17 June 2013

Avoid Collective Switching Schemes

Council backed collective energy switching schemes continue to disappoint as they don't necessarily offer the best deal for the individual.

Many county councils have been promoting collective switching schemes where lots of people sign up and the energy companies are invited to bid for their business. The idea is that they'll fall over themselves to compete for all the households and the resultant offer will be the best you're likely to get. You can sign up, safe in the knowledge that you've got the best deal you can get. That's a great concept, except it's not working out that way.

We've now seen results of another county council backed collective switching scheme and it's actually worse than the last one we saw. Last time the winning bid was from Sainsbury's Energy (selling rebranded British Gas energy) with a strong sounding £210 discount on a fixed price tariff. That sounded impressive but was actually not particularly good as the basic tariff wasn't that competitive. We found it easy to beat the deal by nearly £200 by comparing against the whole market. Ofgem don't like the idea of special deals for special interest groups as being generally anti-competitive and it makes it hard to compare the deal.

The latest deal to come out is no better. In fact, the latest winner in the Hertfordshire area is Scottish Power with their Fixed Price Energy October 2014 tariff. No special discounts for the collective scheme and as the participant is already a regular MoneyMaxim energy comparison service user, it was actually £150 more expensive than his existing supplier. In fact, our user is already on the best tariff, hardly surprising as energy prices have been going up and we regularly check his usage over the whole market. But the fact is that he could fix his prices into 2015 and still be paying £65 per year less than the winning bid.

This emphasises the other issue with the collective switching schemes. You don't know which energy companies are participating and offering a tariff and which aren't. So though the scheme doesn't necessarily compare over the whole market it then promotes the winning bid as the best offer for you. If you haven't switched before, it might look like a good deal, but without comparing all suppliers you won't know. It's not as if the collective scheme is any easier to use – they require as much information to do a partial job as we do to do a full and impartial review of the market. That's why you should use the MoneyMaxim energy comparison service, we'll show you all the tariffs, even if we can't switch you to a supplier (there are some who won't!), you'll know who the supplier is so you can still find the best deal for you.