Collective switching

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Collective Switching refers to a type of service which facilitates the switching of service providers (specifically utility providers) that occurs in the United Kingdom, Australia, the Netherlands, and Ireland. It refers to the concept of getting a group of customers together in order to negotiate a group deal with a common provider of a service or product (normally gas and electricity supply). In the UK this has always been managed by a third party which gathers the consumers together into a grouping via a registration or membership model and then takes their collective demand to the supply base and obtains from a supplier preferential or bespoke rates for that group of consumers.

There is no set model for how individual schemes operate although a third party, such as an Energy Broker, usually seeks to negotiate a better energy tariff with Energy Suppliers on behalf of the group. Collective switching schemes in the UK are not, as it stands in 2015, strictly regulated by OFGEM but they are indirectly regulated through the supplier which "wins" any particular collective switch; as that supplier has obligations to the consumer under its supply licence conditions. Collective switches may also be run by some of the companies which run Price Comparison Websites which are accredited by the OFGEM Consumer Confidence Code but the collective switch itself falls outside of this confidence code.^[1]

Collective switching attempts to deliver the best tariff for a collection of disparate consumers that may have different usage patterns and priorities. It should not purport to deliver the cheapest deal to all participants as there are inevitably outliers that would obtain a better deal elsewhere. As the name suggests the emphasis is on collective rather than cheapest; although if the numbers of members are large enough and the remit of the collective switch is solely price then the associated deal may indeed be the cheapest deal at a point in time; but that is by no means certain. Collective switching can also apply to any type of tariff for which there is a collective need; green energy supply is an obvious example of a collective switch where the criteria that is not purely a function of cost.

In the UK the Department for Energy and Climate Change (DECC) has been an active supporter of collective switching as it is of the opinion that collective switches have the ability to increase the number of energy consumers changing energy supplier each year and therefore that they increase the competition for consumers within the energy markets and as a result consumers get a better deal and suppliers are incentivised to innovate.^[2]

• My Utility Genius (The Big British Switch)^[3]
• The Big Deal^[4]
• Milkman Energy^[5]

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