A specialist energy supplier servicing the lettings sector has missed a £14.4m payment and is looking to merge with a so far un-named company.
Spark, which sells its utility packages through letting agents to whom it pays commission, missed its renewables obligation payment due at the end of October.
The company – which says it is a profitable £23m turnover business – said that it has met all its payments in previous years, and that it missed it this year “in common with an unprecedented number of other suppliers”.
It said that the payment has been deferred pending discussions with Ofgem.
Chief executive Chris Gauld, who led a management buy-out of Spark in 2016, said: “There is little doubt that these are difficult times in the industry.
“We’ve built up a strong, growing energy business over the past 11 years.
“However, the UK Government’s announcement in September that it was capping domestic energy bills at £1,137 a year based on a typical dual fuel customer has caused chaos in the industry.”
Gauld revealed Spark had been in discussions with a “number of other energy companies” in recent weeks.
He added: “As a result, we are now in merger negotiations with another medium-sized UK energy supplier and both of us believe this offers a long-term solution which would create a sustainable business of scale. However, we are taking nothing for granted.”
Gauld predicted that the price cap could force other independent entrants to the energy sector to the wall.
Spark works with letting agents to sell energy and broadband packages to tenants.
It currently has some 500,000 customer accounts and employs over 400 staff at its Selkirk headquarters.
Comments (4)
Is this company still going? I recall they were fined a few years back heavily by Ofgem for all sorts of irregular and unlawful practices, illegal terms and conditions and customer complaints while they feathered the nest of some big agents. They used to refuse tenants, that were pushed to using them by agents, from changing utility supplier, that was stopped, so no wonder they now have more competition to contend with.
As the letting fee ban comes closer and closer agents will naturally become more receptive to income opportunities and cost savings.
Buying into the supply chain is something larger firms make part of their overall business plan. The fees ban will put pressure on 3rd party service suppliers as their fixed costs and profits could so easily be absorbed as income opportunities for the agents who are generating the opportunities.
500k accounts is about 2500 agents worth, It doesn’t take a big leap to see how £23m shared out across 2500 agents would go some way to off-setting the fee ban.
As the story says, a lot of agents are already receiving commission for utilities management. I think its possible to remove a tier from the supply chain and give agents access to the fixed costs and profits currently enjoyed by 3rd party suppliers.
Lettings and sales agents already have regular and necessary comms with tenants and applicants it’s daft to ignore the income opportunities that are currently being ignored in favour of commission on a sizeable income.
Conceptually? Absolutely
Practically? getting 2500 agents on board? Hmmm, not so sure.
It isn’t a case of getting 2500 agents to do anything as a collective group. The hard part is done; assembling near whole of market utility suppliers. Providing UM as a wholesale product or as a service means the concept grows with agent need or demand.