A similar scheme was organised by pressure group 38 Degrees a while ago. They negotiated a deal for everyone who signed up to their campaign for cheaper fuel, many thousands.
It is a good idea, where a whole community bonds together and negotiates a deal to benefit everyone. There are rules and exceptions though. Everyone would be on the same tariff after the change, that means it cannot include people like myself with pre-pay meters for example.
I went into detail about this sort of thing at an event held in Doncaster by Caroline Flint MP, the Shadow Secretary of State for Energy and Climate Change. The event had many of the suppliers trying to persuade people to swap, helped by a chap from a comparison company, I think there was somebody from Which? there too.
It seems a bit ironic that a council would be able to set up a scheme for people who live in it's borough, to buy power from companies who took over the individual town supplies long ago.