Tomato Energy (Electric Only Supplier) - Too Good To Be True ?

lohr500

coupleuk said:

QrizB said:

Newbie_John said:

But again, at glance TE Lifestyle is the only tarrif that has the super low overnight rate of 5p.

Utility Warehouse offer 5p overnight on E7, but IIRC the daytime rate is 40-something to compensate.

BUT with UW you have to take extra products through them like phone, broadband etc etc to get their better rates

True, but with no extra products in my region, they are offering variable rate E7 at 4.887p off-peak, 37.557p peak, 55.732p s/c.

I did take out a SIM card as well with them back in November to lock in a 12m fix with lower rates at the time.
With our high usage (+/-19000kWh pa.) and 99.6% off-peak, it worked out at just over 6% more costly then TE, but without all the headaches over incorrect billing and worries about potentially ending up with a SOLR for any length of time.

MWT

Newbie_John said:

QrizB said:

Newbie_John said:

But again, at glance TE Lifestyle is the only tarrif that has the super low overnight rate of 5p.

Utility Warehouse offer 5p overnight on E7, but IIRC the daytime rate is 40-something to compensate.

Bu that's the problem - TE offers cheap peak, lower additional periods and cheap over night rate.
With everyone else you need to choose something to sacrifice.. 

... and ultimately that is also why they are where they are today...

Totally get why customers enjoy it while it lasts, but it isn't a viable long term position to be cheap at all times sadly.

superkoopauk

coupleuk said:

QrizB said:

Newbie_John said:

But again, at glance TE Lifestyle is the only tarrif that has the super low overnight rate of 5p.

Utility Warehouse offer 5p overnight on E7, but IIRC the daytime rate is 40-something to compensate.

BUT with UW you have to take extra products through them like phone, broadband etc etc to get their better rates

The extra products only discount your standing charges (on a variable tariff).  If you want a good fixed from them though you will need to get other services.

Newbie_John

MWT said:

Newbie_John said:

QrizB said:

Newbie_John said:

But again, at glance TE Lifestyle is the only tarrif that has the super low overnight rate of 5p.

Utility Warehouse offer 5p overnight on E7, but IIRC the daytime rate is 40-something to compensate.

Bu that's the problem - TE offers cheap peak, lower additional periods and cheap over night rate.
With everyone else you need to choose something to sacrifice.. 

... and ultimately that is also why they are where they are today...

Totally get why customers enjoy it while it lasts, but it isn't a viable long term position to be cheap at all times sadly.

I disagree, take a look at average prices on Agile for the past year - and now that TE charges 25p for most of the day:

+Their Tomatopia, using own free cheap systems, not having 1000s of employees..

masonic

Newbie_John said:

MWT said:

Newbie_John said:

QrizB said:

Newbie_John said:

But again, at glance TE Lifestyle is the only tarrif that has the super low overnight rate of 5p.

Utility Warehouse offer 5p overnight on E7, but IIRC the daytime rate is 40-something to compensate.

Bu that's the problem - TE offers cheap peak, lower additional periods and cheap over night rate.
With everyone else you need to choose something to sacrifice.. 

... and ultimately that is also why they are where they are today...

Totally get why customers enjoy it while it lasts, but it isn't a viable long term position to be cheap at all times sadly.

I disagree, take a look at average prices on Agile for the past year - and now that TE charges 25p for most of the day:

You seem to be conflating the most common tariff rate with the price customers are paying for most of their energy. That's patently flawed, or there'd have been no impetus to join them. Most customers on TE lifestyle will be paying less than 15p/kWh on average. Taking the vanilla tariff for example, they'll be getting 5 hours at 5p, during a time the average Agile rate is around 14p, two lots of 2 hours at 14p when Agile rate averages about 18p, and the remainder at 23p when Agile is anywhere from 15-38p. It is a fair assumption that they'll have a group of customers on their Prime tariff, who they'll make a little profit from, and that all other customers will be paying less than they would on Prime - otherwise why stay on another tariff.

Time of use will have a huge impact on profitability. When I was on Lifestyle, virtually all of my peak usage was between 5-7pm, and I load-shifted as much as possible into the 5p slots and to a lesser extent the 14p slots. I was averaging about 13p/kWh and I don't think any of it would have been cheaper on Agile at the time, except for those (rare at the time) price plunges.

But the above assumes TE is buying day ahead on the wholesale market, which would be super-risky for a fixed tariff, and the reason why many prior energy suppliers failed. So they are probably forced to enter into forward supply contracts, where the pricing would differ from day ahead, and having entered those agreements last year for many of its customers, probably agreed to higher prices than current wholesale prices.

