At Cost Energy – is it any good?

EnergyUpdate 27 July 2010. After writing this blog At Cost got in touch and agreed to an interview that we published today. See the full At Cost Energy Interview though do read this first for background.

This is a question I’ve been asked a lot, and my simple answer is “I can’t tell you until the company has some actual prices and info, not just vague promises”.

At Cost Energy is a proposed company that’s touting for people to join its distribution list, and it’s not surprising people are keen as it says:

“No misleading ploys, no introductory offers, just gas and electricity… AT COST!”

Sounds great doesn’t it, and you’d expect nothing less from a company that previously had Max Clifford associates behind its PR.

And indeed it may well be great, but I’ve seen many similar promises before – and most either haven’t come through or have had more catches than a baseball glove.

However at last there’s been some progress: it’s passed the first stumbling block by being granted an energy licence. (though from what I’ve been told, getting the licence isn’t the tough bit, fulfilling the conditions is).

We’ve been digging and we’ve made official requests for information, but unfortunately it hasn’t been particularly forthcoming with the answers (maybe my writing this blog will change that).

Until then this leaves some big questions…

What are wholesale rates?

Let’s look at the tag line again “No misleading ploys, no introductory offers, just gas and electricity… AT COST!”

I can envisage a few problems with this concept….

  • Buying energy isn’t like buying a CD in a shop – the prices are set by the markets, and the rates depend on when the energy is for. So there are prices for now, for three months, for Christmas and further ahead – and all are constantly fluctuating. So which ‘cost price’ is it talking about?
  • It won’t have the buying power of a big energy company so its cost price is likely to be higher than theirs – how much higher is the key question.
  • Energy prices are predicted to go back up by some– other companies buy so they can ride out peaks and troughs, if it happen’s what’s its plan?

We asked At Cost Energy for a clarification of all this – but haven’t been given one.

A comparison site dilemma

I’m also rather confused at its stance over comparison sites, as it’s been saying…

“You won’t find At Cost Energy on any comparison or switching website because we refuse to build additional costs into our business. Each of these websites get paid substantial commissions for swapping consumers from one company to another, these commissions are then recouped through your energy bills, often classified as an acquisition cost or cost of supply”.

Yet in its latest email it has effectively announced it’s launching its own comparison service:

“To SAVE YOU MONEY, we’re launching the UK’s first free quarterly energy consumption analysis service.

“We know you’re interested in At Cost Energy to make sure you have the lowest possible energy bills and save money, and since we can’t give that to you today, we’re keen to ensure other ways to help in the meantime.

“So we’re launching a FREE energy consumption analysis service in the next couple of weeks. Then, every 3 months, our system will automatically check your gas and electricity tariffs against the whole of the market, and if you can get a better deal by switching to someone else, we will implement it for you to ensure that you are paying the lowest amount possible…

“Did you know you can switch suppliers that often? Few people do. It’s not a problem so long as you haven’t committed to a long contract or don’t owe your existing supplier money. Of course there is no obligation to change supplier. In fact, we may often find that there is not a better deal to switch to. At least you’ll have the peace of mind that you’re always on the best deal, with our help.

“This will be the first quarterly energy consumption analysis service in the UK, carried out in this way. It will be a FREE service to you.

“Each time one of our customers uses this service, At Cost Energy will be paid a small fee by the suppliers. When we launch the service we will be totally open with you about these fees, and where the money will be used. While At Cost Energy is well funded, this revenue will help to ensure the ultimate goal: giving you and thousands like you energy at cost.”

Switching suppliers every quarter seems rather rapid – after all a switch normally takes two or three months to actually come through – so by the time you’ve got it are you then going to apply to someone else?

Even so, why set about adopting a comparison site model if it doesn’t like these sites?

Surely it’s worth telling people about now anyway to help it build a database?

Many years ago I got burnt by the ‘Pipeline card’ which similarly promised if it got a critical mass it would arrange a fuel card giving everyone discounts on their petrol buying;they were ‘very close’ and ‘just needed critical mass’.

I decided to go for it, and told people about it saying: “it needs critical mass and what’s the harm”, 100,000s joined on the back of my mention – and they hit the number wanted. Yet did it materialise – no – it just started sending out emails about other products and trying to make money that way. And as far as I’m aware it still hasn’t delivered the card all these years later.

Of course it’s unfair to say At Cost Energy will be the same, though its latest note leaves many questions about actual delivery of the promise. It reads:

“The next step is then to assess just how much energy we need to buy in order to supply homes, schools, charities, hospices and hospitals vital to our community. This is the reason we’re asking people to register their interest first, so we can gauge just how much gas and electricity is required. The more people who register the more competitively we can buy the energy on your behalf.”

This is all fine, but why not come out and start being a bit more candid about the pricing structure or how it will deliver?

That’s why until I know At Cost Energy is up, running, works, and has clear pricing structure you certainly won’t be hearing me suggest people join up with an organisation based on the flimsy info we have so far.

It be a chicken and egg scenario, but MSE won’t be roosting on this one. Though if it wants to start giving solid backed up info things could of course be different.

Have there been any other similar energy products?

Pricing isn’t straightforward in energy.

There’s the great equipower which has a Christian mission statement and for years was best for prepayment meters, as it ethically decided not to charge society’s poorest a premium – though that didn’t mean everyone who used it got the cheapest deal, and now the others have caught it up for prepay too.

Then there was Staywarm, the ‘fixed fee energy company’ where the amount you paid each year was fixed depending on the number of people and bedrooms in your house. It was only for the over 65s and was a social tariff designed so people could turn the heat up without worrying. After a fantastic start came a takeover, and gradually the prices were put up and up and up so it’s now hardly worth it for most.

Is At Cost Energy a bad deal?

Don’t get me wrong, I’m not saying it won’t be good, I’m not saying people should never use it – what I am saying is the info available at the moment isn’t nearly enough to go on.

Until it can start putting something practical and measurable out it’s not something MSE will be suggesting, though this blog in itself serves the purpose of alerting people to it so they can make up their own mind.

My hope is it will end up performing as well as its laudable aims and spin suggest, it sounds great, let’s cross our fingers.

What should people do now?

It ISN’T a functioning energy company right now – it’s not offering any prices.

Currently, the most important saving most people can make is by shifting to online billing and direct debit payments, where costs drop massively (see cheap gas & elec). If you’ve not done that yet, it’s about time!

Comment and Discuss