Headlines: January 16th, 2013

More than 3.5 million UK households have been given the chance to club together and use their joint purchasing power to negotiate the best deals with their energy suppliers over the last six months. Millions more expected to be given the same opportunity by their local council over the coming year.

Since the first council run ‘collective switching’ initiative was launched by South Lakeland District Council in June 2012, more than 25 local authorities have set up or are in the process of developing a variety of schemes. More than 80 projects reported to be in the pipeline helping residents to save on average between £60 and £250 on their annual gas and electricity bills.

The cost of household energy has outpaced the rise in incomes substantially over the last decade. Since 2004, the average household energy bill has rocketed by £732 or 140 per cent, from £522 a year to £1,254. In the last 12 months alone we have seen prices rise by an average of £90. As a result, people are more worried about their energy bills than ever. Yet research by the Department for Energy and Climate Change has shown a general decline in the number of people switching supplier. Current estimates suggest just one in five UK households is now on the lowest energy tariff available.

Most existing schemes have focused on supporting their local communities, using collective purchasing to ensure residents have access to the best deal possible, particularly those living in fuel poverty. Other schemes have been extended to include local businesses to help provide a boost for the local economy. However, some councils have also developed models for ‘collective switching’ which are being rolled out across other local authorities to extend the reach of each scheme and increase their collective bargaining power.

As a trusted neutral party, councils can negotiate with the big energy companies on behalf of local residents, harnessing their collective buying power to secure the best deal. Estimates suggest that 70 per cent of those who take part in collective switching will save money, but because there is no obligation, those who sign up can make a decisions on whether to switch or not based on their individual position once an offer has been made by an energy company. ‘Collective switching’ offers an incredibly easy and flexible way to switch energy supplier.