Pinocchio strikes again

[David Guyatt]

Those poor, poor penniless energy suppliers who raise prices by as much as 10% and make billions a year are, clearly and obviously, completely innocent of profiteering.

Energy challenger Telecom Plus leaps to Big Six's defence
The energy challenger says the Big Six energy suppliers are being "hung out to dry as scapegoats" by politicians


Reducing the UK's reliance on imported gas means homes are less exposed to price fluctuations of the global market Photo: NorGal




By Emily Gosden
8:28PM GMT 20 Nov 2013


Telecom Plus, owner of Britain's biggest independent energy supplier Utility Warehouse, defends Big Six against accusations of profiteering.
The Big Six energy suppliers are being "hung out to dry as scapegoats" by politicians, according to their biggest challenger, Telecom Plus.
Andrew Lindsay, chief executive, on Wednesday officially established his company as Britain's largest independent energy supplier, in a £218m deal to buy its existing 770,000 customers from npower.
Telecom Plus already operates the accounts through its own multi-utility brand, Utility Warehouse, but the customers were owned by npower which supplies them with gas and electricity and will continue to do so for 20 years under the deal.
Npower chief Paul Massara said Britain was now "well on the way to having a Big Seven rather than a Big Six".
Mr Lindsay said Utility Warehouse, which also offers customers broadband and phone services, ran its customer-facing operations more efficiently and took lower profit margins than its bigger rivals.
But he also leapt to their defence, insisting: "The Big Six are categorically, in my view, not profiteering. They are being hung out to dry as scapegoats."
"They all move [prices] broadly in time with one another because they are all facing broadly the same costs the same regulatory burden and wholesale markets from which to buy," Mr Lindsay, who won a gold medal rowing for Britain at the Sydney Olympics, said.
"It's hardly surprising that they appear to move in tandem and it's totally disingenuous of the politicians - who loaded all these costs up onto them to then say actually they are crooked."
Telecom Plus's energy supply deal with npower sees it buy its power and gas at a discount to the price the Big Six charge their own customers, reflecting the fact Telecom Plus then bears the costs of running its own customer-facing operations such as billing.
It tries to undercut the Big Six by running this part of the business more efficiently and offers the cheapest prices to customers who also take phone or broadband services.
"There is no doubt that the Big Six could be more efficient than they are and could deliver better customer service," Mr Lindsay said.
"I am totally willing to take them on, on that basis, but I do defend them on their financial returns.
"We believe we can absolutely get to the same size as some of the Big Six - we would love to be the Big Seven-th. But we are anything but like the Big Six. They are vertically-integrated power generation businesses; we are solely customer-focused, customer acquisition and management business. We are approaching the utility space as a competitor to the incumbents."
The supply deal means Utility Warehouse's prices broadly track those offered by the Big Six. But Telecom Plus said that as part of Wednesday's deal it had renegotiated the terms of its supply arrangement, increasing its gross margin by 4.25pc.
Mr Lindsay said this gave it greater scope to undercut its rivals, meaning it had recently raised prices by less than it would otherwise have done.
Telecom Plus started out buying its own power and gas directly on wholesale markets, but sold its customer accounts to npower in 2006 for a nominal amount after struggling to secure wholesale energy profitably.
Telecom Plus shares soared 16pc on Wednesday's deal.

Ever hear the phrase "getting a seat at the top table" before?

[Magda Hassan]

All utilities should be just at cost plus a bit more to cover capital replacement and future capital investment and development. It should never be a for profit enterprise. Always publically owned.