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Welcome to an awfully big adventure

February 7th, 2012 by

As part of The Big Switch, Jonathan Maitland will be blogging here – keeping you up to date with progress in the campaign.

Welcome to an awfully big adventure. This could be the start of something very significant indeed. For years now, we’ve felt helpless and shocked as the latest even-more-sky-high-than-the-last energy-bill has landed on our kitchen table.

Five hundred and forty what ??!?’ was the cry last quarter, I recall (But with a few more colourful adjectives thrown in). For millions of home owners in the UK, gas and electricity bills are now the biggest monthly outgoing – even more than the mortgage payments. 38 Degrees members agreed – we need to  do something about it, together.

So we are! All you need to do is sign up and then we can use our power as a group to bargain with the gas and electricity companies to give us the best deal and then we switch suppliers – it should be hassle free.

The more of us that sign up to this campaign, the more power we will have in our collective negotiations with the energy companies. Think Groupon: but without the fishy foot massages.

So how did we get here? Well, it’s pretty simple. Our energy bills are higher than they should be, because energy companies aren’t being run for the  benefit of the customers – us, in other words –  but for the benefit of the shareholders. Their raison d’etre is to make their investors as rich as possible. And they are doing just that. Recently, British Gas and its parent company Centrica made record profits of £2bn pounds in one year. So tell your friends , family and everyone you know about this project. Tell them that we are taking back the power and saving money on our gas and electricity companies. The fun, and hopefully the lower bills, start here.

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  • Mary Finnigan

    Hello Jonathan Maitland — can’t remember where/when we worked together — was it Invicta Radio? Good to see you in action here.

  • Barry Durdant-Hollamby

    Hi Jonny – remember me , Barry? Timo, Martin and Tim’s old mate once of the music business?? Bung me an email will you – I’ve got a reasonable outreach to a sector of the market that will be quite interested. contact me via artofhange@msn.com.

  • peppercat

    Some of us would lose out majorly by switching. We are on Scottish Hydro’s “total control” package which means the meter for our storage heaters and immersion are radio-controlled by Scottish Hydro who give us a boost in the middle of the day. If we switched to any other supplier presumable we’d be put on a standard white meter and storage radiators only topped up at night – Brrrrr. Also we get green electric from them.

  • Apowrie

    Peppercat Im in total agreeance with you, we are the same, any change & we’d lose out, its the right way to go though, so if “we” in Hydros hands can be helped too I’d be only too happy to go along with it all, but, until “we” are even thought of in these plans I’ll not bother, why lose out on the Green energy, Top up etc, yes our costs have quadrupled & yes I’d like them halved, who wouldnt?

  • SamanthaPiaOwen

    Why not go one better? Why don’t we start our own 38degrees energy supplier company? Can’t we find out what we can buy bulk gas for and see how much it really costs? if you have 1 million customers/members willing to switch to it, surely we could tempt some members to work for it at a reasonable wage and not the fat cat wages our current suppliers are paying themselves?

  • richiep

    I think rather than setting up a new supply company perhaps we should  consider the Co-Operative Energy, it’s generally aligned with the views of the group

  • Joe Average

    I’ve been advocating this approach for awhile.. play one energy company off against another with the threat of losing thousands of customers if they don’t offer the best deal. If they don’t play ball then organise a mass boycott of one of one of the big companies.. and let them explain their lower profits to their shareholders.  

  • http://twitter.com/ShaleGasExpert Nick Grealy

    Jonathan  I used to buy gas and electricity for the NHS:  £500 million pounds at one one point. So I know what I’m talking about.
    And you are SO wrong!  So naive!  You sound as if you’ve been drinking John Major invented Kool Aid.
    That delusion, because that is exactly what it is, is that energy markets are competitive. They aren’t. They are driven by wholesale markets and have prices accordingly.

    If you think that competition of 38 Degrees members would drive down energy costs, you should get out more often.  You don’t have to go far.  Take a drive.  Pass by each petrol station. See any bargain petrol station? See any appreciable difference in price? Unless you drive around all day looking, which rather defeats the purpose. Or buy overpriced groceries at a supermarket and other bait and switch tactics.

    Similarly, UK electricity and gas prices come from wholesale movements in natural gas markets.
    There are plenty of issues in the UK domestic market about transparency, but you sound as if you and Which are just re hashing the same old crap.  We hear it all the time from 1997:  If only feckless energy consumers would switch supplier they would have lower prices.

    What is needed, and should be your efforts instead of setting up a supply company is to ask for the end of confusing pricing.  There should be one default tariff that is 100% transparent based on wholesale price movements and published distribution costs and a transparent margin.  That is how large industrials buy gas and power and it saves them millions.

    This month it’s cold.  Guess what?  The wholesale costs have gone up.  But the only option domestic users have is to buy on forward prices:  That is your price moves only once a year or so.  
    The absolutely laughable conceit that crooks like the Big Six tell Ofgem, (and even worse that they believe it !) is that they buy gas and power on wholesale markets up to a year or two in advance, and THEY CAN’T CHANGE that price.  This is laughable to anyone who knows anything about commodity markets.  Their excuse is that in order to ensure supplies they have to fix the price, which is a ridiculous lie.  They have contracts, sometimes lasting for many years,  with big off shore producers or LNG terminals etc, which are based on volumes.  That means the gas will ALWAYS show up absent force majeure.  What is unclear is what price it is.  That price is set by the wholesale markets and changes every day. The price is FOB : Free on Board exactly the same as in oil markets. 

