A new breed of consumer fight back in the form of collective purchasing schemes are burgeoning in the energy sector. Consumers are left feeling held to ransom by their energy providers due to their ever increasing charges.
Several new sites have cropped up and Which? have spearheaded a campaign called the Big Switch. this scheme and others like it seek to get consumers to sign up as a collective or co-op, this then gives them the power to negotiate better rates for the group as a whole.
The Which? Collective Purchasing Schemes
The Which? campaign is slightly different in that when a critical mass of consumers has been reached, the energy companies will be invited to submit a “market-leading deal” by taking part in a reverse auction. It’s this deal which will then be offered to everyone who signed up.
The aim of collective purchasing schemes is to provide individual savings for all members of the group, and, to give consumers back some control of their energy bills.
Another company is approaching this in a ‘not for profit’ true community style and is looking for a critical mass of 5,000 sign ups, which will enable them to negotiate deals with the top energy providers.
Foreign Collective Purchasing Schemes
Similar schemes have been trialled in the Netherlands and have proven to be very successful. The Consumentenbond scheme resulted in 7,000 people signing up and 25 per cent switching to a new deal with the winning bidder. The scheme gave an average annual bill saving of £250 per customer who signed up.
And it doesn’t stop just at energy buying. In Australia, a local collective purchasing scheme project was launched for home owners to sign up for competitive mortgage rates, which helped 1,000 homeowners reduce their mortgage costs. Even government officials think they are a great idea. New Energy Secretary Edward Davey said;
‘Collective purchasing will be a game-changer in terms of handing power back to consumers’.
Labour’s energy spokeswoman, Caroline Flint, commented on the Which collective purchasing scheme saying;
‘It sets an exciting precedent that organisations such as local authorities and housing associations could take up to negotiate better energy deals on behalf of their residents’.
You may be interested in our other article about the rising poularity of crowdfunding for finance too.