Octopus Energy takes on Avro customers

oliverbrown

polymaff said:

Yes, but what's in it for Octopus?  The more customers they take on the more they lose.

I was under the impression that if Octopus is out of pocket due to the SoLR process that they can reclaim from an "industry process" (i.e. paying customers from all energy companies).

wakeupalarm

As far as I understand, Octopus gains the 550,000 extra customers and can claim back the costs under the SOLR process.  Now, I'm not sure if they can claim the costs for the full 6 months up until April next year, In which case the cost to Octopus Energy is zero and the benefit is 550,000 extra customers.  If they can't claim the extra costs back for the full 6 months then the additional cost they are losing for each customer is probably still cheaper then the cost of acquiring those customers from other suppliers in the market place.

oliverbrown

wakeupalarm said:

the additional cost they are losing for each customer is probably still cheaper then the cost of acquiring those customers from other suppliers in the market place

Interesting assumption, I would love to see evidence of that.

Consumerist

I think it's probably fair to say that Octopus has made a long-term investment. Long-term investments often involve a short-term loss (e.g. those who have opted to pay more now for the Helpful tariff - now withdrawn - in the hope of savings to be gained from April).

We have little idea of what 'deal' has been cooked up between Octopus and Ofgem but it's a fair bet that Octopus will lose little, if anything, and they go forward with a customer base which has grown by 580,000; it would probably have taken many years to achieve such growth organically.

polymaff

I agree that there'll have to be a subsidy.  I don't expect us to find out anything about it.

The excellent  analysis of AVRO, based on Companies House filings,on the previous AVRO thread suggests that there are no easily identifiable AVRO assets that will fund our credit transfers.

I hope that they'll give another shake of the money tree to get that back.

2010

oliverbrown said:

wakeupalarm said:

the additional cost they are losing for each customer is probably still cheaper then the cost of acquiring those customers from other suppliers in the market place

Interesting assumption, I would love to see evidence of that.

Some energy companies, usually the big six, pay switching sites £60 for every successful switch.
The switching sites such as MSE cheap energy club keep half the fee and as an incentive and gives the customer the other half.

I`ve no idea how many people switch energy companies a year but at an average of £60 a switch it must cost these "poor" suppliers millions.

NINJA59

2010 said:

oliverbrown said:

wakeupalarm said:

the additional cost they are losing for each customer is probably still cheaper then the cost of acquiring those customers from other suppliers in the market place

Interesting assumption, I would love to see evidence of that.

Some energy companies, usually the big six, pay switching sites £60 for every successful switch.
The switching sites such as MSE cheap energy club keep half the fee and as an incentive and gives the customer the other half.

I`ve no idea how many people switch energy companies a year but at an average of £60 a switch it must cost these "poor" suppliers millions.

Yep referral fees, I actually have some dealings in that side of things.

If you are big enough mind, and the comparison site strong enough you just buy out the comparison site, hence why so many are usually owned by someone with a vested interest.

bristolleedsfan

Consumerist said:

and they go forward with a customer base which has grown by 580,000; it would probably have taken many years to achieve such growth organically.

Approx 1 year based on https://octopus.energy/about-us/  "Since then, we've been picking up 50,000 customers a month on average"

Consumerist

bristolleedsfan said:

Consumerist said:

and they go forward with a customer base which has grown by 580,000; it would probably have taken many years to achieve such growth organically.

Approx 1 year based on https://octopus.energy/about-us/  "Since then, we've been picking up 50,000 customers a month on average"

So, the arithmetic is starting to emerge.

If most of these customers switched through comparison sites to which Octopus might pay £60 a throw they could be saving something like £35M in the long run by getting them overnight for "free".

polymaff

bristolleedsfan said:

Consumerist said:

and they go forward with a customer base which has grown by 580,000; it would probably have taken many years to achieve such growth organically.

Approx 1 year based on https://octopus.energy/about-us/  "Since then, we've been picking up 50,000 customers a month on average"

And, for the forseeable future, each of those is another nail in the coffin..