BIS, British Gas, Charities Buying Group, Community Buying Unlimited, Cummunity Energy Extra, Consumer Focus, Co-op Energy, Cornwall Council, Cornwall NHS, Eden Project, Energyhelpine.com, Energylinx, Energy Extra, Energy UK, E.ON, First Utility, Green Energy UK, Hyde Housing, Incahoot, iChoosr, Local Government Association, MoneySavingExpert.com, MoneySupermarket.com, National Energy Action, National Housing Federation, New Local Government Network, Northern Housing Consortium, Ofgem, Peabody, Switchgasandelectrcity.com, TheEnergyShop.com, ThePeoplesPower, Unison, Unravelit.com, Uswitch, Which?.

NOTES

- The new collective purchasing factsheets produced by the Department of Energy and Climate Change in cooperation with Consumer Focus and Ofgem are available on the Collective purchasing and switching working group page.

- The Government has been working to build momentum behind collective purchasing for over a year, with the launch of the Consumer Engagement Strategy in April 2011 by (then Consumer Minister) Edward Davey; the creation of a working group in November 2011 on collective purchasing in the energy market; and ongoing work with Ofgem to reduce barriers to getting more collective switching schemes up and running.

- On 23 March 2012 Energy Secretary Edward Davey wrote to energy suppliers making clear that he wants to see them engaging positively on collective purchasing schemes.

- On 27 March 2012 Mr Davey hosted a first round table on collective purchasing, attended by Age UK, Consumer Focus, the Independent Suppliers Forum, the Energy Retail Association, ichoosr, the Local Government Association, Moneysavingexpert.com, moneysupermarket.com, uswitch, the National Housing Federation, Ofgem, the Eden Project, thepeoplespower, and Which?.

- On 30 April 2012 DECC published an update on the work of the collective purchasing working group.

- On 30 April 2012 Ofgem published information to help suppliers and other parties that wish to participate in collective purchasing and switching schemes, including a summary of some of the relevant licence conditions.

For more information and for the 'Collective purchasing and switching: Guidance for consumers', click here.