Utility Week

24 | 9TH - 15TH FEBRUARY 2018 | UTILITY WEEK Customers Analysis A er the collapse of Future Energy there followed almost a week of avid speculation about who might be appointed as supplier of last resort for its 10,000 customers. Industry commentators were at odds as to whether the prospect would be appealing to suppliers. Some suggested bids would be diverse and competitive, offering an oppor- tunity to win brownie points with the regula- tor by stepping into the breach for stranded customers. Others said the customer transi- tion process constituted an almighty and unattractive headache of billing system inte- gration and customer expectation manage- ment, 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 cus- tomers 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 inde- pendent brand but has the backing of a huge multinational energy company – Just Energy – which is the third-largest domes- tic energy supplier in the North American region. It recorded a gross margin of $696 million (£489 million) in 2016-17; UK-derived revenues, including those from its commer- cial 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 – fore- stalling 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 expe- rienced UK energy industry hand, Joanne Thornton (see box, facing page). By convincing Ofgem that it is a worthy new home for Future Energy's customers, Green Star has also proved it knows the ropes of the UK's daunting regulatory sys- tem. 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 its advantages, however, absorb- ing a chunk of confused and concerned cus- tomers, 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 on to 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 says she is very much alive to these issues. "The challenge is to make that transition a seam- less 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 worry- ing for the industry. "We've got to make sure that what cus- tomers 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 talks with Future Energy's administrators to ensure its final meter reads marry with Green Star's opening ones. There are also discus- sions 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 Future Energy had recently changed its bill- ing system and was struggling to get billing 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 for- mer Future Energy customers. Green Star has committed to honour refunds owing to accounts that 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 open- ing 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 have promised new accounts will be set up by 6 February. Then we can start dealing with any enquiries concerning their account, including reconciling bal- ances," she says. And assuming all this comes off, the addi- tion 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 mil- lion customers on board, with the company focusing on fast switching and smart home services – enabled by smart metering – to differentiate itself from the crowd. In short, Green Star has seized an oppor- tunity 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." Picking up the pieces Future Energy's collapse came out of the blue, but Ofgem has wasted little time in appointing an alternative supplier to help shore up customer confidence in the market. Jane Gray reports. Customers 24 | 9TH - 15TH FEBRUARY 2018 | UTILITY WEEK Joanne Thornton, MD, Green Star Energy

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