History
Telecom Plus, a FTSE 250 company, established Utility Warehouse in 2002 [6] as a subsidiary and brand to encompass all of their residential energy, telephony and broadband offerings. [7] The Utility Warehouse headquarters is in Colindale, North London. [8]
In 2006, UW and Telecom Plus entered into an agreement with npower, under which npower would supply energy (gas and electricity) to UW customers. [3] UW sold its two subsidiaries (Electricity Plus and Gas Plus) to npower. A 2009 article by The Guardian reported that Telecom Plus's rates were generally average, and as much as 20% higher than the best deals. [1]
In 2013, however, npower sold the two former Telecom Plus subsidiaries back to Utility Warehouse for £218 million. [9] As a result, Utility Warehouse became one of the largest independent energy suppliers in the UK. [3] [9] The deal sparked commentary about the possibility of npower's parent company RWE leaving the UK, or the emergence of a "Big Seven" in place of the existing Big Six energy suppliers. [2] [3] [10] In 2023, UW reported that it was the seventh largest energy supplier in the UK, supplying around 3% of UK households. [11]
In 2021, UW agreed to pay £1.5 million into Ofgem's redress fund, after an investigation begun by Ofgem in 2018 found that since 2013 the company had not given sufficient support to customers in payment difficulties. [12]
In 2023, UW had over 360,000 broadband customers and over 420,000 mobile telephony customers. [13]
Business model
Utility Warehouse employs a multi-level marketing model that utilizes independent distributors to obtain new customers. Distributors introduce both residential and business customers. [7]
Utility Warehouse has no shops and does not advertise on television or in the national press. The company uses word-of-mouth as a primary means of promotion, and offers bonuses to distributors who recruit new customers and distributors. [8]
Distributors gain a commission from their own customers and their distributor's customers, making Telecom Plus a multi-level marketing company. There is a joining cost to become a distributor (reduced if they become, or already are a customer). A 2017 Guardian investigation found that total commission paid to distributors in the previous financial year was £21.1 million, or less than 3% of revenue; if that amount was divided equally among the 41,717 distributors they would each receive £505 per year. [16] Utility Warehouse responded that the calculation was misleading: "there are many who for whatever reason earn considerably less than £500 per year, and there are those who work at their business extremely hard and earn considerably more than this". [16] In 2019, the average distributor earned £12 a week, prior to taking costs into consideration. [1]
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