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Which? Big Switch fails to attract Ecotricity Which? Big Switch fails to attract Ecotricity
(about 2 hours later)
A fourth energy company has refused to take part in the Big Switch, a scheme to help people reduce their energy bills organised by consumer body Which?, on the grounds that the charity is making too much money out of it. A fourth energy company has refused to take part in the Big Switch, a scheme to help people reduce their energy bills organised by consumer body Which?, on the grounds that the group is making too much money out of it.
Green energy provider Ecotricity has calculated that Which? will make more than £8m from the scheme. Taking part would be unfair to its existing customers, it says. Green energy provider Ecotricity has calculated that Which? will make more than £8m from the scheme. Taking part would also be unfair to its existing customers, it says.
The Big Switch aims to use the collective bargaining power of 215,000 consumers who sign up to negotiate the lowest possible prices through a reverse price auction. Which? points to figures from the regulator Ofgem showing that six out of 10 people have never switched energy companies, and are collectively paying £4bn a year more than they need to by not changing to the cheapest deal available. The Big Switch aims to use the collective bargaining power of 215,000 consumers who have signed up to negotiate the lowest possible prices through a reverse price auction. Which? points to figures from the regulator Ofgem showing six out of 10 people have never switched energy companies, and are collectively paying £4bn a year more than they need to by not changing to the cheapest deal available. It adds that the sheer number of deals available make it impossible for consumers to decide which deal is best for them.
It adds that the sheer number of deals available make it impossible for consumers to decide which deal is best for them.
But Ecotricity says Which? has not made it clear to consumers that it will make money out of the scheme – and with more than 200,000 signed up it could earn more than £8m.But Ecotricity says Which? has not made it clear to consumers that it will make money out of the scheme – and with more than 200,000 signed up it could earn more than £8m.
Dale Vince, founder of the green energy company, says Which? will charge the successful energy bidder £40 for every customer who switches. This is typical of the amount that comparison websites receive when consumers switch through their services.Dale Vince, founder of the green energy company, says Which? will charge the successful energy bidder £40 for every customer who switches. This is typical of the amount that comparison websites receive when consumers switch through their services.
Vince says: "We feel if they want to become an energy broker, they need to make it clear to the public that this is not a purely charitable campaign and has a definite commercial outcome."Vince says: "We feel if they want to become an energy broker, they need to make it clear to the public that this is not a purely charitable campaign and has a definite commercial outcome."
Which? confirmed that it would charge £40 a customer, a figure based on the need to cover financial risk and campaign costs, which stood at £570,000. "Which? is a not-for-profit organisation, but we have made clear that we hope to cover our costs by charging a fee to the winning supplier, just like all switching sites," a spokeswoman said.Which? confirmed that it would charge £40 a customer, a figure based on the need to cover financial risk and campaign costs, which stood at £570,000. "Which? is a not-for-profit organisation, but we have made clear that we hope to cover our costs by charging a fee to the winning supplier, just like all switching sites," a spokeswoman said.
No one knew how many people would switch, she added, but Which? took "extremely seriously" the responsibility of getting them a good deal. "That is why we have made a significant investment in IT infrastructure and customer support to ensure that the Big Switch process is as fair and clear as possible for potential switchers.No one knew how many people would switch, she added, but Which? took "extremely seriously" the responsibility of getting them a good deal. "That is why we have made a significant investment in IT infrastructure and customer support to ensure that the Big Switch process is as fair and clear as possible for potential switchers.
"We have also been very clear from the outset that our objective is to secure a cheaper energy deal for consumers in today's market, and that means involving as many suppliers as possible in this first attempt.""We have also been very clear from the outset that our objective is to secure a cheaper energy deal for consumers in today's market, and that means involving as many suppliers as possible in this first attempt."
Consumers who like the idea of collective bargaining for their energy, but dislike the idea of generating fees for a third party, may prefer thePeoplesPower, which also aims to set up reverse auctions with energy companies. It is charging only a £2 handling fee to maximise savings to customers.Consumers who like the idea of collective bargaining for their energy, but dislike the idea of generating fees for a third party, may prefer thePeoplesPower, which also aims to set up reverse auctions with energy companies. It is charging only a £2 handling fee to maximise savings to customers.
Ecotricity also says the idea of the Big Switch breaches its ethical pricing policy of having two simple tariffs with everyone getting the best price no matter when they join or how they pay. Those switching through the Big Switch will be on a unique tariff, negotiated by Which?.Ecotricity also says the idea of the Big Switch breaches its ethical pricing policy of having two simple tariffs with everyone getting the best price no matter when they join or how they pay. Those switching through the Big Switch will be on a unique tariff, negotiated by Which?.
Ecotricity says regulators and consumer groups, including Which?, have taken a stand against "predatory pricing" – where existing customers subsidise deals offered to new ones. "The idea of creating a new tariff giving Which? customers a preferential price over our loyal customers would just be unethical to us," it says.Ecotricity says regulators and consumer groups, including Which?, have taken a stand against "predatory pricing" – where existing customers subsidise deals offered to new ones. "The idea of creating a new tariff giving Which? customers a preferential price over our loyal customers would just be unethical to us," it says.
SSE, Ovo and Utilia, which together represent 18% of the energy market, have already said they will not take part in the Big Switch. The Which? spokeswoman said the charity would be disappointed by any energy company deciding not to participate, "as this is an opportunity for suppliers to prove their commitment to putting customers first – or risk losing them to someone else who does". SSE, Ovo and Utilia, which together represent 18% of the energy market, have already said they will not take part in the Big Switch. The Which? spokeswoman said the group would be disappointed by any energy company deciding not to participate, "as this is an opportunity for suppliers to prove their commitment to putting customers first – or risk losing them to someone else who does".
She added: "Ecotricity can't claim to understand all the details as they have not responded to our repeated efforts to discuss the Big Switch with them, which would have helped them to understand what we are trying to achieve this time round."She added: "Ecotricity can't claim to understand all the details as they have not responded to our repeated efforts to discuss the Big Switch with them, which would have helped them to understand what we are trying to achieve this time round."