Who would have thought a year ago what 2020 would have brought? After the 2019 election, delivering Johnson a large majority in parliament, the only repeat story we expected was Brexit and the easy delivery of the oven-ready deal we were promised. As the year draws to the close, Brexit issues are still ongoing, a deal is looking increasingly unlikely and we’ve spent the last 10 months mostly talking about the SARS-CoV-2 virus.
It has been a turbulent year, with disruption felt in every industry. We’ve learned new words – hopefully, we’ll never have to use ‘furlough’ again once a vaccine is rolled out – and we’ve all had to learn to work in different ways. To outsiders, energy has superficially escaped the worst of it so far: supplier failures are no worse than other years, although the real pain likely to be round the corner as the job losses start to really impact household incomes and debt continues to build up: the number of households in arrears is up 40% since the start of the pandemic; and Q3 2020 saw more people leave payrolls than any other quarter since records began. Whilst we might be at the beginning of the end of the impacts to our day-to-day lives with the start of vaccinations, the impact to household incomes, the jobs market and the wider economy are still very much developing. It will be imperative that energy suppliers do their bit in supporting consumers and businesses impacted by the virus, as we get economy back onto its feet in 2021.
With vaccine news providing some optimism for 2021, an opportunity to conveniently see friends and family again will be cherished when it comes, as will those first hugs. We hope to see you when we’re allowed – either at industry events or over a coffee or a beer.
We hope you have an excellent Christmas (within the rules), if you’re celebrating it and enjoy the public holidays if you’re not. Here’s to vaccines and 2021!
Rob Eynon & Jackie Street
December 2020
2020 Overview
Before the pandemic hit, we had the news that Robin Hood Energy and Bristol Energy had appointed advisors to look at options for the business – the outcome of which we found out later in the summer – was for Robin Hood’s book to be sold to British Gas, and Bristol Energy was to be split with the B2B business being sold to Yü Energy and the B2C business being sold to Together Energy. Bristol Council’s decisions at least aligned closer to their reason for getting into energy, selling to a supplier part owned by Warrington Council, but for Nottingham to not only sell to British Gas, but also just the book, so all their staff were put on risk of redundancy – seemed to go against everything Robin Hood Energy stood for. It also marked the end of their council white labels and the UK’s longest running not-for-profit supplier and white label, Ebico.
In January we had the first supplier exit, with Engie’s B2C portfolio (including their white labels) being bought by Octopus, and the completion of OVO’s deal to buy the retail arm of SSE, originally announced in September 2019. E.ON and Innogy also completed their deal which saw npower move under E.ON.
Things went a little quiet in February with all eyes watching with interest as the coronavirus epidemic started to spread, with a first major outbreak in Europe in Northern Italy. By March, this had become a pandemic, and countries started to lockdown.
March also saw announcements that GnERGY was to become the first supplier failure of 2020, Bulb would be appointed as SoLR for their customers and that Vattenfall was selling iSupply to EDF. EDF also closed down the TOTO Energy brand and offices following their SoLR gain the previous year.
As the pandemic began to impact households, Ofgem introduced voluntary protections for customers finding it harder to pay their bills as a result; these then became mandatory in December. Behaviour during the pandemic also led to a fine for E (Gas and Electricity) for blocking PPM transfers.
Octopus Energy and their proprietary Kraken software were subject to two major announcements – first, in March, it was announced that E.ON was going to move all npower’s customers onto Kraken and rebrand them as E.ON Next. E.ON’s customers are due to follow in 2021. Secondly, in May it was announced that Australia’s largest supplier, Origin Energy, was taking a 20% stake in Octopus Energy and would be taking on Kraken to service their customers, joining Hanwha’s Nectr who were already on Kraken in Australia. Octopus also made moves into Texas by purchasing small start-up Evolve Energy and have just announced a joint venture with Tokyo Gas to launch in the Japanese Power market. This followed the recent trend of the larger challengers looking overseas to continue growth, with OVO launching in Australia and France, and Bulb launching in Texas, France, and Spain.
Over the summer, Avro completed on a controlling stake in their software provider Dyball – with their competition, also using the same software, surprised by this turn of events. We also had over 2 months coal free generation in the UK, followed by another 55-day run – which, considering only 2 years previously 55-hours coal free was record breaking, was excellent news for the renewable industry and the wider environment.
Despite the impacts of the pandemic, it was not until September that we had a second supplier failure: Go Effortless going under with their 4,000 customers moving to Octopus.