If you are comparing with a company (Octopus) that made fairly minimal levels of profit per customer in its most recent accounts, and also has greater economies of scale, and saying simultaneously that you are saving lots of money, but that TE is still able to profit from you as a customer, then I'd love to know how that works.

Newbie_John said:

+Their Tomatopia, using own free cheap systems, not having 1000s of employees..

Tomatopia may be a bit of a cash cow for them, with which they can cross-subsidise the energy supply side of the business to bring down prices, but in essence it is a hire-purchase agreement where they'll make money from interest on loaned kit. It seems to be contingent on customers switching to TE, which they cannot currently do, so all sales must currently come from existing customers. I wonder what percentage of existing customers would be taking it up this year. My guess would be a very low number. So how many £99.99 monthly payments will be rolling in, and how much of that £99.99 is surplus income with which they could use to reduce energy prices for their other customers?

If we're doing additions and subtractions, the big minus will be what is being paid out for MyWatts to the parent company (amounting to about £400 per customer per year), and other inter-company loans. Then there are the bill write-offs, compensation from failed switches, cost of defending winding up orders and complying with Ofgem's investigation. I suppose maybe they are gaining a little through the policy of not paying their creditors for as long as possible. They are also not having to spend any money on sales and marketing, given the new customer ban.

On employees, TE had 118 employees at the time this was last disclosed. We know from the Ofgem action they had about 12,000 customers recently. That's a ratio of 100 customers per employee.

Compare with Octopus Energy, who had about 8.5k employees, and has about 9m customers. That's a ratio of over 1000 customers per employee. Much more efficient.

Newbie_John

There's a lot of assumptions taken..
Before TE opened to customers, they were selling electricity to businesses and students, no idea on details here but I would assume this to be heavily day focused - so there's a high chance they could have a source of cheap rates overnight. 

No doubt they've taken a risky innovative approach - but that's the only way to grow big - look at GreenEnergy out there since 2001 and most of us haven't heard of it, Octopus on the other hand fairly new and now largest provider.

masonic

Newbie_John said:

There's a lot of assumptions taken..
Before TE opened to customers, they were selling electricity to businesses and students, no idea on details here but I would assume this to be heavily day focused - so there's a high chance they could have a source of cheap rates overnight. 

No doubt they've taken a risky innovative approach - but that's the only way to grow big - look at GreenEnergy out there since 2001 and most of us haven't heard of it, Octopus on the other hand fairly new and now largest provider.

If looking back into the past, a lot of assumptions are required. They had a total exemption for their accounts prior to the most recent filing. However, we know that their turnover for the 2022 calendar year was £30.6m, and this increased to £64m in 2023. Most of their growth would have come in 2024. So the fraction of revenue coming from the pre-TE era is likely to be quite small.

I'm afraid I don't follow the logic that they'd have some source of cheap overnight rates. Energy imported by their domestic customers will be delivered by the grid, and as far as I'm aware, TE is not selling energy to the grid and able to buy this on the cheap. Senapt's EaaS write-up suggests businesses using that service get the benefit of selling any exported energy on the market with Senapt (not TE) taking a commission.

I agree that superficially, the proposition is innovative and has a lot of potential. But where it falls down is in the capitalisation of the business, and the unethical and deceitful practices of its principals, notably its CEO. I fear that may be its downfall (rather than anything wrong with the proposition itself). It's very common for new entrants to markets dominated by established players to sell products and services at a loss to build their market share, and they generally do so with the backing of investors with deep pockets. What makes TE's approach risky is that they are clearly technically insolvent even if they just about have sufficient cashflow to operate, albeit while upsetting their creditors. They have de-risked the situation for themselves significantly, by placing most of the infrastructure in parent company Senapt, and charging multi-million pound software service fees to extract money from TE. Should the latter fail, Senapt will go on, albeit with some reputational damage within the industry.

MWT

masonic said:

 Should the latter fail, Senapt will go on, albeit with some reputational damage within the industry.

Senapt may have some inertia from retained payments received, but they ended up buying Tomato (Logicor) because that was their last customer and they were about to have no customers...

Not sure they have gained anyone new since then...

masonic

Alongside Tomato, they have Assured Energy (business supplier) and The Student Energy Group listed as customers, but Tomato would be their key proof of concept customer for domestic supply.

MWT

masonic said:

Alongside Tomato, they have Assured Energy (business supplier) and The Student Energy Group listed as customers, but Tomato would be their key proof of concept customer for domestic supply.

There is a bit of double counting going on there I suspect.

The Student Energy Group is a white label customer customer of Tomato, and Assured Energy appears to be a broker not a supplier so arranging to switch customers to Tomato (... and all the other major suppliers)