The Co-operative enters gas and electricity market

The Co-operative has entered the energy market with a simple, single tariff designed to be consistently fair and competitive.

The Pioneer tariff, named after the Rochdale pioneers who founded the first co-operative in 1844, has a variable rate and no penalties for switching to a different provider. Co-operative Energy also promises that new customers will not receive preferential treatment over existing customers with cheaper price offers.

The company describes the multi-tariff offerings of other energy providers as "baffling and bewildering", and says it will challenge the big profits made by the other companies by including a twice-yearly profit-sharing deal for all its customers, who will own the business.

Electricity will be sourced from low-carbon generators, including from renewable energy sources such as wind and hydro, and the Co-op's aim is for the carbon content of its electricity to be less than half the national average by April 2012.

Co-operative Energy's Nigel Mason said: "It is time this industry had a radical shake up. Customers have been bamboozled by complicated tariffs and confused by changing prices and unfair contracts, and it has to stop.

"We are determined to provide a fair and transparent service for Co-operative Energy customers and to let them share in the profits. We are campaigning for long-overdue reform in the energy industry."

The Co-op says the big six providers rely on customers not knowing how much they are paying for their energy. According to research carried out by Consumer Focus in 2010, 57% of electricity and 59% of gas users do not know how much they pay per unit. The Co-operative Energy website has a price comparison tool so customers can compare their current energy costs with those of the Co-op.

Joe Malinowski, founder of energy comparison website TheEnergyShop.com, welcomed the Co-op's entrance into the market, particularly as it is offering its own products rather than white labelled versions of the big six providers. "On price it is not the cheapest – and it is not likely to get much business via the comparison websites – but it is a sensible long-term price for those who are unlikely to keep an eye on how much they are paying."

An average user buying gas and electricity from the Co-op on a monthly direct debit basis will pay £1,023 based on today's prices, compared to an average of £1,041 across all variable rate tariffs, according to TheEnergyShop.

Malinowski particularly liked the deal's single unit price: "There's a serious risk that people might actually understand what they are paying for their energy."

The Co-op's move follows the scrapping of the market's cheapest variable rate deal, WebSaver 11 by British Gas, while npower withdrew the cheapest fixed-rate deal, Go Fix 5, and replaced it with one 4.2% more expensive, according to Energyhelpline.com. 

It predicted that prices could rise by 15% by the autumn and Mark Todd, director of the website, said: "The cheaper deals are being pulled so quickly it is difficult to keep up.

"Over the past month there has been a bonfire of some of the best deals on the market. The outlook is very bleak and consumers need to act quickly if they want to snap up the cheapest deals or opt for a fixed-rate tariff which will protect them from further price rises."

10.05.2011 - Guardian.co.uk

Are you looking for a new deal on your gas and electricity? Check out the Reduce Comparison Gas and Electricity comparison service.