Collective Switching

“Always check the contents of your tin”

Is that the sound of the Collective Switching cavalry charging headlong into the breach to take the challenge firmly to the industry?

Perhaps, but only if your idea of a cavalry charge involves a few rescued donkeys from the beach resorts of yesteryear going for a gentle trot round the “style over substance” goat track of political expediency. As far as we can tell, and I am yet to be disabused of this analysis.

Collective switching undertaken thus far has involved a person signing down to a deal that, 9 times out of 10, is worse than the one they could have achieved by going on MyUtilityGenius’s standard switching engine and simply switching their own home in isolation. There are no economies of scale being derived from these deals; in no small part due to the lack  of understanding as to how such deals need to be structured and how to get the best out of the pricing teams at suppliers.

With collective switching, the suppliers have not been engaged with in any meaningful sense; simply selling the “We’re all in it together, let’s use our buying power” to get households registered and then just plonking a pile of interested parties down on a supplier’s desk and saying “What’ll you give me for these?” is at best naïve and at worst a misrepresentation to consumers as to the benefits they will derive from collective switching.

This is not to say that collective switching for energy is a rubbish idea and should be put out of its misery forthwith; but rather that it needs to be delivered with an eye to the risks, rewards, realities and constraints that feed into the delivery of residential pricing in the energy markets.

Unfortunately we are not being helped along the collective switching path by OFGEM’s retail market review which places severe constraints on the number of products that a supplier can put out to market, and insists that any such product be available to all.

If everyone gets the “Deal”, then it’s not really a deal is it, it’s just the price. We would not send a surgeon into an operating theatre expecting that they will require the exact same callipers, forceps, needles and monitors for open heart surgery as are required for dealing with an ingrown toe-nail. For collective switching to deliver REAL value then OFGEM needs to play its part a bit better and ensure that the regulatory framework it creates allows for appropriate and customer friendly innovation.

Moreover they need to regulate how these collective switches are being represented and calculated; you can dress up a monkey as a ballet dancer all day long; but it is still monkey. Don’t go selling tickets to the next performance of said monkey as though it was about to perform Swan Lake; it’s just a monkey in a tutu! If you do decide to investigate collective switch that appeals to you; do it armed with the necessary tools to lever up the lid of the tin and see what’s spin and what’s horse.

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