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Utilyx and the TPI Market Debate

Utilyx has the TPI Market Licked

Utilyx, the London based energy TPI (Third Party Intermediary) owned by building services company MITIE have weighed into the TPI debate with some forceful opinions.

Utilyx who claim to manage the energy supply for 10.5% of the total volume consumed by large (I&C) businesses in the UK has apparently declared war on their smaller competitors by labeling their commercial models as “[Keeping] businesses … in the dark on £100 million-worth of ‘hidden’ fees”.

Utilyx’s Managing Director Jo Butlin says:

“We believe it is time customers got full transparency on exactly what fees are being paid for the energy deals they are signing up to. Together with direct regulation of brokers, that is the best way to improve the market, drive more competition and ultimately ensure customers are getting the best possible deal on their energy”

This strikes Business Juice as a strange statement.

We fully support the move for a code of conduct to cover TPI / broker sales interactions in the business energy market, however we strongly believe that customers should be allowed to expect the same standards of service from Suppliers as well as TPIs.

For this reason we have been at the forefront of demanding that suppliers are covered by any code of conduct and that it should cover ALL business energy sales interactions regardless of the parties involved.

Utilyx doesn’t appear to agree. Instead they focus on their fellow TPIs. As a major player in the TPI market this strikes us as odd.

Butlin goes on to say:

“Businesses understand there is a cost involved in the work carried out by brokers but commissions are often included in the price the customer pays and paid to the intermediary by the supplier without the customer‟s knowledge. Often this may be in addition to what the customer is already paying the intermediary.”

We at Business Juice have always operated a policy of full commission disclosure.

In addition our service is free at the point of use.

  • We are only paid the disclosed commission where a sale is successfully registered with the customers’ chosen supplier, where they complete their contract term in full and where they use the level of consumption originally forecast.
  • Suppliers utilise the services of Business Juice in order to keep their costs of acquisition low and to avoid the need to engage in costly sponsorship and advertising campaigns.

We believe this is a prudent and fair approach, Utilyx apparently don’t. Indeed Utilyx have a rather confusing opinion on what should be done instead.

“Under Ofgem‟s current proposals, customers will be able to ask for a breakdown of fees and charges involved but that would only be on request rather than being automatically provided.

“Utilyx believes that unless TPIs are able to demonstrate they have carried out a comprehensive market comparison and have presented a range of offers to customers, any commission paid to them by suppliers should be revealed.

“The detail should be either as an up-front statement to the customer or as part of a line item on the bill where it is included in the rate the customer pays.

“This would give complete transparency to customers on what the TPI has been paid and by whom”.

It is difficult to understand Utilyx’s position here as anything other than shoring up their own business model as opposed to genuinely looking to improve the market for all businesses, whether customers, TPIs or suppliers.

Despite saying “Businesses understand there is a cost involved in the work carried out by brokers”, Utilyx would want a situation where a business who is happy with the service they have received from their TPI and comfortable with their commercial terms with the supplier would be nevertheless burdened with added and unwanted complication on their invoice.

How or why this would be of benefit to any party is difficult to understand.

If a customer wants to know the commission their TPI received for arranging their deal, under the Ofgem proposals they only need to ask and a full disclosure will be required. We at Business Juice do this already without the need to wait for Ofgem’s consultation outcome.

For the supplier, who have apparently faced very real challenges of the printing of customer contract end dates on invoices, to be asked to add new bill lines to an invoice, and to do so accurately would undoubtedly add cost and complexity which the customer will ultimately and inevitably bear.

For the TPI, the inference will be that their service comes as an added cost, when the truth is suppliers’ utilization of TPIs is their most cost effective route to market and the absence of TPI costs would simply be replaced, and potentially exceeded by the direct marketing costs of the suppliers.

We would have expected Utilyx to grasp this evident consequence of their calls.

However what concerns us the most is the statement that reads:

“Utilyx believes that unless TPIs are able to demonstrate they have carried out a comprehensive market comparison and have presented a range of offers to customers, any commission paid to them by suppliers should be revealed.”

What, in Utilyx’s opinion, is a “comprehensive market comparison”?

  • Is it a minimum number of suppliers? If so how many?
  • Is it a full tender process for each customer?
  • Is it the provision of “added value” services in conjunction with procurement?

If a TPI can ‘prove’ they have conducted a “comprehensive market comparison” presumably Utilyx are happy for them to charge whatever they wish both directly to the customer and indirectly via the supplier and have no obligation to disclose any of this information.

Quite how that benefits anyone other than the proposing TPI is utterly unclear.

Utilyx’s expertise is in the high end I&C market, where added value services are the key to their commercial model whilst procurement is the access way into the added value field.

Utilyx will inevitably therefore have a more complex and ingrained commercial structure with their clients based on the range of services delivered. It must be presumed that Utilyx would not find it a challenge to justify a “comprehensive market comparison” whether for procurement or any of their other services.

Utilyx’s experience however is not in the SME market.

Business Juice are proudly and intentionally a ‘procurement only’ TPI.

We don’t believe in charging customers directly whether for our procurement services or for questionable added value services.

What Utilyx appear to misunderstand in the SME market is that suppliers provide a shopping list of customer criteria and an associated price they are willing to pay for that customer type.

It is the TPIs role to match the customer with the supplier, however not all suppliers want all customers.

An SME customer on the same street, using the same amount of energy, indeed operating the same type of business could have an option of 2 suppliers or 22 suppliers to choose from – all depending on their credit score.

As a result, and just taking this simple example, Utilyx’s call for a “comprehensive market comparison” to prevent the need for automatic commission disclosure makes absolutely no sense.

We are not against commission disclosure, far from it; we have operated this policy since our inception as uSwitch for Business in 2009.

We are not against a code of conduct for business energy sales. Indeed we are a seemingly lone voice in calling for this to be extended to all sales interactions to ensure the customer, big or small, using a TPI or contracting directly with the supplier, can be confident in the service they receive.

However what we are against is ill-informed and self-serving statements like those from Utilyx which are focused on protecting and justifying their own business model, at the expense of smaller competitors and at the cost of distracting the industry from its most crucial role: making the market better for every business energy customer.

As a self-styled ‘senior statesman’ in the market we would have expected better from Utilyx.

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