Collective Purchasing Energy Guide – 5 Things You Must Consider

Rising energy costs mean that many households are struggling to pay bills, and experts warn that things aren’t likely improve for some years. Government intervention offers some hope of energy price freezes, but many people think this is too little too late. Energy companies have been criticised for putting their profits before the needs of their customers.

Switching energy suppliers is one route to cheaper bills, but the trend of rising prices means there’s a limit to how much you can expect to save. The market regulator, Ofgem, states that UK consumers lose over three billion pounds a year because they stay with uncompetitive energy tariffs. Switching isn’t a difficult process, and the average household saves around two hundred pounds a year by moving to a cheaper supplier.

Another effective way to cut your energy bills is to move to a collective purchasing scheme. This is still a relatively new model in the UK, but several large groups of consumers have now negotiated their own deals. Follow the tips in this collective purchasing energy guide as another route to cheaper gas and electricity for your home.

1) Check your current energy contracts.

Before exploring what cheaper tariffs may be available, check that you can leave your existing energy supplier without having to pay penalty charges. Some contracts have a notice period, and you may have to pay exit penalties if you want to leave within this. It may make financial sense to pay the penalties if cheaper tariffs are available, so calculate the cost of switching and the potential savings.

2) Look at the collective purchasing deals available.

Several large consumer groups have already started collective energy purchasing schemes, and these are the place to start if you’re interested in this concept. The consumer organisation, Which is one of the market leaders in negotiating energy deals. Which’s Big Switch campaign secured a deal for thirty thousand customers with Co-operative energy. A later deal gave other members access to discounted tariffs with EDF Energy.

Huge Switch is another well established initiative, and customers who joined in May 2012 are projected to have saved over one and a half million pounds in energy costs. Huge Switch has also offered cashback deals to consumers, and the average household has saved over a hundred pounds by joining the group.

3) Look out for new energy buying collectives.

The Government supports the idea of collective purchasing, and this means new initiatives are likely to appear over the coming months. You aren’t obliged to switch if you join a new collective, so don’t worry about being forced to leave your existing suppliers if you don’t like any deals negotiated. Keep an eye out in the press, national news and consumer forums for announcements about new energy collectives.

4) Understand the pitfalls.

A collective purchasing energy guide wouldn’t be complete without pointing out the potential pitfalls of the schemes. Collective purchasing retailers, like Groupon, have proved their value in negotiating restaurant deals and cheaper access to local services, but many argue this model doesn’t work for energy supply contracts. A concern with collective purchasing is that energy suppliers will give generous discounts to some customers only to recoup funds by overcharging others. Many experts argue that the UK’s energy market needs a complete overhaul, and there is growing pressure on Ofgem to take more decisive action. Joining a collective may be a solution to rising energy costs, but you need to check the benefit to you as an individual before taking part.

5) Consider the alternatives.

Joining an energy buying collective is an appealing idea, but you may be able to find better tariffs by switching to a new supplier. Energy comparison websites can search for and compare hundreds of tariffs in a few seconds. As well as searching for cheaper deals, an energy comparison service can also guide you to green energy tariffs and other initiatives you may find appealing. Dual fuel deals often attract additional discounts, so consider switching your gas and electricity to one supplier. Many energy companies are keen to retain their existing customers, so it may be possible to negotiate a cheaper tariff with your existing supplier.

Follow the advice in this collective purchasing energy guide and you should see a reduction in your bills over the next year.

Sam Jones the author of this article recommends that there is a collective purchasing energy guide available on the help and guidance section of leading UK price comparison website uSwitch

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