"Why not give share ownership straight away?"
This one requires a slightly technical answer…
Share ownership requires companies to keep a share register with the level of detail and complexity of this register depending on the type of company. It is far easier to maintain a share register for a Public Limited Company (PLC) than it is for a Private Limited Company (Ltd). We have, therefore, sought legal advice and have been told that, as a Ltd company, it would be a logistical nightmare to maintain a share register to the required standards for such a large sum of customers. The bureaucracy for this reason would be colossal. We want to be able to focus on our customers, the way we serve you and involve you and not create a bureaucracy.
So why not just become a PLC? That would have been our first choice however, turns out you need to have traded as a Private Limited Company for two years and have £50,000 of issued share capital. For this reason it is not possible at this time due to the fact that we have neither of these. So, shame that it is, we will have to wait a couple of years in order to qualify. Following this two year waiting period, we will change the legal status of the business from Private Limited Company to Public Limited Company. It is at this point that we will look forward to hosting a fantastic party and look at handing out our first shares for free to our valued loyal customers.
"Why not become a co-operative?"
Co-operatives are a wonderful concept and we have often drawn inspiration from co-operative models, both at home and abroad, whilst developing People’s Energy. We are business people however, with decades of experience helping small private businesses grow and this is where our expertise lie.
What we have in People’s Energy is a hybrid combining elements of a co-operative with a traditional energy company, believing that it marries the best of both worlds together.
We have been working flat out on People’s Energy for a long time now and, like you, have families and responsibilities to care of. For this reason we do require to make a reasonable living out of this company but, in turn, all remuneration we receive will be completely transparent and open to negotiation with our customer shareholders.
"Why should we believe that you will succeed? Why has no one else done it before?"
It is certainly true that we are not the first well intentioned energy company in the UK, however we believe that what sets us apart is that we are realistic about our future. Firstly, we are honest and not making wild promises. We are focusing on coupling our profits back scheme with competitive, fairly priced energy tariffs which has given us a secure and sustainable business model.
Secondly, we are currently funding our launch through Crowdfunder rather than seeking out investors. It is easy to start off as an ethical supplier but be directed “off course” by the pressure of providing your investor shareholders with the returns they were looking to receive. Crowd sourcing this kind of capital is a challenge, however we rise to this by simply not allowing People’s Energy to enter the desires of profit hungry investors.
We will launch this Spring with no other mission statement than “to do right by anyone who grants us the responsibility of supplying gas and electricity to their home”.
"How is this different to the Big Six?"
Every company out there will tell you “they’re putting customers first”, and it can be hard to know who to trust but don’t fall for the slick spiel, demand evidence. Here’s some:
- We will return 75 percent of our profits back to customers. No other UK wide company does this.
- We will also give customers a democratic vote in the future of the company. Tell that to one of the Big Six and they’ll tell you we’re crazy. We however, think it’s crazy not to give your customers a voice.
- But the fundamental thing which separates us apart from our competitors is that we want YOU to own US. We want to keep transferring customers shares in our company until you, the customers, own the entire company. No one can sell their shares which means that the company will always be in UK customer’s hands. It also means that we answer to you, not to investor shareholders who will always put profit before the well being of the customers.
"What is the catch?"
There isn’t one……honestly…..we are genuine about wanting to make this work for you and not for some “fat cat” shareholders.
In the first few years, as we get the company up and running and acquire more customers, there will not be much profits to pay back to you. We, therefore, need your help in sharing this opportunity with as many of your friends and family as you can as, the more people we get involved in this people owned company, the better the return for you and the faster we can start paying you an annual rebate. Our forecasts project significant growth in the first three years and an opportunity to break even by the second year. This means by year two you will start to “reap the benefit” of being part of a customer owned company.
Help us grow fast and your return will come quicker…
"Why don't you just lower the prices?"
Let us clarify that ethical does note have to mean expensive, we are not selling fruit and veg. We can offer prices in the lowest quartile of the market so you will be enjoying a desirable deal even before you get your rebate of profits back.
The latest events in the energy market (with the demise of GB Energy) also shows that a business model built on a promise of the lowest cost, whatever it takes, is not necessarily a sustainable model. In our extensive financial modelling (Duncan has pored over those number for weeks and weeks) we have built in careful hedging processes that we believe will create a robust and resilient business.
We are operating a ‘cost plus’ model where we set our prices against the wholesale price and then add costs and do not base the price on what the competition does, as most others do. When wholesale prices are low then so are your tariffs. This means that we will always charge enough to make sure the business can stay in business (otherwise what is the point). We will not always be the very cheapest but, as the profits grow over time and you receive your percentage of the profits back, you will always receive the fairest and best deal wherever possible. That is, we are sure that you will agree, more than most companies can promise…
We would like to add that returning profits is about so much more than a great tariff and believe that it is about sharing our success with the people who make it possible, you, the customers. It is about proving that, when we use words like ‘partnership’, we have thought deeply about what they mean and have built our company around them.
