Gas and electricity prices secured by consumer group may not be cheapest on offer, and are available only to limited number
Almost 300,000 people who thought they were signing up to the cheapest gas and electricity through the UK’s first collective bargaining for energy may find they are not being offered the best deals available.
The Big Switch, organised by the consumer group Which?, had promised to use collective bargaining power to negotiate the most competitive energy prices. The auction was won by Co-operative Energy, but comparison sites have warned that the deals may not be the cheapest for all customers.
The uSwitch website said a variable dual-fuel deal from First Utility would be an average of £21 cheaper than the fixed-rate deal offered by the Co-op, and £117 a year cheaper than the Co-op’s variable-rate deal.
Mark Todd of the energy switching website Energy Helpline said: “It’s a very difficult thing to pull off – I’m not surprised it’s turned into a shambles.
“The only way it can really work is by sacrificing commission, so the cheapest deal becomes cheaper. But Which? hasn’t done that.”
A Which? spokeswoman said First Utility’s iSave Dual Fuel V10 deal did not meet the criteria it had set for the auction.
Which? is also likely to have angered potential customers by failing to tell them that the number allowed to switch to the winning deals might be limited. Only 30,000 of the 285,000 people who signed up will be allowed to switch to Co-operative Energy.
Which? said it had allowed smaller companies to cap the number of new customers that they guaranteed to take on to encourage as many energy companies as possible to take part in the reverse price auction – a condition that was not announced before the auction.
Customers who wish to switch to the Co-op deals will do so on a first come, first served basis, and those who miss out will be offered the next cheapest deals from EDF. The spokeswoman said: “There is only £6 a year difference between the cheapest and next cheapest deals, so it’s not that they won’t save any money.”
The Co-op capped the number it wanted to take on at 20,000 for its fixed-rate deal, which is paid for by direct debit, and 10,000 for its variable-rate deal for customers paying by cash and cheque. Normally, 80,000 people switch suppliers in the UK every week.
Announcing the results of the auction, Which? said a typical household on the fixed-rate deal would pay £1,048 a year, saving £119 on standard charges, while those on the variable-rate deal would pay £1,114, saving £183 a year.
Five companies – Co-operative Energy, EDF Energy, E.ON, First Utility and Scottish Power – bid to offer dual-fuel deals in one or more of three categories, designed to suit consumers’ different payment preferences – online direct debit, offline direct debit and offline paying by cash or cheque.
Which? will now contact everyone who signed up to the Big Switch with details of the winning deals and will provide the 120,000 who also supplied their tariff information with a personalised savings quote showing them exactly how much they could save by switching. Those who want to switch to the deals must let Which? know by 28 May.
The Big Switch has caused controversy from the outset. One energy supplier claimed Which? was not being open with its potential customers about the amount of money it would make out of the deals, and several, including British Gas, SSE, Ecotricity and Ovo, refused to take part.
Which? has admitted it will charge the winning energy companies £40 for each customer that switches to the deals on offer – a figure based on the need to cover financial risk and campaign costs. If 30,000 customers switch to the Co-op, Which? will make £1.2m.