The electricity retailer Powershop, which makes it possible for its users to play the electricity market, is set to roll out its system to the United Kingdom.
An announcement was made today that Powershop, which is owned by Meridian Energy, has committed to a franchise arrangement with the German firm Npower that will allow them to use the brand and service platform in the UK.
Meridian organised a similar franchise deal in 2013 that led to Powershop being introduced across Australia. This move meant that the total number of customers that use the Powershop platform now sits at around 110,000.
As the UK face of the German utility company RWE, RWE Npower is one of the big six energy companies in Britain. It is currently reported to manage more that 10% of the 50 million gas and electricity accounts throughout Wales, Scotland and England.
Ari Sargent, the chief executive of Powershop, has said multiple times that the customer satisfaction records of the big six is “abysmal”. He believes that many of them are starting to lose their customer to smaller energy companies but that these energy companies are lacking in terms of new technology and innovation.
He went on to say:
“They[the big six] see declining market share from new entrant players, but there’s not the same level of innovation as what we see in New Zealand. There’s innovative sales approaches but not innovative service models.”
“There’s other players there with in excess of one million customers without having to do much innovation to be honest. They haven’t had to work particularly to get where they’ve got, so a disruption like what we’ve had in the New Zealand/Australia market should be pretty successful.”
“The players up there are competing on A, we’re not one of the big guys, or B, discounts, and I guess it’s a different level of competition we’ve got down in this part of the world, which is inevitably going to hit the UK at some point in time.”
Meridian released a statement, which said that the newly agreed franchise would allow Powershop to enter the UK market “without carrying wholesale energy market exposure”.
Mark Binns, the Meridian chief executive, said:
“The licensing deal gives Powershop the opportunity to sell the technology and know-how its team has developed, with no exposure to foreign wholesale energy markets and minimal capital outlay”.
It is understood that the potential returns were connected to how well the franchise performed in the UK market.
“The remuneration is confidential but there is some skin in the game for scale, but there’s also a fixed component”.
It is fair to say that Powershop has seen great success in New Zealand. It received a customer satisfaction rating of 96% in both 2011 and 2012. It was also rated as the best electricity company in New Zealand by the Consumers’ Institute. The Ministry of Economic Development found that Powershop was the lowest priced electricity retailer in New Zealand.