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The first big supplier has broken cover and admitted it will not take part in the collective switching exercise that consumer organisation and switching company Which? is attempting to organise.
SSE said it would not take part because the proposal went against its recent commitment to transparency and simplicity and would effectively amount to predatory pricing – offering one group of customers a discount to attract them at the expense of its existing customer base.
Publicly, the rest of the big suppliers have said they will consider the proposals from Which? for its so-called Big Switch. The reverse auction, scheduled to take place next month, could see up to 300,000 customers taking part. The idea is that suppliers put forward their lowest bid, consumers decide whether or not to take it, and Which? handles the switch.
Privately, suppliers are annoyed that Which?, which has consistently called for transparency, has not disclosed its cut. One supplier claimed it was £40 per switch. Which? told Utility Week that it took half the fee charged by other switching sites and that it was not for profit. However, executive director Richard Lloyd said that set-up costs must be covered. He insisted Which? had the expertise to handle the Big Switch, and that it would “walk away” if it looked like collapsing.
Speaking before SSE’s decision, Lloyd said he was confident that the “majority” of major suppliers would take part. He said small suppliers could take on tens of thousands of customers without being swamped. First Utility and Ovo, the biggest independents, told UW they could handle that level of growth over a matter of weeks, but neither had yet decided whether to take part in the auction. They also called for more detail.
See next week’s feature on collective switching.
by Brendan Coyne
This article first appeared in Utility Week’s print edition of 16 March 2012.
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