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Chart of the Week

2020

TPIs hit by the COVID-19 pandemic

Molly Lloyd Analyst

Third Party Intermediaries (TPIs) operating in the business market in 2020 have experienced significant changes due to the COVID-19 pandemic. Cornwall Insight’s 2020 Annual TPI report published earlier this week found that when negotiating business energy contracts in 2020, TPIs could target a £335mn/year revenue pool, an 18% decrease on 2019 levels. In this week’s 'Chart of the week', we look at how national lockdowns and the uncertainty in the market have led to a decrease in growth in both the SME and I&C sectors. The SME market for TPIs has been sharply impacted by COVID-19, with total revenue for TPIs operating in this segment at £190mn in 2020, a decrease from £225mn in 2019. The decrease in revenue was partly due to businesses temporarily closing during national lockdowns and TPIs furloughing sales staff leading to reduced levels in the number of new business energy contracts TPIs were able to secure. Distress in many businesses meant that the renewal of energy contracts moved down the list of priority for customers, meaning many deferred the decision to renew contracts until the outlook for their business operations became clearer.  The impact of business closures was coupled with commissions in the SME sector being impacted by the reduction in volumes. In some instances, those TPIs that are paid on a volume basis or using estimated rates of consumption are seeing suppliers clawback commission payments in cases where actual consumption was lower. Revenues for TPIs from I&C energy ...

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