    A transparent price is likely to be up in the cold and down the rest of the year.  I saved the NHS millions most years. And on some years it cost them a little bit more.  But whatever it was, it was 100% transparent.  Hospitals that fell for the energy prices are always going up spiel got killed, and some of the patients too, simply because they confused risk mitigation with risk total avoidance.

    Two final points: In the USA, there are even more companies offering domestic power, and it is insanely easy to switch, next day in most cases.
    However, because the default option is that the local supplier has 100% transparent pricing linked to widely available published wholesale rates that change monthly based on actual meter reads unless you are incredibly risk averse, or gullible, most people stick to the existing supplier. Their only other option is to buy on a fixed price and people aren’t that anal.

    But in the UK, people often are because they have been sold either Peak Oil or the fairy tale of competition.  

    Any doubts as to what I say?  A very easy test.  Go to the websites of the various stitching up with sites all given at least £40 a customer commission by the Big Six, all hidden from customers of course.

    And all those sites?  Active ONLY in the UK.  Minimal, if any, operations in the US or Europe or anywhere else.  

    Go for a default price structure.  But good luck getting one from the Big Six, and their stitch up site enablers at Ofgem.

    Happy to help further.  It’s a noble cause I’d love to support but hate to see you going about it  the wrong way.  

    Finally, let me point out that if 38 Degrees got the government to act so EVERYONE was on default (with a choice not to of course),  then far more people would save much more money than a narrow range of 38 Degrees followers.  Want to prevent unnecessary deaths among the elderly?  Do it that way so everyone benefits.

  • LD

    I like the idea of this in principle…however it comes with some big problems…all the papers, tv, radio go on about getting a fair deal, saving money…none of them and I do stress none of them ever consider a few of the facts first.

    First off everyone should check that they are on the best deal, not just paying by direct debit having both fuels. there are a lot of people out there that are on E7 – people who pay less at night but dont actually use this to their advantage and end up paying more than the average customer because their day right is set higher. So when deciding the best deal make sure its the right tariff not just the cheapest prices. Also look at when the lower rates kick in.

    Next up is, providing readings or paying the right amount. You pay for what you use, If you get a bill for £300 outstanding it doesnt mean you’ve been landed with a big bill it means your payments were set too low and you’ve been under paying. Pay the right price now and dont build up large debts. Also make sure you are billed to an actual reading. You can provide these yourself, but energy companies ahve to obtain a reading from an agent at least once every two years.

    Finally before you switch or even think about switching check out when you discount (if applicable) is to be applied, so many people move before their 12 months are up and end up losing out on £100 just to save £30 with another supplier.

    Remeber a DD payment of £20 rather than £30 a month is only cheaper if thats what you are meant to pay/use. Simplier tariffs, better education and common sense would save you far more money than changing supplier.

  • Mike_k_houghton

    What we need to do is to get a large number of customers of any *one* of the big providers and, over the course of a week, all of those customers leave and sign up with another company. No energy company could withstand losing half a million customers in one week and the only way to get customers back would be to reduce prices. So let’s pick a company, use Facebook to spread the message and begin the boycott…

  • RBK.

    I like the idea but don,t stop at the gas and electric what about the petrol prices and the food prices, they all make huge profits, Maggie Thatcher said i want profit not to be a dirty word, well i think she was wrong and it is a dirty word when you put HUGE in front of profit.    

  • dmn21

    Really? “Millions of home owners” pay more for gas and electricity than their mortgage? Sounds like made up nonsense statistics to me, unless you can provide a sensible source.

    Also, I’d like to point out that Which? are taking a commission from everyone that signs up, adding to the cost of energy for this group of customers.

  • Jmaitland

    Oh ye of little faith ! Made up nonsense ?  The Council of Mortgage Lenders
     ( quite a sensible source)  say  there are  currently 18 million owner occupiers in the UK . Of those, only 11 million have a mortgage. 7 million don’t have one. 

     So it is reasonable to assume  that for a good proportion of  the remaining 7 million 
    fuel bills are their biggest outgoing.(The average yearly fuel bill is £1400 )  Also, around 20% of the 11 million who DO have a mortgage, make  payments of less than £200 a month- because interest rates are so low.   This figure  also comes from the lenders themselves.  Given that , for many people, fuel bills are more than £200 a month, that puts  even more people into the  paying-more -for- fuel -than-mortgage  bracket. 
    Which?  are indeed taking a commission from everyone who actually switches. It’s  40 pounds. They have been open about this. £40 is half what You-switch  charge, by the way. And given that Which?  are spending hundreds  of thousands  of pounds of their money on this, up front, it is only fair that they attempt cover their costs, is it not ?  Jonathan Maitland        

  • Jmaitland

    Hi Nick very interesting . You of course have a point: there are limits to what we can achieve in the face  of an effective  monopoly . Unless  of course we set up our own power company and  buy the gas etc  wholesale, ourselves. But that is mighty difficult as you know…..achieving  economies of scale, big deposits need up front  etc. but in the meantime doing something like this -  which could save thousands of customers millions of pounds, collectively …is better than doing nothing, is it not ?
    bestJonathan Maitland   

  • Helen and David M

    We are spreading the word about The Big Switch through our village magazine, but many of its readers do not have a computer. How can we make it possible for them to register for The Big Switch?.

  • carlota

    what is exactly the project about?
     

  • Tony1

    What a tosser!

  • H.E. Hugh Cares

    Locked into municiple waste in new and old landfilll is around 10000kw energy per ton. At current efficiencies converts to 3000kwper ton electricity.
    By using a process called plasma total gasification the waste could reduced to stone and be pollution free.
    Wonder why this is not done?
    Never mind
    Hugh Cares