This week Ed Miliband and the Queen both joined the energy debate.

Image by bisgovuk via Flickr

“Then let’s get on with tackling the problem with people’s living standards; stand up to the energy companies so that we guarantee every pensioner over the age of 75 the lowest tariff available and break up the Big Six energy companies: stand up for people who are seeing their train fares going up; and stand up for different choices on taxation.”

That’s the leader of the opposition, Ed Miliband, going on an all-out offensive on the Tories in a speech given in Harlow this week.

Now, I’m not a political commentator and I’m not siding with any party, but I have to say that it does frustrate me when statements that haven’t been completely thought out are thrust out purely with to capture votes or headlines. 

He said that he wants to guarantee that every pensioner over the age of 75 gets the lowest possible energy tariff. However, I’d argue that that the issue shouldn’t be about age - it should be about levels of poverty. Not everyone over 75 is living in poverty, just as not everyone under 75 is financially secure. But that’s not my not my axe to grind.

His next suggestion - that we break up the Big Six energy suppliers - is the sticking point for me.

I will be the first person to say that the UK energy market is far from perfect and it needs to improve in many ways, not least by increasing the number of companies operating within it. But Ofgem’s plans to increase liquidity in the market should aid new entrants, and I would also like to add that in the B2B market we already see a great deal of activity from non-Big Six energy companies and we know that more are coming in the very near future. 

My question to Ed Miliband is, what good will  breaking up the Big Six do? Surely if he was feeling in a destructive mood, he would have been better off picking on the banks and would have got a lot more support from voters for it.

Energy is always going to be a hot topic, so it’s not surprising that as well as Ed Miliband, the Queen also made a reference in her speech at the state opening of Parliament. In a nutshell, the Queen said that there will be reforms the electricity market to encourage more investment in low carbon generation and clean energy, put more restrictions on the emissions of new coal plants and create a new independent regulator, the Office for Nuclear Regulation, funded by the industry.

Hudson Energy - the North American business energy giant - is due to launch in the UK this year.  It's not every day that a new business energy supplier appears on the scene, so I caught up with Steve Fitzsimons, sales and marketing director for Hudson in the UK, to find out more.

Hudson Energy is coming to the UK from North America this year. Image by tame_alien via Flickr.

Would you like to introduce yourself and tell us a bit about your background and your role now?

"My current role is sales and marketing director for Hudson, responsible for launching and developing the UK supply business. I’ve been working with my North American colleagues for the past six months, undertaking all of the background work required to launch the business such as recruiting, creating and developing our systems and processes.

"I’ve got a  long history running I&C and SME sales organisations in the UK market, with a number of major suppliers, since before market opening, developing new products, services and propositions for customers , as well as a period heading up the sales activity for a specialist demand response company."

Hudson is a well-known name in B2B energy in North America, but it's new to us here in the UK. Can you tell us a little about the background of the company?

"Hudson supplies power and gas across a number of states in the US and Canada, where the market is deregulated. Established in 2002, our operations are centred on New York and Texas. We were acquired by Just Energy, a major Canadian residential gas and electricity retailer in 2010 who also have operations in the US, with the two businesses being complementary to each other."

Why is Hudson launching in the UK now? What are your aims for the company?

"At Hudson we recognise that the UK offers opportunities for new suppliers, with a number of similarities between the UK market and US markets, particularly Hudson's largest market, Texas. Your own research showed that SME and I&C customers are far more willing to contract with smaller suppliers than residential customers. So while the market is mature, it is competitive, and we feel that, with Hudson Connex, our sales portal, allowing brokers quick and easy access to the market, we offer a proposition that hasn’t previously been available. Of course, we will be backing that up with high quality service, giving customers the confidence that we’ll deliver on our promises, and have made significant investment in all our systems as we go to market.

"Our aim is to grow the UK electricity market to scale, and, having created an operational hub for Europe, launch sales operations in one or two European countries within a year, and, of course, leverage our trading capability by moving into gas supply. I’m sure my colleagues in Just Energy are equally excited about the potential that may exist in the residential space."

What are the differences between the market in North America and UK? Do you think that we could learn anything from them, or vice versa?

"The markets are remarkably similar, although visibility and availability of market price is easier in the UK – although to counter that, liquidity and term are easier in the US, with five year contract terms widely available. On the service side, the difficulties we have in credit language in the UK are significantly less apparent in the US, perhaps because disconnection for non payment is comparatively easy.

"Overall, I’d say our markets are more complex , and many of the difficulties I have had to explain to my counterparts relating to obligations on suppliers that they simply don’t understand."

What will Hudson offer its UK customers? What sets it apart from other business energy suppliers?

"Hudson won’t be approaching customers directly with an offer, our business model is to work through brokers and consultants in the market, allowing them access to the market via our sales portal “Hudson Connex” – which provides brokers with customer offers, including product and term choice, with prices refreshed on demand. We are very clear that we are an energy supplier, and as such, don’t want to broaden our offering into energy services, similarly, our product and service offering, will enable us to keep our operational costs down, allowing us to offer a great value proposition."

One of the things the really sets you apart is that fact that you don't have a sales team. What's behind the decision to only work with brokers and TPIs, and what does this mean for customers when it's time to renew their contract?

"While I don’t have a sales team as such we will, of course, be developing and managing our relationships with brokers, aligning our offering to meet changing needs, and requirements. Operating in this way means that I don’t have to manage multiple sales channels, with the inevitable conflicts that arise in respect of renewal paths. It also focuses our attention entirely on supporting the broker in their sales relationship with the customer, allowing us to focus entirely on service."

Finally, when will you be open for business?

"We’ll be entering the market in late July, initially with limited capability as we prove our systems to Elexon via the controlled market entry process. We don’t anticipate any difficulty with that, and I expect to be fully operational by mid August."

Yesterday, Ofgem release its consultation on Improving the Reporting Transparency of Large Energy Suppliers. James Constant takes a look at the consultation and what it means for transparency on energy supplier profits.

When the transfer price the supply business pays the generation business shifts, so does the picture on profits.

We’ve said before that, working in the B2B sector, naturally we want to see businesses do well and make a profit to provide reward for their staff, investors and customers. However, we also believe that transparency on profits is essential, a fact that has previously been recognised by Ofgem, which has mandated that the Big Six energy supplier should publish their accounts.

• all suppliers should report to the same year end to ensure transparency of comparison. Ofgem now does ‘not intend to take forward this recommendation’.
• an independent auditor should provide opinion on the statements. Ofgem now will get an opinion, albeit not from auditors and maybe just for the initial year.
• the statements be reconciled to IFRS (International Financial Reporting Standards). Ofgem now only requires that the supplier statements mirror their group accounts.
• the businesses recognise sources of additional potential profit by reporting trading and risk results. Ofgem now only requires the suppliers to fill out a checklist of activities they undertake.
• it would undertake further work to understand the critical issue of the transfer price between the generation and retail arms of the vertically integrated business. Ofgem now does ‘not intend to take forward this recommendation’.
• exceptional items on the supplier’s account were given greater definition. Ofgem now will settle for the information held in the suppliers’ group accounts.
• a consistent profit base for reconciliation was created. Ofgem now only requires the information held in the suppliers’ group accounts.