Two more suppliers sadly went under after Go Effortless: Tonik Energy in October with 130,000 customers and Yorkshire Energy with 74,000 in December. Tonik failed to recover from an unsuccessful migration in the spring, and Yorkshire Energy ran out of cash after looking for investment. Some great talent has come to the market following the closures of both, along with GnERGY, Go Effortless, iSupply and Robin Hood Energy – hopefully, they have all now been picked up.
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As for NEC, we’ve had a good year, increasing our client book and working on some interesting projects. 2020/21 is looking on track to be our strongest year yet, which considering the challenging times we’ve had over the year, is hugely encouraging.
We have been working with a couple of new entrants, including one for most of the year (yes, they are still coming in!). One of our associates was working with them to map out the customer journey and ensure all options for automation or improved engagement could be planned in. Having a client take the time to make sure everything is mapped out and planned has been great – truly setting themselves up for success. The associate has now joined the client full time, ahead of them looking to launch in 2021. NEC will continue to provide support as they go into and through controlled market entry. The other new entrants all have plans for 2021 which are still taking shape.
Rob led on the losing-side migration for 165,000 customers and a team of 25 in-house and 80 off-shored staff transferring to another supplier following an acquisition. This presented a number of challenges, not least from the impact of the pandemic, but also the customers were moving to a system with less functionality than the one they were leaving. To support the migration, we created a team (peaking at 9 associates) to help with the cleansing of accounts, clearing backlogs and correcting settlement issues.
Jackie has been working with an established B2B challenger who, following investment, are looking to set themselves up for growth. Working with the company’s new COO, she’s been making sure the processes are correct, creating resource plans and bringing any backlogs down and generally whipping the team into shape!
We’ve been speaking to a few companies looking at becoming a white label supplier – with one we’ll be running a tender for in the new year to identify a partner. Please let [email protected] know if you would like to be invited to tender.
We’ve also worked on a few projects in the regulatory space, from providing compliance audits to supporting companies looking at vulnerability. We’re continuing to talk to a couple of new entrants as well (both retailers and software companies).
ICYMI:
Rob did some analysis on the four sets of Citizens Advice’s Energy supplier ratings which came out in2020:
There was also an in-depth review of Which?’s annual call waiting stats released earlier this month.
2021 Outlook
2021 will be another interesting year for us all. It is great to see vaccines beginning to be rolled out. Hopefully once those at greater risk have all been covered, the country can start to open back up again, and we can start to meet back up, face to face. It will be great to see everyone at industry events again. Even with no handshakes and a need still for masks!
The winter will be hugely challenging time for energy customers, which will impact energy suppliers. With further lockdowns, a lot of the country starting the year in Tier 4 and the wider societal impacts of Covid-19, it will be critical for suppliers to be on top of their collections activity, working with customers to ensure they are supported through these difficult times, whilst minimising risk to the business. Tailored, specific engagement with customers will be critical. If you are unsure about how best to address this, please do speak to us.
For NEC, our associates, and our clients there is the upcoming changes in obligation on IR35 legislation due in April, postponed from last year. This could have a large impact on the whole contracting industry, with increasing rates where clients deem their contractors to be in IR35, thus changing the tax status of those. Clients will need to undertake IR35 determinations ahead of contractors starting, or ahead of April if already in position.
We are looking at a number of solutions to the IR35 situation to put our clients minds at rest, and to simplify things for our associates – follow NEC on LinkedIn to hear more when confirmed.
We will be continuing work with the new entrants, as well as starting off the tenders for the white label partnership. We’re also working with some other industry and resource partners to support them with their upcoming project work. On that note, we’re hoping to further deepen our relationship with our partners, both in the UK and overseas – we now have partners offering support and market entry in France, Spain, US, Japan, Australia, and Singapore and we are looking at setting up partners in additional European markets across 2021.
Finally, we’re setting up a team of ‘backlog busters’ – a small team of experienced agents who can come in and hit the ground running to assist with clearing down backlogs. This could be to look at failed bills, processing change of tenancies, clearing emails or anything in-between. This model has worked really well with our migration client, and we feel it could be of huge use to our clients, even if not going through periods of change. If you think you could benefit from them, please do get in touch with Rob or Jackie.
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Wishing you, your family, your friends and your colleagues the very best for 2021 – hopefully, the vaccines will start to have a positive impact earlier in the year than hoped and we’ll be able to get together before too long