"None of the senior team come from the energy sector?"
Ok, so what you are really saying is “should we trust you with our energy?” And that is a fair question…..
We believe our different backgrounds are our strengths. We are not looking to create another Big Six-like company but want to offer you something very different. The core skills and interests of the team centre around “people”, “our customers” and “our staff”. Listening and respect is core to who we are and that is why we will give profits back, shared ownership and offer transparency in all our that we do. We are all very experienced business people with a strong understanding of how to make businesses work effectively and sustainably.
Of course running an energy business is not just like selling home grown potatoes at the end of the driveway, it is very complicated. We are working with several experienced energy professionals, hedging advisors and are currently in the process of recruiting an energy analyst and hedging specialist. We want the best of both worlds, strong energy experts and an unconditional focus on our customers’ needs.
"Are you green?"
Yes, we will offer a green option with our two tariffs being ‘lean’ and ‘green’. Lean is the cheapest available package whereas ‘Green’ offers a fully renewable package. We want to give you, the customer, a real choice and an option to use renewable energy.
Over time, we want to hear what matters the most to you. By this, we want to know, do you want the cheaper prices or do you want more renewables? This will determine where we go from here and you have influence on the direction of the company – you decide!
For people who want to go ‘green’ but can not afford it just now, they can choose ‘lean’ for a period and, in months where their bank balance is a bit healthier, they can switch to ‘green’. This is a perfect example on how flexible our energy supply can be, a flexibility that you will not get anywhere else.
It is a bit more complicated than ‘green’ or “not-green” however. No energy company can sell ‘green gas’ and the electrons coming through your electricity cables are just that, electrons. You can therefore never know for sure if they come from a windfarm or from a nuclear power station. In light of this, we aim to offer the most genuine ‘green’ option where we will seek partnerships with local renewable suppliers, allowing us to deliver electricity produced in the local community.
"How will you ensure your suppliers are ethical and fair too?"
“Are they not just a big businesses themselves?”
This is a good question and something that we have debated a lot too. Our aspirations are to use local, ethical businesses wherever we can. In the first couple of years we will need to be as cost effective as possible to move towards making money for you faster and create a robust business on your behalf. We will aim to gradually, as we build greater resilience, establish partnerships with local, ethical companies within the community. It is fair to say that, as you will be on board, you will have a say in our choice of suppliers along with all other important decisions that will arise as we move forward. When we have launched we will be looking to run a ‘People’s Energy Lab’ where you can throw in any idea that you may have and we will test it and trial it where possible. We, like you, want an ethical approach all the way through the supply chain.
"How much does 75% profits back really mean – how much will I get back?"
We wish we could give you an exact answer that would allow you to calculate your household bills for the next few year but, the honest answer is, it depends…
As you are aware, profits will depend hugely on the wholesale prices of gas and electricity. Couple that with our determination to run a robust and resilient company that does not offer unsustainably low prices, for example, like GB Energy did. This means that we will run a carefully balanced approach between matching prices closely to the wholesale prices, meaning lower profits but lower prices, and retaining enough money to be able to deal with fluctuations in prices. To ensure to do this well we are currently in the process of appointing an expert energy analyst and hedging specialist.
All this coupled together means that it is hard to give you an exact sum and, in addition, your rebate will depend on your annual spend too. It is fair to say that those who spend more will get more back. Our calculations do, however, at this point suggest, roughly £50 back per year for an average household.
"What about the remaining 25% profits? Who gets them?"
We do initially for the first seven years but will keep some of the profits within the company to put into its future growth and development. This will also be used to create cash reserves so that the business does not run out of money when wholesale prices rise suddenly. This will build a secure, robust and resilient company.
Some will, in addition, go to us, the founders and leaders of People’s Energy but only a small sum of around 25% or less. As we grow we will also give profits back to our staff as they matter and want them to feel that. Like the John Lewis Partnership, we want our staff to be partners in the business and feel vested in our success. We, the team, all have families, bills to pay and pensions to establish like most of our customers and we are not ashamed of our desire to make some money from this venture. We do not however want to fall into the greed trap and that is why, once the company is well established and profits have grown, we want to give 75% of the profits back to you.
"Will you go bust (like GB Energy)?"
GB Energy focused on always offering the lowest possible tariff. Whilst we also want to offer you low prices, they will not necessary be rock bottom but within the lowest 25% on the market at that time. We cannot always guarantee the lowest cost becuase, as GB Energy has demonstrated to us in the past, of what might happen if that is not backed up by an absolutely solid hedging strategy if that approach does not allow for adjustments that take into account fluctuating wholesale prices. We want to run a successful company on your behalf, as our customers and take that responsibility very seriously.
Our ‘cost plus’ model helps ensure that we are always sensible and link our income through tariffs to what it costs to buy the energy and it always guarantees you fair prices.