May 31, 2018
Having worked in the fiercely competitive utilities sector for over 20 years, helping to establish and grow one of the UK’s leading names in the field during that time, Andrew Richardson is, perhaps surprisingly, one of the industry’s biggest critics.
Having become frustrated at the lack of regulation of the sector and an absence of transparency in pricing – which recent research has said contributes to businesses paying a collective £500 million a year too much for their energy prices – Andrew decided to take action in an attempt to, as he puts it, bring much-needed honesty into the industry.
In January, he founded Troocost, a service aimed at the SME market to offer highly competitive rates for their energy prices – with the company taking a clearly-defined fixed fee from the supplier – alongside offering a free online benchmarking platform to allow price comparison.
Already, the company has secured clients across the UK, won the endorsement of a host of energy suppliers, created seven jobs and occupies premises just off Newcastle’s famous Quayside with ample space for expansion.
With such progress in barely five months, Andrew believes the foundations are in place for Troocost to become a new major name in the utilities market.
He says: “My biggest concern was that businesses weren’t getting a fair deal. There is a real lack of transparency in pricing and broker fees, and the fact the industry is totally unregulated means that is allowed to happen. Brokers can charge any price they want and they don’t have to justify it. Of course, this lack of regulation could be changed overnight with Government intervention, like they did with financial services ten years ago, but in the absence of that, there needs to be some disruption in the industry – and that is where the concept of Troocost came from.
“When you realise how much money businesses can save, and we are talking tens of thousands of pounds by getting a better deal through honest and transparent prices which are clear from the outset, it becomes something that businesses, and particularly small businesses, realise they need to consider. While large-scale businesses probably have their own in-house pricing specialists, and will probably have the influence to negotiate the best possible deals with their energy suppliers, SMEs don’t have that, and that is where we can help.
“It has always amazed me that some businesses will travel the earth to save a few pounds off things directly related to what they do, such as supplies or materials they use, but for the more ‘hidden’ things like gas and power, they rely on a broker and completely trust what they are being told by a stranger over the phone.
“In reality, they are probably spending 20 or 30 percent too much compared to what they could be paying.
“But because it’s a pain in the backside to change and seems to be that big hassle that comes around every two or three years, many businesses just don’t bother and stick with their current supplier. We want to change that approach.”
Andrew is keen to draw a distinction between the way Troocost operates in comparison to the broker market. With around 3000 utilities brokers in the UK, the lack of regulation, which then gives rise to accusations of lack of transparency, is something that looms large over the industry.
“There are some very good brokers out there, but equally there are some poor ones who operate in ways that are in their own interest rather than those of the customer, whereas our sole objective is to get our customers the best deal. I have seen brokers who offer their staff uncapped bonuses, trips to New York – ultimately, it is the customer who is paying for that,” says Andrew.
“Pricing is a big problem in the industry. A lot of ‘good deals’ are actually the more you use, the more you pay. So if you use twice as much, you pay the broker twice as much, but because this is hidden, you don’t realise until the end. You also don’t know how much the broker is putting on. There can often be some nasty surprises. With us, you get a flat fee, which is made clear from the outset. I think pricing is made out by a lot of brokers to sound more complex than it is, whereas I see our role as demystifying that whole grey area and giving clarity to the customer.
“With us, businesses – and that can be anyone from a corner shop to a large-scale manufacturing business – can use us as a benchmarking tool. We are a bit like Trip Advisor, in that people may not initially visit the site to buy from there, it’s a comparison site, but once they visit us, they see the prices are very competitive.
“They can come to us and see if we can save them money – they have nothing to lose. If they have a better deal themselves, then that’s great, and we always encourage people to look around and find out what deals are out there. But we are finding that nine times out of ten, we can save them money, and often up to 30 percent, which equates to quite a significant sum off their annual energy bills.”
While the business has only been trading for a few months, Andrew believes Troocost can help redefine the whole industry.
We want to really disrupt the market and make businesses aware that there are better options out there.
“We have only been going since January so it is early days, but we will create jobs as we grow and gain in size and profile. Troocost is bringing an honest and transparent approach to the industry which we are confident will benefit nine out of ten small businesses.
“Many businesses have already come to us initially to benchmark prices, but have realised our prices are often better than you can get through going directly, and have decided to use us. That is something so many other businesses could benefit from too, and we want to help SMEs across the country realise that they can get a better rate and a better and more honest service than they have previously had. Change is needed but it is happening.”