Is Collective Energy Purchasing Right For You?
What is Collective Energy Purchasing?
Collective energy purchasing is all about people power. It refers to the practice of getting a group of people together who will all then apply for a gas or electricity deal at the same time. A group of consumers gets together, usually due to the agency of a third party organisation to get a particular, specific deal from an energy supplier.
Collective switching, or collective energy purchasing took off when endorsed by the government back in 2012. However, after a good start, many schemes failed to take off as expected. Nonetheless, since then, there has been renewed interest in the practice and many people have clubbed together under such schemes to see whether they can use collective power to get the best deals.
What Are The Benefits of Collective Energy Purchasing?
The idea that lies behind collective energy purchasing is that a group of people can negotiate a better deal from an energy supplier than an individual household ever could. This collaborative approach could be used to reduce the costs for each individual or household participating in the scheme.
How Does Collective Energy Purchasing Work?
- The first step is generally to bring together a group of people who are interested in the project. (The group might be, for example, the residents of one building block, or a number of households within one council region.)
- Once a pre-determined number of people have signed up to the scheme, it will be closed, and a reverse auction for the energy supplier and plan is carried out. A reverse energy auction involves energy companies bidding against one another to offer the best deal.
- The organization running the scheme will then select the best deal. (The plan is decided after registration for the scheme has closed so the organisation can assess the energy needs of the group. They can then choose a plan that suits the energy needs of the majority of the group.)
- In most cases, those who signed up to the scheme now decide whether or not they would like to take up the deal, and whether it is worthwhile for them to switch. (Under most schemes, there is no obligation for registrants to take up the deal. But you should always be sure to check that this is the case before signing up.)
Is Collective Energy Purchasing Right For Me?
It is important to understand that you do not need to be part of a collective energy purchasing scheme in order to switch. You can search and compare at any time with Money Pug to seek out the best deals for your household.
However, the benefits of collective bargaining can be clear. Sometimes, you may be able to get a much better deal with energy companies than you would be able to get on your own. However, whether collective energy purchasing is right for you will depend on the goals and remit of the particular scheme in question. Such schemes work best when the group who are negotiating are made up of like-minded and/or similar individuals.
It is important to understand what the primary needs and motivations of the group are, and whether these needs and goals mesh with your own. For example, the group may be looking primarily to save money. But how exactly this can be achieved for the majority may not mesh with your own particular situation. The group may be looking to achieve other goals (such as going greener) – but if this is not your own primary motivation, this may not be the best collective energy purchasing scheme for you. If the people in the group do not have similar energy usage, usage patterns, motivations and goals, then it may not be able to achieve the best result for all of its members.
If you are considering joining a collective energy switching scheme, there are certain questions that you should be sure to ask before doing so. Namely:
- Is the scheme free of charge?
- How long will the whole process take?
- When is the deadline for signing up?
- When will I hear back about the deal?
- What are your primary goals – what benefit do you plan to secure for me?
- How will I determine if your offer is better than my current plan?
- Is it a problem if I am in debt to my current supplier?
- Will you provide me with clear information to help me understand the terms and conditions of the deal?
- Which suppliers do you expect to bid on the scheme?
- Will you receive a commission if I switch supplier?
- Is my information safe? Will it be used for other things, or given to third parties?
- Will I have options on payment methods with the new deal?
- Am I obligated to accept the deal negotiated if I sign up?
If you are happy with the answers to all the questions you have asked, before signing on the dotted line it is also important to double check on Money Pug’s handy comparison site to make sure that the negotiated plan is better than the plan you have at the moment.
What Are the Alternatives?
Bear in mind that you do not need to join a group to switch energy supplier. Check today on Money Pug’s website and you can switch your own energy supply independently. Find the best deal for you, determine whether or not it is a good time to switch, and you can be saving money and getting the best deal for your household in next to no time at all.
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