Pinsent Masons advises on groundbreaking energy scheme

International law firm Pinsent Masons has advised Peterborough City Council on a groundbreaking 'collective bargaining' scheme which could help bring down energy bills - and act as a blueprint for similar schemes throughout the country.

The Peterborough Collective Energy Scheme will enable people from across the city, and from other participating communities in the UK, to join together as a single unit to negotiate cheaper energy bills. Councillors are set to vote on Monday on whether the scheme will proceed.

Participants will be invited to visit a new website or to contact their council to register their details free of charge, giving their current energy usage figures for gas and electricity.

A reverse auction will then be carried out where energy suppliers will be invited to bid the lowest price to supply the energy to all those signed up for the scheme. Residents will subsequently be sent an offer to switch provider and accept their new energy rates.

Several local authorities will join the city council as part of the scheme, which in total will open up potential savings to two million UK households. It is expected that residents could see energy savings of between £60 to £200 a year.

In addition, the council’s scheme will be the first in the UK to invite small and medium enterprises (SMEs) to take part, which could result in savings for 5,000 SMEs.

Peter Feehan, a Partner at Pinsent Masons who advised on the structure of the scheme, said: "This is a landmark scheme which demonstrates the innovative approach being taken to help lessen the burden of high energy costs on consumers and businesses. This type of structure is often used in procurement by blue chip companies and there is no reason why it should not work for members of the public."

Councillor Marco Cereste, Leader of Peterborough City Council, said: “As a local authority we have a key role to play in protecting and helping the most vulnerable. This scheme will give us a unique opportunity to tackle fuel poverty and to put pressure on the energy suppliers.

“This will also be the first scheme in the UK for businesses. By making it possible for them to participate we are helping to make the business community much more resilient and as such contribute to sustaining growth in this city.”

John Harrison, Executive Director of Strategic Resources for Peterborough City Council, said “The establishment of the UK’s first inter-council collective switching framework will save local households hundreds of pounds on their soaring energy bills. The councils involved to date will mean over two million households being able to participate.

“We will be acting swiftly to try and bring the potential benefits to our communities before winter arrives.”

This landmark scheme follows a challenge from Edward Davey MP, Energy and Climate Change Secretary, who encouraged communities to use their potential bulk buying power to get a better deal on energy prices.

Mr Davey said: “As a long-term advocate of collective purchasing and switching, I thoroughly welcome this initiative from Peterborough City 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.”

If the initiative is approved by councillors at a meeting on 5 November, Peterborough would lead the UK’s first ever collaborative scheme for collective energy switching.

It is anticipated that registration for the scheme will commence in November and the results of the reverse auction will be available before Christmas. For SME’s registration and auctions will be held in January 2013.