“Careful planning” and monitoring of financials is helping People’s Energy to thrive in the turbulent supply market.
Speaking to Current± about the closure of a number of small energy suppliers in the last few years in the wake of Robin Hood Energy’s customer base being sold to Centrica earlier this month, David Pike, CEO and co-founder of People’s Energy, said that the news was “disappointing”, especially due to the supplier being sold on to a Big Six member.
However, when asked if the news of another small supplier having struggled to continue on was concerning as a fellow small supplier, Pike stated that this was not the case due to People Energy “paying a lot of attention” to its cash “to make sure we’ve got a robust business”.
It’s this monitoring and planning that is allowing People’s Energy to have success in the market, with the company opening up a new office in Selkirk last month, a move which will create an additional 100 jobs.
Several suppliers have struggled to pay their Renewable Obligation fees, something that was not a problem for People’s Energy, with Pike stating that “we could have paid it twice if we needed to”.
People’s Energy was started via crowdfunding – whereby people were given energy in return for the money they put in to help the company crowdfund capital to start up – and has since been put into a community interest company, and is therefore unable to secure private investment due to its lack of shareholders which can create challenges.
The company, which Pike said he thinks is the largest social enterprise in the UK due to it turning over over £200 million per annum, has therefore had to be “really careful with every bit of money that we’ve got to look after”.
“We only had half a million pounds of crowdfunding money to start with, so we have to be extraordinarily lean. My background is in lean manufacturing, so we’ve applied some of those lean principles to the business here because we knew we’re very unlikely to get any more funding, especially when so many companies have gone bust.
“It’s very, very careful planning, and implementation and monitoring super carefully of what’s going on,” Pike continued, adding that the senior team meets daily to decide “what are the most important things we need to focus on, and then get that communicated across the whole company”.
The selling off of Robin Hood “leaves us as the only community-based, ethical-based entity left that we’re aware of. All other energy companies are for profit and to service the shareholders,” Pike said.
As part of this, People’s Energy has pledged to pay back 75% of its profits to its members. This was done in a bid to help build trust in the energy market again.
As Pike explained: “If we really want to restore trust, then what would we have to do to is absolutely demonstrate to everybody that it’s for the people, and it’s not for shareholders. The only way we thought we could do that was to make sure we get most of the profits back to the customers so they can see that there isn’t profiteering”.
“We wanted to make sure that the customers had a voice and that we did really listen to them. So our customers elect representatives themselves to sit on the Advisory Board. Our customers have direct access to us and can say, ‘this is what we think you should be doing’ to make sure that we don’t lose sight of what they want”.
People’s Energy also recently launched a new supplier, dubbed East Lothian Energy, in collaboration with East Lothian Council. The supplier is to offer two discounted tariffs – a fixed tariff and a variable tariff – to residents in a bid to tackle fuel poverty.
This marks the first step, with Pike confirming the company is “talking to other council’s across the country”.