ARE OCTOPUS ENERGY ANY GOOD?
Yes, yes, yes, yes and yes!
Apart from being the Which? highest ranking energy supplier for 2020, providing 100% green energy and embracing technology Octopus energy do not treat customers like fools. Octopus energy encourages those who love tech too reimagine and engage with them in order to make their energy supply even greener. They provide support online via social media links (which I love) and keep customers fully informed of developments within their company. As if that’s not enough they are also, in my opinion, a highly ethical company and an inspiration for a greener future!
We are in a global pandemic and how companies treat their staff speaks volumes! I have seen both the good and bad over the last few weeks and was delighted to read Octopus Energy’s latest blog on their Covid-19 challenges.
WHAT HAVE OCTOPUS ENERGY DONE DURING COVID-19 PANDEMIC?
FOR THEIR STAFF
Since Monday 23rd March, the Octopus office-based team has moved entirely to working from home.
Octopus has established OctoKids and OctoTV to help parents balance work with looking after their kids. Some teams have set up buddy systems, making sure no one working from home ever feels isolated or lonely.
Octopus Energy maintain full pay for everyone we employ directly. Where people can’t work, we may use the government’s furlough scheme and top salaries up to 100%.
Octopus gives employees access to company resources (like vans and computers) so they can assist in NHS and other volunteering programmes.
For engineers who need to go to peoples homes Octopus Energy are providing special training and equipment in the wake of Coronavirus as well. They are expect to upgrade from protective coveralls and face masks to full Hazmat suits as of March 30th where they’re necessary.
FOR OCTOPUS ENERGY CUSTOMERS
Octopus Energy phone answer times, and email response times have been fairly good. Overall service levels have been about the same as pre Covid-19 and are expected to keep improving!
Now this is where it becomes interesting. I was trying to summaries Greg Jackson, the CEO of Octopus Energy’s comments about how he is trying to help customers but I just can’t. I am usually good at skipping through peoples waffle and finding the hidden meaning BUT there isn’t one!! It is an open and honest response just as I have come to expect from their CEO.
Well done on being so upfront and for doing so much! I wouldn’t expect anything less!!! It’s very odd how as a family we feel we know you Mr Jackson!! I couldn’t say that about any other provider for any home service we’ve been with. Stay safe!! This is the reason I stick with you! Stay safe!!
THIS SECTION IS A DIRECT QUOTE FROM THE BLOG OF CEO GREG JACKON – 30TH MACRH 2020.
How working from home impacts customer bills
Our data scientists have done some initial analysis using smart meter data and found that a typical household moving from working out of home to working at home will use around £3-£5 per week more energy at the level of the government’s energy price cap (read the analysis in full here). There’s two things to note about that – an Octopus customer pays less than the price cap, and we also expect this £3-5 weekly figure to come down with reduction in gas usage as we start to hit warmer months.
I am conscious that for everything I write, there will be exceptions – and some very serious ones – but for most households, this extra energy consumption is not likely to be the big driver of hardship. Indeed, for households with the same income as before, the increased energy cost of £3-£5 per week is a lot less than the typical cost of commuting (about £66/month). Of course, in a household where one person has lost their job, and another is working from home, they’ll see drop in income and higher energy costs – and similarly for people with commission and other variable earnings. We recognise those differences. Similarly, we also know that for many households lockdown has led to lower outgoings. Everyone’s circumstances are different, but on the whole, drops in income are more instrumental in making it difficult to pay energy bills than the fact that people are using more energy at home.
So, what are we doing to help when people have had big drops in income as a result of Covid-19?
First – we signed up to a government charter which outlines the support energy companies are voluntarily giving to customers.
This has been covered by the media “energy companies to waive bills” or similar, but when you read the charter it’s much more nuanced. For example, here’s the section on helping people whose finances have been impacted:
‘Based on individual circumstances, this could include:
– Considering reassessing, reducing or pausing debt repayment and bill payments for domestic customers in financial distress.
– Considering referring customers who are struggling to pay to third party debt advisers such as StepChange and Citizens Advice.’
This fairly low level commitment is the current reality not just for Octopus customers, but we believe for customers of other companies as well.
