Octopus Energy takes on Coop Energy customers
Coop Energy and Octopus Energy have partnered up, with Coop customers set to benefit from Octopus’ superior technology, award-winning customer service and may even see a drop in their bills.
Coop Energy, part of the socially-minded Midcounties Cooperative, has chosen Octopus to manage and supply energy to its 300,000 plus consumers.
The Coop brand will remain in business and retain existing Coop customers. The Midcounties Co-operative will continue to attract and register new clients, leveraging its high-profile and respected reputation. Accounts from Flow and GB Energy will become Octopus Energy customers.
The companies have not revealed how much the deal is worth, but it marks the fourth large deal inked by Octopus over the last 12 months. The firm has also acquired Affect Energy, taken over the customer base of defunct supplier Iresa Energy and partnered with Marks and Spencers to become the supplier for its M&S Energy brand. Its 300,000-strong clientele portfolio has now tripled in size to over a million.
Who is Octopus Energy?
Octopus Energy offers 100% renewable energy via some innovative tariff options. In addition to the usual fixed and variable energy rates, Octopus has also developed some that you won’t find anywhere else, including a supergreen tariff, an Arsenal tariff (yes really, that Arsenal!) and a tracker tariff that changes on a daily basis to reflect wholesale market prices.
It is also a tech-focused energy supplier and has developed a powerful cloud-based platform it calls Kraken.
The Kraken system is also integrated more widely with Octopus’ business operations providing it with information about the industry as a whole through data monitoring and allowing predictions of customers’ energy needs. It even helps the firm trade on the wholesale market to get the best prices available.
Midcounties Co-operative head Phil Ponsonby pointed to Octopus’ technology as one of the reasons the board chose it as a partner.
“The market is now more competitive than ever, and it is clear to us that having the best technology is absolutely critical to delivering the best service to customers while maintaining a sustainable business for the longer term,” he said.
“Octopus have developed what we consider to be the most innovative and customer focussed technology anywhere in the industry today.”
What about Coop Energy’s community energy commitments?
The two suppliers are also planning to cooperate on a project to encourage more community-generated energy schemes in the UK.
Co-op Energy has a good deal of experience in this area and is the UK’s largest buyer of community-generated energy supplied by small organizations who sell it to the grid from micro-generation projects using solar panels or wind turbines. The Coop estimates that there have been 5,000 such projects set up over the last five years, with even more in the pipeline.
Octopus has already contributed to encouraging community energy as it was the first company to offer a smart export guarantee tariff, part of the UK government’s strategy to support renewable energy generation and adoption. It means that, from January 2019, people who fit new solar panels in their home or business for example and feed electricity to the grid are guaranteed to receive a fair payment.
Coop and Octopus plan to invest to increase the capacity of such small-scale community generators across the country. They want to boost the amount of energy bought from such schemes and intend to offer them their expertise with practical assistance.
Greg Jackson, CEO of Octopus Energy, said he was “very excited” about the joint venture in community energy.
"We have been hugely impressed by Coop Energy’s achievement in this area and we believe that together we can help even more people from across the UK to come together in developing new sources of sustainable power,”
Why has the deal been made now?
Coop Energy entered the market in 2011, when the Big Six energy giants claimed 99% of the supply and there were fewer than 12 companies in the sector. The socially-oriented company made a niche for itself as a green energy supplier which shared its profits with members of the Midcounties Cooperative.
However, in recent years the Midcounties Coop has been struggling to keep its power supply arm afloat in an increasingly crowded energy market. Coop Energy reported losses which hit the collective’s overall profits with a sizable drop of 25% in January 2019 compared to the previous year. In fact, Coop Energy suffered a loss of more than £10m in one year.
The overall cooperative profit loss year-on-year was reported at £2.8m. The organization stated that, if its energy business was not included in the calculations, it would actually have made a profit of £8.3m. Chief executive Phil Ponsonby said the rest of the society’s businesses had performed well over the same period with operating profits rising to £16.5m before taking Co-op Energy into account.
He pointed to increased wholesale costs, greater numbers of customers switching suppliers and increased competition squeezing profit margins to explain its losses and failure to sustain an increase of market share beyond 1%.
Such financial woes make its decision to partner with Octopus a good move towards saving the brand before things got out of hand. Selectra has reviewed Octopus in depth and we can safely say in terms of customer service, reliability, innovative and unique tariffs and environmental-friendliness, Coop customers are in good hands.
Despite the recent stagnation, Phil Ponsonby, head of Midcounties Cooperative said the board was “extremely proud” of Coop Energy’s legacy.
“We firmly believe that we disrupted the market and played our part in reducing the dominance of the big players by providing fair prices, supplying 100% green electricity and supporting community energy projects all across the UK,”
He stressed that it was important for the board when it started looking for a new partner that it shared the cooperative’s values, and demonstrated that it “put customers, colleagues and the environment at the heart of what they do”.
“Octopus firmly meet these requirements and we are delighted to be partnering with them,” he said.
I’m a Coop customer, what will change?
1. Which company will I be with?
2. Will my bills go up?
3. Do I need to do anything?
The whole process is being taken care of by the two companies. They say it will take a few months to transfer all customers onto Octopus’ systems but there should be no change to your energy supply.
4. What if I’m in credit or I owe Coop money?
Octopus will transfer your debit or credit to their systems. They will provide you with a new account number when your move is complete.
5. Will my electricity still be renewable?
Both Octopus and Coop use 100% renewable electricity so nothing will change on that front.
6. Will my smart meter still work?
If Co-op Energy installed your smart meter you should have no problems. However, if your smart meter was installed by someone else it may not be compatible and you may have to submit meter readings online.
7. What if I want to switch suppliers?
If you want to switch from Co-op Energy there will be exit fees if you move to any supplier other than Octopus, unless you have 49 days or less left on your contract.