Ever since the recession hit, the price for almost everything has fallen – well, except for our electricity bills. A new initiative launched in Ireland this month may help rectify this by offering everyone who joins a big discount.
The company that promises to deliver this deal is called OneBigSwitch, and is led by the founder of Vivas Insurance, Oliver Tattan.
No stranger to getting his customers the best deal possible, he is now going to bargain with the utility companies for discounts for the punters.
Oliver was introduced to the One Big Switch idea in Australia. “I thought it was a very interesting movement that the guys had created out there. I saw that this hadn’t been done in Ireland, although similar versions had been executed in other jurisdictions.
“I thought that this was something, especially considering the times we are in, that would work very well in Ireland. It could garner a lot of support. Hence, we agreed that we would roll it out here, and that’s what we have done,” explained Tattan.
Elaborating on the joint venture between the Australian business and the Irish operation, Tattan said he couldn’t say for sure why something such as this hadn’t been tried in Ireland before: perhaps the conditions had not been right until now.
“I guess it’s because we are a smaller jurisdiction, there may not have been someone to put a campaign together before…these thing have tended to happen in larger regions because someone has thought of it and someone has executed the plan,” said Tattan. “It doesn’t mean it won’t work, or it isn’t a good idea for Ireland: we can already see from our numbers that it’s a fantastic idea, we are already at 16,000 out of our 20,000 target for week 4 (5,000 new members per week).
“Clearly it’s resonating with householders here, perhaps the reason it hadn’t been done before was because no one ever got around to it, but it’s clearly working…its time has come,” he said.
Historically, energy companies have been used to making special deals and arranging discounts with larger customers. Now Tattan and his company are approaching the utility companies as a group, offering a large number of households in the same way that they would deal with a company or industrial customer.
Similar to the co-ops of the last century, this collective bargaining aims to secure deals for OneBigSwitch members. Tattan says that their members may choose to avail of an offer or not: the choice is theirs, with no strings attached.
“No cost now and none later, there is also no obligation to take an offer. We negotiate the offer and send it out to all who have joined. But if you don’t want to take it you don’t have to. You can, in fact, use the offer to negotiate with your existing utility provider to get a better deal if you like … But it will be an off-market offer that you won’t be able to access elsewhere,” says Tattan.
What kind of savings can be made?
Tattan says that the amount that can be saved depends on how many people join the campaign. “The more that join, then the bigger the potential gain. We reckon in the hundreds of euro on a typical household bill (yearly), there could be a more than 10 to 15 per cent gain. It could be better than that looking at things at the moment.”
Now that the movement is growing, the OneBigSwitch team can get a better idea as to why people may have been reluctant to switch before by asking them questions. According to Tattan, of the 16,000 members they have asked, they are getting a sense that the major reason for people not switching providers is because they find it difficult to make the comparisons between them to see if switching is a good option.
Energy companies’ reaction
“We have reached out to all of them and they are all interested,” says Tattan. “Remember that these are large professional businesses – anybody who comes to them to say that they can deliver a certain amount of customers to them…they are interested, so we are speaking to them.”
The idea that consumers should band together and negotiate or bargain collectively with the large utility suppliers may be only to Ireland, but is better-known elsewhere: it has been introduced in many other regions successfully, and has brought a lot of savings to households.
If targets are met, Tattan believes that the 20,000 members will have about 40 million euro in buying power. “So the discounts we can expect are pretty significant.”
Has this worked elsewhere? Yes, says Tattan, “It has worked in many other jurisdictions beside Ireland – we were surprised when we looked at this model that it hadn’t worked here before.
“We have based it on what has happened in Australia. OneBigSwitch in Australia has about 1 in 7 households signed up to them over the last few years – that’s nearly 500,000 households,” says Tattan.
“They moved from electricity on to mortgages, bank accounts, and health insurance, and other utility-type products like that.”
And what’s in it for Mr Tattan?
OneBigSwitch will earn a commission from the energy companies, which according to Tattan will pay the campaign costs. “If we can have sufficient mandate from consumers to continue this model, then we might move on to another campaign.”
For more information, visit www.OneBigSwitch.ie