Northumbria Energy spinoff to offer free electricity

Free electricity

A new arrival to the domestic energy market has come up with a novel way to entice customers - by offering free electricity.

Neo Energy - a white-label spinoff of Northumbria Energy - is looking to shake up the energy market with its ‘Power to the People’ incentive until 1st May. Under the scheme, every new customer signed up during this period will benefit from two months of free electricity, while still paying the standard cost for their gas. After their first two months, users will then be moved on to a contract-free tariff.

Free electricity... what’s the catch?

Neo Energy first entered the market earlier this year and looks to stand out from the rest of the competition by being the only energy supplier in the UK to allow customers to pay using cryptocurrency, such as Bitcoin, Ripple and Litecoin.

The supplier brands its free electricity offer as a ‘Covid-19 initiative’ on its website, though some are warning prospective customers to be sceptical of such schemes.

Speaking to Utility Weekly, Energy Ombudsman chief executive Mike Vickers said of Neo Energy’s free electricity offer: “It is an attention-grabbing claim but clearly it is not sustainable because you can’t keep providing energy for free.

He added: “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.”

In response, Neo Energy chief executive, Oliver Friedrich, 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 continued: “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 we did our share.”

About Neo Energy

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Neo Energy is a white-label supplier set up by Northumbria Energy. Ofgem defines a white label brand as ‘an organisation that does not hold a supply licence but instead works in partnership with a licensed ‘partner supplier’ to offer tariffs’.

Northumbria Energy was established by Tim Cantle-Jones, a former chief executive of failed supplier Future Energy. The firm has already seen previous white labels go bust in the recent past, with Brilliant Energy’s collapse in March 2019 leaving 17,000 households in limbo - some seeing increases of up to 68% as SSE was appointed to take on its customer base.

Customers enticed by the offer of free electricity should maybe think twice before signing up; Neo Energy head Oliver Friedrich has previously served as secretary of both Brilliant Energy and URE Energy, which was stripped of its licence to operate in August last year after it was unable to meet a £200,000 commitment to the government’s Renewables Obligation program.

Under the scheme, suppliers that do not meet the minimum requirements on renewable electricity production must pay into an Ofgem-administered buy-out fund.

We reached out to Mr Friedrich for further comment on his latest energy firm’s free electricity offer but had not received a response at the time of publication.

Neo Energy is currently listed on the business crowdfunding website Angel Investment Network, where it is aiming to raise £2 million through external investment. On the website, the supplier states that it aims to have 3,000 customers by the end of the year

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