Co-operative Energy

Our Verdict

With no particularly competitive energy tariffs, some well publicised customer service issues to deal with and standard variable tariffs which, following the 1 October 2016 price increase, will be £49 a year more expensive than the standard variable tariffs of the Big 6, Co-operative Energy seems to us to be in a bit of a pickle at the current time. In fact, anyone with Co-operative Energy should be seriously thinking about ditching them for a cheaper deal elsewhere. Customers on the standard Pioneer Variable tariff can save a massive £374 by switching to the cheapest deals (and that is for average energy usage).

We admire their bold aspiration to be different in many areas. However, with many of their policies off track and given their current pricing and service situation we have to wonder whether Co-operative Energy is able to compete in this marketplace.

Company Description

Overview and History

Co-operative Energy, with over 200,000 customers and annual revenues of over £200m is now classified as a mid-tier supplier.

The company was incorporated on 18 August 2009 as a "pre-packaged" energy supply business by Utiligroup Limited. The company was then acquired by The Mid-Counties Co-operative Limited on 21 October 2010 and is now a wholly owned subsidiary of The Mid-Counties Co-operative Limited.

Cooperative Energy started supplying energy to domestic consumers in December 2010. It enjoyed initial rapid growth in customer numbers, particularly in 2012 and 2013, although the growth rate has slowed since then. It currently supplies over 200,000 domestic customers with gas and electricity contracts. The company first turned a profit in the financial year to 25 Jan 2014 and moved into a positive net asset position in the financial year ending 24 Jan 2015.

Claims and aspirations

Co-operative Energy came to the energy market with a number of distinct claims, propositions and aspirations. Here we summarise and review the main claims.

Coop energy's first claim to being different was that, because it is a co-operative, customers have a say in how the society is run and where the supplied energy comes from. Technically Cooperative Energy is a limited company, but because it is wholly owned by the Mid-Counties Co-operative, who also supply and compensate the Directors, then this seems to us perfectly valid.

With a co-operative, members rather than shareholders own the business. This means that when Co-operative Energy makes a profit, the members, rather than shareholders, share in any profits that are made, in proportion to how much business those members do with the co-operative. Although Cooperative Energy is now profitable, and has on overall positive net asset position, they have yet to declare or remit any dividends to the parent so it is not clear whether members have yet seen any return on this investment.

Coop Energy states that "Our aim is to be completely clear and transparent, focusing on our members, customers and long-term sustainability."

They go on to say...

"We will always offer fair prices. Many suppliers offer cut-price promotions for a limited amount of time. They invite customers to switch by offering them a great price - but it soon increases when the offer ends. At The Co-operative Energy we do things differently. We will make it as simple as possible for you to switch, and provide you with straightforward, fair and easy to understand tariffs. We aim to save you money in the long term, so much so that once you switch to The Co-operative Energy, you will never want to switch again."

The implication here is that Cooperative Energy does not engage in offering time limited discounted tariffs, and that its tariffs will always remain competitive. Neither of those is, in fact, correct. Furthermore, given that the Coop Standard variable tariff is more expensive than the standard variable tariffs of all of the Big 6, then currently it is actually costing its customers money rather than saving it for them.

On the subject of sustainability and the environment, Coop Energy states;

"We are committed to a sustainable world, and this is reflected in our ambition to obtain 75% of our energy from renewable sources within the next three years. As a step towards this we have ceased contracting energy that is generated from coal fired power stations."

The ambition is commendable and Cooperative Energy has indeed stopped purchasing energy generated by coal fired power station; but only since February 2016. Furthermore, given that the Coop are already committed to buy coal fired energy for years ahead, coal and nuclear will remain part of its fuel mix for the next 3 years.

In the meantime, it appears that someone forgot to tell the energy trading department of Co-operative Energy about this ambition because in the year to 31 March 2015, Co-operative energy bought 37% more coal fired energy than the UK average, whilst their purchases of energy from renewable sources was only half the UK average. Either that or, given the choice, members decided to load up on coal. Please see Fuel Mix Disclosure below for more information.

Finally, on the subject of value and ethics, Cooperative Energy states;

"For over 165 years we have been making the world fairer for members, customers and suppliers by providing everyday services at fair prices. For us it is not about money and profits, it's about being a responsible, ethical business that is committed to making a positive impact on climate change."

Again we don't doubt their aspirations, but in respect of their energy supply business those ethics seem to have gone a little off track. Rather than paying a "fair" commission for applications taken through energy price comparison websites, Co-operative Energy has (certainly as far as and many of the other comparison sites are concerned) decided to take advantage of a loophole in the Ofgem Confidence Code which allows energy suppliers to exploit price comparison websites to extract free advertising. To be fair, Cooperative Energy are not the only ones doing this but, given that we have, over the years, served millions of views of their tariffs, for which they have not offered to pay us a penny, we wonder how that fits in with treating their suppliers fairly.

On balance, we like the fact that Cooperative energy is now an established and profitable business with a decent balance sheet. We also like the fact that, as a cooperative, they offer customers the opportunity to participate in the profitability of the business. We like the fact that they have a bold set of aims and aspirations. Finally, we like that they do not take money out of customer bank accounts before the customer is even on supply.

On the flip side, we are less keen on the following;

- Standard tariffs which are more expensive than the Big 6.

- Lack of any competitive product offering (as at 21 September 2016).

- Their customer service issues.

- Policies which are off track on fair pricing, sustainability and treating suppliers fairly.

- An online quote tool that asks 18 questions before you can get a quote.

More about Co-operative Energy

The Company operates from offices in in Leamington Spa

Coop Energy offers predominantly, electricity only and dual fuel tariffs.

Co-op Energy does offer a prepayment meter tariff.

Co-op Energy is signed up to the Warm Home Discount Scheme.

Co-op Energy has a board comprising of 16 Directors (wow!) of which 11 are women.

The directors receive their salaries from the parent company, The Mid-Counties Co-operative Limited, so at least having such a heavy board count is not creating a drag on profitability.

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