Interview with Ben Gordon (Senior Energy Industry Operations Leader)

  • Posted by: AD Group
  • 15 January 2019

With over 30 years’ experience in the energy sector, Ben Gordon is undoubtedly an industry expert. His background is comprised of Big 6, medium, and more recently, smaller sized suppliers, with over 10 years’ experience at senior operations level.

Ben Lowe (Consultant – AD Energy) sat down with Ben Gordon (Director of Operations) to discuss the current tough market conditions which has caused eight suppliers to fail this year, with potentially more on the horizon.

BL – How much has the industry changed since you first started?

BG – So I started just prior to British Gas being privatised and at that time British Gas was integrated, meaning it covered the distribution and supply aspect of the industry. I saw them through the demerger with National Grid which led to British Gas being a strictly supply only company. After this came the onset of competition, there are well over 70 companies competing in the domestic market and a plethora of companies competing in the B2B market aswell.

BL – What are your thoughts on the current energy market?

BG – Competition has driven complications and made it more complex, you would require people with experience to succeed. I believe people don’t realise how complex the market is when they first set up.

BL – Given the recent collapse of Extra and Spark Energy, what are the biggest threats that would cause a supplier to fail?

BG – I think it’s just not getting it right in the first place, they’re not doing their due diligence when they first start up as an energy company. They also need to recruit people with experience who have worked at energy companies before, it’s massively complicated and whether you like it or not you need to have people with experience of buying and selling energy, settlements, the complexities of the dataflows and changing between suppliers etc. I think some people rely on this ‘out of the box’ set up of an energy company that will go buy Utilisoft and Junifer and think that’s it, but that’s just the start. You need to have experience of running an energy supplier and making a profit.

BL – To what extent do you think the price cap has influenced the market?

BG – It definitely has. It’s made people look at their original business models and what the turn around time will be to go from loss making in the first few years, which would be expected of a start-up supplier, to turning over a profit. I think the price cap has pushed that time scale out and making a profit has probably gone back by a couple of years, even the big 6 are feeling the squeeze. I know from my contacts that E.on are going from a forecasted £170mil profit to a £40mil loss and their putting it down to the price cap. I think the price cap probably exposes some of the energy companies who haven’t been operating that efficiently aswell.

BL – What do new market entrant start-up suppliers need to do to succeed?

BG – They need deep pockets. With the set-up costs of buying quality products like Utilisoft and Junifer you’re probably going to need the best part of £1.5mil. Ontop of that you have acquisition costs and possibly financing costs, depending on the purchase of energy.

Hedging is extremely important also, you need to get your hedging strategy right – buying energy at the right price and buying the correct amount of energy. There are a huge number of risks in setting up as a new-supplier.

BL – Given the current harsh market conditions, in your opinion is it feasible for start-ups to succeed?

BG – Personally I don’t actually believe it is until we turn the corner. Until smart meters reach a critical mass and make the complications less complicated when operating in the energy market. Unless you’ve got backers with fairly deep pockets, like one of the oil companies for example, I don’t believe it’s a viable business model to go into the domestic market at this current time, perhaps the b2b market because it’s less regulated and you don’t have the price cap, but certainly not the domestic market at the current time.

BL – Coming from a predominately big 6 background, what advice would you give to professionals worried about moving to smaller sized suppliers?

BG – You obviously can’t guarantee it’s a completely safe move, however, it can be enormously more rewarding. At a big 6 in order to get anything done you’re talking a plethora of committee’s and sign offs etc and the worlds usually moved on before you get through the authorisation stage. Whereas the smaller suppliers can make decisions, they are nimble, they are quicker and can react to market conditions better than a big 6 who are like a ship turning around when it comes to making decisions. However, the big 6 do have that critical mass which probably lets them ride out the spikes in energy prices etc, whereas probably the smaller suppliers are unable to do that. It’s definitely more rewarding at a smaller energy supplier, you can see the fruits of your labour in terms of making changes and being able to see the impact it has directly on customers.

BL – Do you find it harder attracting the best talent being a medium sized supplier, in these current market conditions?

BG – I’ve not found that. What we’re finding is that the big 6 are having to react to the price cap aswell so companies like E.on, British Gas and Npower have made a huge number of redundancies, even in the past year or so there is a lot of very experienced people coming onto the market. These people have vast experience and are coming from trusted big 6 suppliers and therefore have a lot to offer a smaller sized supplier in terms of the knowledge and expertise they’ve built up over the years.

I think the difficulty is that the small supplier maybe waits too long before they draw on some of that experience and waits until they’re in a position where they need the experience opposed to recruiting it in the first place.

BL – What do you look for when hiring new recruits?

BG – It depends on the position, but specific industry experience. If it was an industry operations role for example, I’d be looking to recruit someone with settlements experience.

It can sometimes be transferable like in a collections role for example, if you’ve got the skills from another industry then you’ll be able to apply that to utilities after you’ve got your head around the regulations etc.

But I think experience is key and for more senior appointments I’d be looking for someone with energy industry experience and someone who knows the markets.

BL – What is your perception of working with recruitment agencies?

BG – At the big 6 it was very frustrating because we didn’t use industry specific agencies and HR controlled a lot of the processes. Certainly with the smaller suppliers you have way more flexibility to go to specialist recruitment agencies and you have more autonomy to do that in order to seek the best candidate, opposed to being restricted to an agency because of a presigned contract agreement. For me it’s all about using industry and skillset specific agencies as they’ll have the best candidates.