Will Ireland pick upon the Big Switch?

The group switching campaign has been a success in Australia, but the energy companies are tight-lipped about any possible discounts

Emma Kennedy Personal Finance Correspondent

Today marks the last day for energy customers to sign up to the Big Energy Switch, a campaign that aims to get consumers a better deal on their energy bills.

The campaign, which launched in Ireland last month, is the first step in the European expansion of Australian company One Big Switch. The premise is simple: negotiating a discounted group deal for a block of consumers.

People power seems to have piqued the interest of consumers, with more than 33,000 people having signed up to the One Big Switch campaign by late last week.

One Big Switch calls itself a "for profit with purpose", meaning that as well as trying to save consumers money it also wants to make money.

The Australian-headquartered consumer network announced last week that it plans to use Ireland as its base for an expansion into Europe. According to a statement issued by the IDA, the company will create 20 new jobs here by 2016, with roles in IT, media and campaign management, customer service, PR and administration.

According to One Big Switch's co-founder, Lachlan Harris, the company decided to expand into Europe after its initial success in its first three years in Australia. "We chose Ireland as the initial test market for Europe due to the similarities with Australian law, the language and cultural connection, the assistance of IDA Ireland and the location of Ireland as a gateway to Europe," Harris said. "We engaged with Irish entrepreneur Oliver Tattan, the founder of GloHealth, as a launch partner."

While the idea of collective switching is already established in other jurisdictions, it's a relatively new phenomenon here. "The campaign has captured the national imagination," Tattan said "It's only really in the last few years that something like this could have happened here. There are a couple of things needed for these models to work – the internet and deregulation."

According to Tattan, the energy-switching campaign has beaten its own goals. "We set a target of signing up 20,000, but we've close to 35,000," he said. "It's not double, but it's almost double what we set out for."

He plans to finalise an exclusive "off-market offer" for members this week, saying that all energy providers had given "a positive response to thecampaign".

"They see this as a potential to deliver a large group of consumers, "Tattan said. "It's another channel."

However, it remains unclear just how much consumers could save via the One Big Switch campaign. Energy companies remain tight-lipped on their appetite for doing deals with blocks of customers, giving little detail of any contact with One Big Switch.

A spokeswoman for Bord Gais Energy said the company was committed to offering its customers value for money and "considers all options available to deliver the best value offers to its customers".

Electric Ireland's spokesman said that "such things are commercially sensitive and Electric Ireland are not in a position to comment on who they have meetings with".

The message from Airtricity was similar. "We do not comment on speculation regarding possible new customer contracts, whether individual or grouped," a spokesman for Airtricity said.

Energy market

According to one industry expert, the newest player in the energy market, Energia, is the most likely to play ball with One Big Switch. Simon Moynihan, a switching expert with comparison website Bonkers.ie, said that Energia was signing up about 1,000 customers a week since its launch earlier this year, but still had a low customer base relative to its competitors.

In Moynihan's view, the success of One Big Switch will boil down to the relative value of a block of customers to a supplier. "Are suppliers going to offer a special rate for a chunk of new business? Energia's the most likely to," Moynihan said.

Gary Ryan, Energia's retail director, said that the energy company was aware of One Big Switch and had been approached by the campaign. However, he said any further information was "commercially sensitive". According to Ryan, Energia is "delighted" with its performance since its launch.

"There was pent-up demand for switching," he said. "We're delighted with the reaction from consumers to our offering and the uptake so far."

Choice in the energy market has expanded in recent years, as the market becomes more liberalised Energia is Ireland's fourth domestic electricity sup- plier and fifth gas supplier, Moynihan explained.

Despite the options on the table and the potential savings to be made, Moynihan said consumers were still slow to switch, saying that only about 60 per cent of gas and electricity customers had switched to reduce their bills.

For him, anything - be that collective switching campaigns or otherwise -that brings the possibility of consumers "stepping out of their inertia" to the fore is a positive. "The benefit of a collective switching campaign is that you give a few basic details and someone does the work for you, "he said. "Obviously it has worked elsewhere, so we'll see if it works here, too." Another initiative also hopes to cash in on the current wave of people power.

Reducemybills.ie, which was set up by husband-and-wife team Barry and Maria Broderick, has had significant consumer interest so far. It's a free members club, that intends to negotiate preferential rates on utility bills for its members.


Price war

The Brodericks had initially planned to begin negotiations with suppliers late last month, but for now have pressed pause, citing a price war, and not the emergence of a rival, as the reason.

"There is currently a price war between the different energy providers," Maria Broderick said. "We have decided to wait until this flux settles just a little so that we can give a preferential offer that will last and have informed our members of this." Reducemybills.ie has competition in the collective bargaining space, since the launch of One Big Switch. Broderick said that Reducemybills.ie was "first to market" and was "maintaining its strategy and continuing to sign new members".

While the current collective switching campaigns are looking exclusively at energy deals, Tattan said there was scope for group switching in other areas.

"If there's enough interest, and enough of a mandate from consumers, we will look at other areas," he said.

However, Moynihan said that the reason energy was the first target for group switching was that it was "one of the most undifferentiated products out there". "It's very hard to put a value add on to energy," he said. "Other products aren't like that. Mobile phones, maybe. The consumer's age doesn't affect the price, for example."

“It takes around five minutes to switch energy suppliers. A medium energy customer can save up to €270 just byswitching energy suppliers alone”


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