Peterborough City Council leads the way in creating “People Power” in the energy market

Peterborough City Council is leading the way in responding to the recent challenge set by Edward Davey, Energy and Climate Change Secretary, DECC, in encouraging communities to use their potential bulk buying power to get a better deal for themselves on energy prices.  

In an exciting step forward for residents and businesses, Peterborough City Council has today announced that it is leading a collaboration of 13 local authorities across the country to create the first ever UK Collective Energy Switching Scheme.

This scheme will enable residents of Peterborough to join together, as well as with other communities across the UK, as a single powerful buying unit to negotiate cheaper energy bills.

Cllr Marco Cereste, Leader of Peterborough City Council, said: “We are aiming for our scheme to be the first in the country to give residents who use pre-paid meter cards the opportunity to participate. As a Local Authority we have a pastoral commitment to our communities and play a key role in protecting and helping the most vulnerable.  This scheme, together with the other positive steps that the Government is taking on this issue, will give us a unique opportunity to assist our communities and the most vulnerable within it, to put pressure on energy suppliers and remove fuel poverty.

“Likewise, we believe that this scheme will also be of great interest and benefit to the many small businesses in Peterborough, who are all striving to be competitive in a challenging market place.  By making it possible for them to participate, we will not only be leading the way in creating  access for the business sector to cheaper energy, but will be helping to make our business sector more resilient and as such, contribute to sustaining the business growth and economy in our area.  This will be the first scheme in the UK for businesses.”

John Harrison, Executive Director of Strategic Resources, commented: “We are committed to supporting the UK Government’s collective switching initiative.  But we have gone a stage further and contacted other local authorities to join us and aggregate our communities’ energy spends to achieve better purchasing power.  The 14 councils involved to date, will mean that in excess of 1.9 million households will be able to participate.

“This scheme is our collective response to the ever increasing issues that our communities face in relation to rising energy prices and fuel poverty.  We want this scheme to be the national benchmark in how collective switching schemes are undertaken in the UK.  We will be acting swiftly to try and bring the potential benefits to our communities before the winter arrives.  We also believe our scheme is well placed to make a successful bid for some of the £5million competition fund announced by Edward Davey last week for the most innovative local authority schemes.”

The council is currently seeking to appoint a service provider to run and administer the scheme.  To participate in the scheme, residents will be invited to visit a website or contact the council to register their details free of charge, giving their current energy usage figures for gas and electricity.  The scheme will work by means of a ‘reverse auction’ where energy suppliers will be invited to bid the lowest price to supply the energy.

Further details on the scheme and how residents and businesses can participate will be announced in due course, but the Council intends to get this up and running as soon as possible so that the benefits are realised quickly.  It is anticipated that the initial auction will be held in November 2012.

In an interview last week with the Municipal Journal for local authority business Mr Eric Pickles, Secretary of State for Communities and Local Government, said: “It’s encouraging to see local government capitalising on its huge buying power to drive down costs and deliver a better deal for the taxpayer.  Better procurement and joint working will enable councils to protect frontline services and deliver significant savings to the public.”

These developments will also be supported by additional powers to be given to Ofgem by the Government, one of which is the creation of a voluntary agreement with suppliers.  Currently pre-payment customers who are in debt to their energy supplier of more than £200 are prevented from switching suppliers.  This threshold has now been raised to £500 with effect from 1 November 2012 allowing potentially tens of thousands more households nationally, to be able to switch to a better tariff if they find a cheaper deal.

The Energy and Climate Change Secretary Edward Davey said: “As a long-term advocate of collective purchasing and switching, I thoroughly welcome this initiative from Peterborough Council and wish it every success. Enabling local residents – especially vulnerable households – to club together in this way could make all the difference in helping households get a better energy deal. I want to see many more schemes like this get off the ground.”