Competition in the business energy TPI market continues to intensify and is now at its highest ever level as recorded by the Cornwall Insight TPI Indexes. Our latest TPI report (Q217) highlights three important trends in the market:
One: Acquisitions broaden service offers
This quarter saw Inspired Energy continue its acquisition strategy by adding three new companies to its portfolio: Flexible Energy Management Limited (FEML), Churchcom Limited, and Horizon Energy Group. The transactions mean that Inspired Energy has made nine acquisitions since April 2012, the most of any company, giving the TPI broader reach in terms of customers and provided services. In addition, we are aware of continuing interest from private equity in the TPI sector in the largest companies in our Indexes to smaller and medium competitors.
Two: Highest ever level of competitive activity in Q217
TPIs have also been busy from the strategic standpoint, with activity as represented through our Indexes up 15% on last quarter. The quarter also saw the highest number of developments ever recorded. Each year we expect an increase in the second quarter due in part to TELCA Awards which is held in June, though, there have also been increases in other measures of market activity. Much of this activity is related to the growth of businesses and expansion of workforce across both the SME and I&C sectors. However, one of the leading TPIs in our Indexes, Utilitywise, has made internal changes in response to issues that emerged in June and July. Reports of under-consumption on certain contracts and the required repayment led the TPI to issue a profit warning, suspend its full year dividend, and adopt a new accounting standard a year ahead of schedule.
Three: Price transparency creates new challenges
As a result of the CMA’s Price Transparency Remedy, which required suppliers to disclose the prices of all their available contracts to certain micro-business consumers from 23 June 2017, we have found there to be a varied interpretation of compliance with the licence condition. This has created quite a disparity as to the quality of information published. Businesses obtaining price information can be faced with a relatively laboursome process, with information not necessarily being provided in the most user-friendly format. With the lack of consistent requirements for input information across suppliers, inconsistency in the way prices are displayed and the format these prices are displayed in, tariff comparisons are a time-consuming and difficult activity for business users. In many instances, this may encourage businesses to use TPIs as they might feel they lack the time, knowledge and expertise to find the most suitable contract themselves.
Cornwall Insight TPI Index
Our latest TPI Index shortlists 201 SME TPIs and 156 I&C TPIs. Figures 1 and 2 highlight the leading TPIs in these Indexes: Make it Cheaper continues to lead the SME TPI market while Utilitywise and Schneider Electric jointly lead the I&C TPI market.