Almost a week of avid speculation followed the collapse of Future Energy, about who might be appointed as supplier of last resort for its 10,000 customers.
Industry commenters were at odds as to whether the prospect would be appealing to suppliers. Some suggested bids would be diverse and competitive, offering an opportunity to win brownie points with the regulator by stepping into the breach for stranded customers. Meanwhile, others said that the customer transition process constituted an almighty and unattractive headache of billing system integration and customer expectation management, which might turn into a PR disaster for a well-intentioned supplier.
Late on Tuesday 30 January, however, Ofgem brought such arguments to an end, confirming that Green Star Energy had been appointed to take on the Future Energy’s customer base, for better or worse.
Expert consensus seems to be that Ofgem has done well for itself. Green Star has all the appearance of an up and coming independent brand but has the backing of a huge multinational energy company – Just Energy – which is the third largest domestic energy supplier in the North American region, recording a gross margin of $696 million in 2016-2017 (UK derived revenues, including those from its commercial supply business, Hudson Energy, came to $488 million).
Green Star made its debut in the UK in 2013, and has grown steadily to accumulate a customer base of 300,000. It has an established trading agreement with Shell – forestalling concerns that it might succumb to the same market pressures that caused GB Energy Supply and Future Energy to fail – and is led by an experienced UK energy industry hand, Joanne Thornton.
By convincing Ofgem that it is a worthy new home for Future Energy’s customers, Green Star has also proved that it knows the ropes of the UK’s daunting regulatory system. Utility Week understands this is not the first time it has put itself forward as supplier of last resort, having thrown its hat into the ring in late 2016 when GB Energy Supply’s 160,000 customers were up for grabs.
Despite all these advantages, however, absorbing a wadge of confused and concerned customers, under the beady eye of the regulator, politicians and a slavering national press, will be no piece of cake.
Customer data will need to be migrated onto Green Star’s billing system, back-end industry information on meter operators, readers and data aggregators will need updating and, crucially, billing and balances must be reconciled in short order.
Speaking to Utility Week, Thornton assures that she is very much alive to these issues.
“The challenge is to make that transition a seamless journey for customers,” she says.
“This was very much the motivation for us in applying to take the customers on. The fact that this is the second supplier in a short amount of time that has gone under is worrying for the industry.
“We’ve got to make sure that what customers see and the service they get – and the price that they get – doesn’t create any issues for them.”
To make this a reality, Green Star is in active talks with Future Energy’s liquidator, to ensure that its final meter reads marry with Green Star’s opening ones. There are also discussions about the option of buying up the defunct firm’s debt book – a decision which should be finalised before next week.
In terms of migrating customer data to Green Star’s billing and settlements systems, there will be a good portion of quality issues and integration challenges to deal with. A senior industry source tells Utility Week that Future Energy had recently changed its billing system and was struggling to get billing back up to date at the time it went bust.
This will complicate issues for Green Star, which may need to check and migrate information on two foreign billing platforms before it can establish 10,000 new customer accounts. Since around 99 per cent of Future Energy’s customers were direct debit account holders, Green Star will also need to leap the hurdle of getting customers to resubmit bank details before new accounts can become active.
And then there’s the problem of former Future Energy customers. Green Star has committed to honour refunds owing to accounts which switched away before the supplier went bust – but as yet, it’s unclear exactly how large a hit this will mean it needs to take.
Nonetheless Thornton is confident. “We’ve taken on more staff – who will remain with us until we are back to business as usual – and we’ve lengthened the opening hours of our call centres to make sure we’re there for customers.
“We’ve also written to all Future Energy’s customers to make sure they understand the journey and promised new accounts will be set up by 6 February. Then we can start dealing with any enquiries concerning their account, including reconciling balances,” she says.
And assuming all this comes off, the addition of 10,000 customers comes as a timely boost for Green Star, which has ambitious growth plans over the near-term. In two years’ time, there’s a target to have one million customers on board, with the company focussing on fast switching and smart home services – enabled by smart metering – to differentiate itself from the crowd.
In short, Green Star has seized an opportunity to show the market – and customers – that it’s a brand to watch.
“What we’ve certainly learned from this process,” observes Cornwall Insights’ research director Robert Buckley, “is that you can’t assume the customers of a failing small supplier will end up back with the big six.”