Big energy switch: was it a failure?

light bulb and wind turbineAndrew Milligan/PA Archive/Press Association Images

When Which? announced it was going to shake up the energy market, there were hundreds of thousands of people who were excited enough about the idea to sign up. The idea was that with such large numbers, the group would get energy companies to bid for the chance to provide cheap energy to them.

However, as the auction closed, there are those who say it hasn't been a complete success.

The winner is...

Which? announced today that Co-operative Energy had won the Big Switch auction. There were no shortage of supporters applauding the success of the scheme. Richard Bates, Director of Empowered Consumers, at Consumer Focus, said: "It's great to see the first collective switching in the UK in motion."

"Collective switching offers an opportunity to put power back into consumer's hands and makes getting a better deal much more straightforward. This first collective switch shows that better value can be obtained by an intermediary who works on behalf of consumers." He is also excited by the winner, saying: "It's good for competition that one of the smaller players in the sector has won the bid."

Not the cheapest

There are just two hitches, The first is that the tariff it is proposing can easily be beaten on the open market, and the second is that the firm has said that far from enabling everyone to sign up, it is restricting the deal to 30,000 customers.

Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "The Big Switch was a brave and bold move, but the outcome is disappointing. 280,000 people signed up, and yet the winning deal will only be offered to 30,000 on a first come, first served basis. This means that the lucky few will be leaving the process with a deal that is more expensive than the cheapest plan on the market, while those who get the fall back offer of EDF Energy's Blue+ Price Promise plan will be getting a tariff that is already readily available on the market and that they could have signed up to weeks ago."

She says that at £1,027 a year, First:Utility still offers the cheapest energy plan in the market today, coming in at £21 a year cheaper than the winning bid, and says everyone who signed up to the scheme really needs to do their own price comparison before deciding if they want to accept the offer.

So is the Big Switch in tatters?

Robinson doesn't believe this is the end for collective switching. She adds: "This mustn't detract from the fact that the Big Switch has provided a benefit to those who have never switched before - they will be getting a better deal than the one they are on and it has opened their eyes to the benefits of switching. The scheme has also provided some valuable learnings and Which? is to be applauded for taking this first brave step. We still believe that collective purchasing offers a new way to encourage people who have never switched before to get involved in the market."
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