Utility Week

26 | 18TH - 24TH JANUARY 2019 | UTILITY WEEK Customers Analysis I t hasn't been the happiest of new years for the energy retail market, as the trend of failing suppliers seen in 2018 continues. Economy Energy became the latest com- pany to fall victim to the challenges of the volatile market on 8 January. This was just a day aer Utility Week reported that Econ- omy was likely to enter the supplier of last resort (SoLR) process when the company was revealed to be in credit default. Elexon, the administrator of the balanc- ing and settlement code, published a level two credit default notice for Economy Energy on the BM Reports website. The notice indi- cated that the supplier's outstanding charges amounted to more than 90 per cent of its credit cover. History repeating itself Following a similar pattern to Iresa, which ceased trading in July 2018, Economy Energy exited the market subject to a provi- sional order from Ofgem, which banned the supplier from taking on new customers. Economy was also prevented from ask- ing for one-off payments or increasing direct debits until it could prove it had resolved customer service and credit balance issues. With 235,000 domestic customers, Econ- omy Energy is the second largest retailer to enter the SoLR process. It comes hot on the heels of the largest supplier – Spark Energy – which had a customer base of 290,000 and entered the process in November last year. Ovo Energy came to the rescue of both sets of customers, which has seen it acquire more than half a million additional accounts in as little as two months. The move secures Ovo's position as the largest challenger brand, with 1.5 million customers (including Corgi Home Plan). Ovo was the first of the smaller suppliers to reach more than one million customers, last November. Not only was Ovo confirmed by Ofgem as SoLR for the almost 300,000 customers of Spark Energy on 27 November 2018, the Bristol-based company also acquired Spark's operating group, Spark Energy Ltd. Speaking at the time, Stephen Fitzpatrick, chief executive and founder of Ovo, said: "The energy sector is going through a major change and many companies, big and small, are struggling to adapt. We are delighted to have been able to bring Spark into the Ovo Energy Group, securing a good outcome for their customers and the team. "We will combine Ovo's innovative tech- nology and focus on customer experience with Spark's unique network of partnerships to bring greater products and services to more households around the UK." Chris Gauld, chief executive of Spark, added: "This is great news. It means Spark becomes part of a very successful large independent energy supplier. "We will service our customers, under Ovo's licence, from our existing offices, and continue to grow our niche model of part- nering with leading letting and estate agent companies. "I'm delighted that we can continue to grow as part of the Ovo family with a renewed confidence in the future despite the challenges the sector is facing." Ovo to the rescue – again Ovo was appointed SoLR for Economy Energy on 11 January. This time, it has made no mention of plans to acquire the brand. Ofgem selected Ovo to take on the 235,000 customers of Economy Energy aer a com- petitive tender process run by the regulator to get the "best deal possible" for customers. Ovo has agreed to honour all outstanding credit balances, including money owed to both existing and former customers of Econ- omy Energy. But the company has gone a step further, outlining its intention to absorb all the costs associated with the credit bal- ances and the migration of customers, instead of this being shared by the industry or households. Warm Home Discount customers who have already been approved by Economy Energy will continue to receive their payment from Ovo Energy. Customers with prepay- ment tariffs can continue to top up their meters and will be contacted by Ovo Energy's prepayment brand, Boost. Ovo says the energy market is seeing "major change and rapid consolidation" as many suppliers struggle to "adapt in tough market conditions". An Ovo spokesperson adds: "This is a good outcome for Economy Energy customers, who have had an uncertain few weeks. We are very pleased to welcome these customers to Ovo." Economy Energy's demise Towards the end of 2018, speculation was rife about Economy Energy's future in the market – so much so that the supplier pub- lished a statement on its website to "assure" customers that it had "no intention" of closing its doors. It followed news that the company could be struggling financially aer Ofgem revealed Economy Energy was under investigation. Economy was named as one of the 14 sup- pliers that failed to pay its Renewables Obli- gation (RO) by the 31 October late payment deadline. It was shown to owe more than £17 million – £15,650,999.63 in RO payments and £1,413,304.97 in RO Scotland payments. The statement published on its website in December said: "In response to the recent speculation and circulating misinformation, we would like to provide assurance that we Goodbye to another supplier As Ovo Energy is appointed supplier of last resort for customers of the latest failed retailer, Economy Energy, Katey Pigden finds the challenges of the market could mean the worst is yet to come. £17 million Economy Energy was named as one of the 14 suppliers that failed to pay their Renew- ables Obligation by the 31 October late payment deadline. Ofgem revealed that the company owed £15,650,999.63 in England and Wales and £1,413,304 in Scotland. 399 The Energy Ombudsman confirmed that almost 400 investigations were opened into Economy Energy in November 2018, compared with just 112 in January of the same year. ECONOMY ENERGY NUMBERS

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