We’d love to do more – and our team and I have been working night and day with other energy companies, EnergyUK (our trade association), Ofgem and Government departments (BEIS, Treasury) to try to find a solution for people who need it.
I’ve been asked why Octopus aren’t, for example, just giving all customers a blanket payment holiday – or even writing off bills. I heard someone on the radio saying “these energy companies make so much money, why can’t they help?”
I’d like to show respect to customers and all readers by responding to this candidly – even when it could mean my words are misrepresented – but I’d rather be open and clear than opaque and evasive.
Energy companies – at least most – don’t make shedloads of money. Octopus lost £29m last year. Our rivals, Bulb, lost £129m. And here’s Centrica’s share price over the last 5 years:
Of course – there’s a reason for all these. In our case, and perhaps Bulb’s, we’ve been investing in growth – payments to comparison sites, for example, are not cheap. In the case of the incumbents, their inefficiency has made it hard to handle price competition from companies like ours.
But underlying it is a fact of the modern energy market: margins are wafer thin. The CMA (government authority) reckons energy companies should make 1.25% margin. We’re very efficient and target 3% – and expected to hit something like that next year. This year was roughly breakeven at what’s called the EBITDA level. I can’t speak for other companies – but this is the way energy should be – super low margins meaning that customers get better value. That’s exactly what we’ve been fighting for since we were founded – better value for customers.
So as a typical example from the numbers above – If a company makes a 3% margin, then for every customer spending £1000 (roughly the average annual energy bill), it makes £30 profit. If a single customer doesn’t pay, it loses £1000. So a single customer not paying wipes out the earnings from 33 others. So if just 1 in 33 customers doesn’t pay, the company goes from profit to loss. On the CMA’s 1.25% figure, it’s worse – 1 customer not paying wipes out the earnings from 80 other customers.
At Octopus, we take a long term view of everything – it’s why we’ve invested in the systems and people to make energy cheaper and greener, rather than focusing on short term profit.
So we are hugely aware that a time like now is a time to focus on doing the right thing – and I’m very happy to take a financial hit throughout this period to help customers affected by Covid-19.
But from the numbers above, you can see that we can’t take a massive hit. Helping 3% of customers is enough to send a company like ours into losses – and the numbers in energy are huge.
Our estimates are that 10-20% of UK households could see significant drops in income from Covid-19, so let’s take the middle of that – 15%. If we help 15% of customers by waiving their bills, the first 3% wipe out any profit. The next 12% are pure losses. Using Octopus as an example – we have 1.5m customers – so our revenue is about £120m a month. 12% of this is £14m.
So Octopus would be losing £14m a month. If the Covid-19 crisis lasts 3 months, it’d be £42m; 6 months, £84m. That just wouldn’t be sustainable. And of course, the economic impact could hit payments for longer than the immediate health crisis.
And that leaves us in the difficult position that we cannot help everyone we would ideally like to.
Instead, we’ll be working hard to ensure that customers who can afford to pay keep doing so, and that we do everything we can to help those who’ve been affected on a case by case basis – but we’ll need to be selective and that’s hard. Really hard.
Which is why we’re working tirelessly with other energy companies and the government to see if there could be a uniform approach across all companies to provide standardised levels of help – and mean that it’s not down to the lucky dip of which energy company you’re with, but your circumstances, which define the outcome.
And it’s why we ask people to be understanding – we’re working hard to ensure we push our own finances to the max to help everyone with service, and those who need it most financially. And we know that our customers will do the same.
With everyone doing their bit, we can all emerge from this crisis together. We’re just at the beginning and we’ll push in every way we can to try to make things work for everyone.
TIME TO RETHINK HOW WE USE ENERGY!
Switching to renewable energy will have the biggest impact on your carbon footprint. Recycling and using public transport, as an example, will also help but by far switching to renewable energy will have the greatest impact. If you are not using green energy please switch today!! It is something you can do in 2 minutes online. We need to act and we have to act now! We can make a difference to our planet. I have created this website to help give my view on Octopus Energy. I hope it will reassure you that switching is the way to go!! We all have to do our bit and whilst in isolation, this is a part of mine.
I hope everyone reading this stays safe. I salute the emergency services. Stay well and share the power of love and kindness by making a difference. Step up and do what you can. I’ll see you at the party hopeful on the other side. We will get through this!