Co-op News October 2019: Sustainable Development

NEWS
ENERGY
Octopus and Co-op Energy agree takeover deal
Co-op Energy has struck an agreement
with Octopus Energy, which will see the
latter take on ownership and responsibility
for the management and supply of
energy to the 300k customers currently
supplied by Co-op Energy, Flow and
GB Energy.
As part of the deal, Octopus will
retain the Co-op Energy brand, while
the Midcounties Co-operative will
retain responsibility for acquiring new
customers under the Co-op Energy brand
as part of its wider utilities strategy
The deal, completed for an undisclosed
sum, will increase Octopus’s customer
base to over a million. Co-op Energy
customers will have access to its
proprietary tech platform and will
receive the same service as Octopus’s
existing customers.
The two businesses say the transaction
also includes the creation of a joint
venture to further develop the community
energy market in the UK. The joint venture
will invest in projects, provide practical
support to community groups and
increase the volume of energy purchased
from community schemes, encouraging
more small-scale generation across
the UK.
Customers of GB Energy and Flow will
now become Octopus Energy customers
while Co-op Energy customers who are
members of the Midcounties Co-operative
will remain as Midcounties members.
The deal could result in some
redundancies, confirmed a Midcounties
Co-op spokesman, adding that the
number of roles affected had not
been confirmed.
Midcounties chief executive Phil
Ponsonby said: “The Midcounties board
is extremely proud of what has been
achieved by our energy business since we
entered a market dominated by just a few
energy companies back in 2011.
“At that time 99% of supply came from
the Big Six and there were fewer than 12
companies in the market. Today there
are over 70 and we firmly believe that
we disrupted the market and played our
part in reducing the dominance of the big
players by providing fair prices, supplying
100% green electricity and supporting
community energy projects all across
the UK.”
Co-op Energy losses affected the most
recent annual results at Midcounties.
While the energy business had grown
its sales to £423m, it was hit by rising
wholesale costs. The society had taken
160,000 customers from GB Energy
Supply in 2016 and 130,000 from Flow
in 2018.
Mr Ponsonby added: “The market is
now more competitive than ever, and it is
clear to us that having the best technology
is absolutely critical to delivering the best
service to customers while maintaining
a sustainable business for the longer
term. Octopus have developed what we
consider to be the most innovative and
customer-focused technology anywhere
in the industry today. But it isn’t just about
technology, one of our strategic objectives
is to make our members lives easier and
our board was insistent that in looking for
a partner, we found an organisation that
shared our values, and put customers,
colleagues and the environment at the
heart of what they do. Octopus firmly meet
these requirements and we are delighted
to be partnering with them.”
Greg Jackson, CEO of Octopus Energy,
said: “This acquisition and our ongoing
partnership with Midcounties is another
step on the road to improving the domestic
energy market for good. Our renewable
energy supply and outstanding technology
is now delivering award winning service
to over a million homes in the UK with
100% green electricity as standard.
Co-op is one of the most well-respected
British brands and we’re delighted to be
working with them alongside our other
cherished partners.
“I am also very excited about our
joint venture for community energy. We
have been hugely impressed by Co-op
Energy’s achievement in this area and we
believe that together we can help even
more people from across the UK to come
together in developing new sourcesof
sustainable power.”
Peter Earl, head of energy at
comparethemarket.com, believes the
move could lead to confusion among
consumers in an already complex
market. “Co-operative Energy customers
will see the management and supply of
their energy change to Octopus Energy
– a different company entirely – yet
Co-operative Energy will maintain its
brand and continue to sell energy,”
he said. “The potential for confusion
amongst consumers is real.
“Only three years ago, GB Energy
customers were moved to become
customers of Co-operative Energy as
a result of GB Energy ceasing to trade.
At a minimum, consumers need clarity
on who is supplying their energy, and
not to be unsure who to contact for
customer support.
But he added: “The rise of start-up,
challenger energy suppliers provides
consumers with greater choice beyond the
Big Six, and healthy competition typically
leads to customers securing the best
value tariffs.”
OCTOBER 2019 | 5