Octopus Energy has been chosen as the supplier of last resort to rescue the customers of failed energy retailer Iresa, which ceased trading on Friday (27 July).
Around 90,000 customers will be moved onto the supplier’s “cheapest tariff” following a competitive tender process run by Ofgem to get the “best deal possible” for Iresa’s customers.
Affected customers will be offered Octopus Energy’s “Flexible Octopus” tariff, which Ofgem described as one of the most “competitive tariffs” on the market.
Octopus will honour outstanding credit balances, including money owed to both current and former Iresa customers.
The cost of protecting customers’ credit balances will be partly met by Octopus Energy, and the rest will be covered by the safety net put in place by Ofgem. This is funded by a levy spread across all energy suppliers.
Greg Jackson, chief executive of Octopus Energy, said: “We are delighted to welcome Iresa’s customers to Octopus, and we promise to be a safe haven after the terrible experience they have had.
“Iresa’s records are in a terrible mess, so it will take us a bit of time to untangle them. Customers should take a meter reading as soon as possible, sit back and relax while we transfer them to our systems.”
Octopus will contact all Iresa’s customers before 14 August and move them onto its cheapest tariff. Switches to Octopus will be completed around 21 August and customers will be free to switch to other suppliers from then without being charged exit fees.
Iresa had been struggling for several months and was banned from taking on new customers since March.
The troubled supplier was also subject to a wider investigation by Ofgem into its customer service handling.
Iresa was ranked the worst energy company for customer service in Citizens Advice’s energy star rating table for January to March 2018. It received a score of 0.35 stars out of five and had a record number of complaints during the period.
Octopus Energy received a star rating of 3.8 out of five in the league table and is a Which? recommended provider for energy.
Rob Salter-Church, Ofgem’s interim executive director for consumers and competition, said: “We are pleased to secure a deal with Octopus Energy, where Iresa customers will be offered a competitive tariff for their energy. Their credit balances will be honoured and their energy supply will continue as normal.
“Our advice for customers of Iresa is to wait until Octopus Energy contacts you. They will give you more information about the tariff you are on, and about your credit balance if you have one. Then you can shop around for a better deal if you wish to.”
Octopus Energy was established in 2016 and supplies approximately 250,000 domestic customers. It has entered into a partnership with Marks and Spencer under the M&S Energy brand. The retail giant will part ways with SSE in September after nine years working together.
Octopus Energy is backed by Octopus Capital, which has invested £2 billion in UK renewable generation, and manages £7.5 billion of assets.