Former small business customers of the failed energy provider CNG have seen their bills increase by 300 per cent, their new supplier has revealed.
Pozitive Energy, which was awarded the 41,000 business customers of CNG Energy and CNG Electricity, said the price hikes were due the fact that CNG did not have any pre-bought gas — through a strategy known as “hedging” — that could be utilised by Pozitive. It was therefore having to buy additional volumes at current prices.
Rocketing energy prices have led to the collapse of more than 70 energy companies, with Harrogate-based CNG becoming one of the most recent, in November last year.
“When [the CNG customers] came to us, we had to supply them at today’s rate, which obviously has gone up by 300, 400 or 500 per cent and there is no price cap for [business to business],” said Steve Daniels, chief strategy officer of Pozitive, which is based in Colchester, Essex.
Daniels said that a number of the former CNG customers — about half of which are small and medium-sized enterprises — were reluctant to sign new long-term deals as they were hoping prices would decrease. Instead they have accepted an out-of-contract “deemed rate” and are vulnerable to fluctuations in the market.
Of the 41,000 CNG customers, 30 per cent have so far signed long-term contracts, with another 15 per cent in negotiation. A quarter have left to go to another supplier.
“So we are now addressing the 40 per cent which are sitting on a deemed price, not deciding to either go with anyone else or to sign a contract with us,” said Neeraj Bhatia, the group chief executive. He said he anticipates that ultimately 60 per cent will become long-term customers and 40 per cent will opt to go to another provider.
Daniels said the process of acquiring the customer book of CNG “has had its challenges”. Among them was the quality of the data on customers, which Daniels describes as “mixed”, as well as dealing with customers frustrated by the inevitable price increases. Pozitive predominantly works through a network of 240 energy brokers.
“We’ve had some [negative] reviews . . . and people shouting at us down phones and all sorts but it’s like ‘Hold on, we’re not the bad guys here’,” Daniels said. “We’ve done as much as we possibly can and more to make this transition as smooth as possible, but you must’ve been hiding in a lead bunker if you haven’t noticed what’s going on in the energy market at the moment. These are unprecedented times.”
He said Pozitive had honoured CNG customers’ credit — something that it did not have to do under the terms of its agreement with Ofgem, the industry regulator that approved the transfer of CNG’s customer base to Pozitive. Another high-profile transfer included passing on 2,000 business customers of the collapsed provider Ampower to Yü Energy, also in November, and Ofgem also decided to place Bulb, which has 1.7 million customers, into a special administration regime.
Daniels and Bhatia set up the business in 2016 after working as brokers themselves. They said Pozitive would have annual revenues of £380 million when the CNG customers are included, and that it has consistently made “a small” profit.
Daniels said he was confident those former CNG business customers choosing to remain at Pozitive would be satisfied with the service they received. It supplies a range of businesses, from “a small corner shop” to large corporates including the likes of the logistics firms DHL and FedEx, the motorway service station provider Welcome Break and Gucci, the luxury fashion brand.
He said the company’s customer renewal rate was 90 per cent, which he claimed was “the highest in the industry”. It uses technology to reduce its operating costs, passing those savings on to customers, Bhatia added.
“Our peers’ ‘cost to serve’ is around £12 per megawatt, [whereas] our cost to serve is around £2 per megawatt because we have deployed technology [including] artificial intelligence and machine learning,” Bhatia said. “What 26 people do in our company, other companies have 250 people doing the same job.”
Pozitive employs 220 people, including a large IT team in India.
Pozitive also provides technology and consultancy services free of charge to its customers to reduce their overall bills, he said. “It is very important for businesses to understand their energy profile throughout the day.”
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