What's bigger, better and cheaper than The Big Switch? The Huge Switch.
What’s bigger than Big? How about Huge? That is presumably how the conversation in energyhelpline.com ‘s offices went when they were deciding the name for their new campaign aimed at trouncing Which! s Big Switch campaign.
Of course, the idea behind this new campaign is the same, to use group buying power to negotiate better deals on energy prices for consumers. However, presumably energyhelpine are hoping for more positive press, instead of the controversy that has blighted Which! in recent times.
Which!’s problems began when SSE, Ovo and Utilia, which together make up 18% of the UK energy market, said they would not take part in the Big Switch. Losing nearly 20% of your targeted customers is never a good thing.
Then smaller energy provider Ecotricity came along. Being an eco-driven energy provider they were concerned about the lack of green or sustainability credentials of the campaign, but were also very against the predatory pricing practices the Big Switch would encourage, saying it would breach its ethical pricing policy of having two simple tariffs with everyone getting the best price, no matter when they join or how they pay. Because of the way the Big Switch will work, customers switching through the Big Switch would be on a unique, and presumably cheaper, tariff than their existing customers.
In addition, Ecotricity believe Which! should have made it clear to the public that they were charging a fee that could net them millions of pounds.
“Perhaps the most surprising aspect of the campaign is the least known, that Which! could earn up to £8million. With around 200,000 people signing up and with Which! asking the successful bidder for a fee of £40 per customer, they stand to make up to £8million from this process – that is a lot of money,” commented Dale Vince ecotricity founder.
“This is not an attack on Which! who generally do a good job, but we feel if they want to become an energy broker, they need to make it clear to the public that this is not a purely charitable campaign and has a definite commercial outcome.” And he’s right- if all of the 258,428 people who signed up before 31 March do switch with Which!, that would generate a windfall of over £10.3 million in switching fees for the not-for-profit organisation.
Which! have confirmed the £40 switching fee, saying “This competitive figure is based on our understanding of acquisition costs in the energy market and the necessity of covering our significant costs in setting up The Big Switch - nearly £600,000 to date."
But Which!'s problems didn't end there. On Friday, Britain’s biggest energy provider British Gas confirmed it would not be taking part in the Big Switch, saying "current proposals from Which! fall short of being simple, transparent and fair for all customers."
British Gas reiterated concerns over the potential huge profits for Which! but claimed their main reasons for not taking part were that customers taking part in the Big Switch could benefit from below cost pricing at the expense of existing customers; some customers would be excluded from taking part; more tariffs would increase complexity in the market; and important customer service standards and other energy efficiency support would not play a part in purchasing decisions. A large company refusing to give cheaper prices to a small group because it wouldn’t be fair to the rest of us? Now that’s what I call clever profiteering.
So will the Huge Switch be any different? Other than huger, obviously. Well the basic premise is the same, but the Huge Switch’s USP is that you can also switch to the energy provider’s best available tariff- you do not have to only switch to a new and unique rate. As the Huge Switch says, if you only have a choice of one rate “this price may be worse than the best in the market at the time – which pretty much defeats the purpose of the whole thing.”
The Huge Switch are making no secret of the fact that they are coming off the back of the Big Switch- their information deliberately compares its offering to Which!’s:
“We think we have improved on the Big Switch from Which! in a number of ways:
1. We will take less commission from the suppliers if you are part of our group switch than they are currently planning.
2. When we offer you the Huge Switch price we’ll also offer you the current best market price for you
3. When you register we’ll let you know the best market price too that day so you can get your switch going immediately if you prefer.
4. We are taking down more preference information from customers so you are likely to get a tariff more tailored to your needs – for example you can ask for a green tariff or a fixed rate tariff with us – you do not appear to be able to with Which!”
Mark Todd, director of Energyhelpline.com, feels the Huge Switch would be cheaper for consumers and includes a number of other improvements on the Big Switch scheme. Which he would do. "We agree with the concept of the Which! Big Switch, but feel there are a number of flaws. We believe we have come up with a solution that would be better, cheaper and provide more choice and flexibility for the customer."
"There are still some suggestions that the collective bargaining price won't be any lower than the best price offered by comparison sites anyway. We want to give customers the choice to go their own way in the switching process or offer them the strength in numbers to be part of a bigger bargaining unit if they prefer. Effectively, we are giving them the chance to hedge their bets and get a second bite of the cherry," he finished.
A spokeswoman for Which! said the organisation welcomed the new campaign. "It is great to see more collective switching schemes being launched that have the potential to shake up the energy market. If it is done right, we think joining together to negotiate a better deal should be good for hard-pressed energy customers. We encourage people to register with as many schemes as possible to get the best tariff," she said, through gritted teeth.
But even though the Huge Switch does charge lower fees than Which!, at best 50% lower, consumers who like the idea of collective bargaining for their energy, but dislike the idea of putting money in someone else’s pocket, may prefer thePeoplesPower, which does a similar thing, negotiating with energy companies once a minimum of 5000 customers put their weight behind it, but charge only a £2 handling fee.
But regardless of the fighting over the referral fee scraps, all this negotiation and discussion with energy companies should lead to clearer pricing and, hopefully, better deals for consumers, And that’s what we all* want surely?
*except the energy companies.