Fledgling challenger brand Neo Energy has announced it is offering free electricity to new customers for June and July.
Launched earlier this year, Neo is a white label of Euston Energy and currently serves 1,000 customers. Neo’s chief executive Oliver Friedrich told Utility Week that the offer will be paid for through the company’s marketing budget.
The offer is available until the end of April for new customers and applies only for electricity. Customers will continue to be billed as normal for their gas usage throughout.
There have been concerns in recent years about challenger brands offering extremely cheap tariffs to the point where they become financially unstable. However, Friedrich described the offer as “just another risk”.
Friedrich, who previously worked with Brilliant Energy, which has since ceased trading, and URE Energy which had its licence revoked in the summer of 2019, believes suppliers have a duty to do their share of helping customers who are struggling financially, especially in the wake of the coronavirus pandemic.
Speaking to Utility Week, he said: “There are so many risks to run a company in general, there are so many additional risks running an energy company and it’s just another one. It’s very simple, we don’t take 20-30,000 customers on board, we do a limited offer until 1 May. Then I have done my piece to support the public situation.”
He added: “We’ve got customers asking for it and we are going to sign them up. We will do this as long as I can afford it. If we, as a very small market participant, help maybe 100, 200 or 1,000 households for the next couple of months, then then we did our share.”
Friedrich says 100 people have registered interest in the offer so far but that he hopes more will join, stating he wants as many people as possible to sign up.
While customers are able to pay their bills in more traditional methods, Neo adds that it is the first energy supplier in the world to give the option of paying via cryptocurrency. It calculates that it will need only 1,900 paying customers in order to reach breakeven.
In response to the offer, Matthew Vickers, chief executive at the Energy Ombudsman, said if it was to work it would be the equivalent of Neo solving “50 million Rubik’s Cubes” that no other supplier had managed to solve.
He said: “It is an attention-grabbing claim but clearly it is not sustainable because you can’t keep providing energy for free. If this is about bringing people in with free energy then hitting them with high prices at exactly the point when they are vulnerable, then I am sure they would agree that it is morally unacceptable.
“They themselves must see that they’d be solving 50 million Rubik’s Cubes that no one else ever has and there are risks with that.”
Neo is aiming to crowdfund £2 million according to the Angel Investment Network website. So far it has raised £200,000.