Power broker tackling electricity giants

Enda Gunnell, Munster rugby fan and founder of prepay firm Pinergy, wants to help you take control of your energy costs, and he has Some heavyweight backers. - Vincent Ryan

The office of pay-as-you-go energy company Pinergy offers more than the odd hint to the identity of the firm's brand ambassador and most famous shareholder.

Munster and Ireland rugby legend Paul O'Connell glares down from the walls, offering to cut your energy bills. In a small call centre, staff are motivated by a billboard-sized poster of the second row flying through the air as he tackles Scotland's Stuart Hogg on the way to Ireland's Six Nations victory in March.

Pinergy founder Enda Gunnell is an avid Munster fan. When the company came to pick a brand ambassador, O'Connell was the only candidate.

Gunnell is tackling more than the competition in the Irish electricity market. He is also confronting the perception that the modern version of the electricity meter is the preserve of the cash-strapped. He is looking to entice the middle classes away from the merry-go-round mania of short-term offers and give consumers "the power to control their energy usage". At least, that's the sales pitch.

Ireland has been slow to embrace pay as-you go electricity, yet it is catching up, Pinergy's customer base has risen from 1,000 to 30,000 in just two years, despite operating in a fiercely competitive market. Rival Prepaypower had 80,000 customers at the end of last year.

Pinergy's original product was a pay as-you-go electricity meter that allowed customers to control their electricity bills. The idea was born out of the recession, when the ESB was disconnecting up to 900 homes a month for non-payment of their electricity bills.

The company is now looking to expand into the bill-pay market and is the first electricity provider to start rolling out smart meters across the country, giving customers a real-time take on their electricity use. “We are competing with Electric Ireland and Bord Gais, huge domimant incumbent players,” said Gunnell. "We are the new kids on the block with new ideas and new ways of doing things."

Gunnell was a late convert to entrepreneurship. A graduate of commerce at UCD, he joined accountancy firm Mazars straight from school. He became apartner eight years later and stayed in the job for more than 20 years.

Gunnell headed up the firm's corporate finance department, working with and advising business owners. It rubbed off.

“If the truth be known, for about 15 years I have been looking for an opportunity to do something for myself,” he said. “I use the analogy that I wanted to get out of the dugout and onto the pitch, and I didn't really care if I was buying or selling widgets-I just wanted to try it myself.”

With a single investor, Gunnell took the plunge in 2012. In Britain, about 15% of energy consumers use pay-as-you-go meters. In Ireland there were only 30,000 households using meters, and those were fitted without dated token meters from the ESB. “It was a huge decision,” Gunnell said. “I felt the opportunity was right and the infrastructure was there to make it work. I had done an amount of research and I knew a little bit about the industry.”

There were, he said, a series of circumstances that came together at the same time. The long, drawn-out recession had made consumers more conscious of spending and fearful of bills. The market was ripe for a product that allowed them to control their spending on electricity.

Pinergy and Prepaypower engaged in a land grab, snaring customers across the country. The two companies introduced a service where consumers could buy credit and enter a code, much like mobile phone credit, to access their power.

“Here we are in July 2015 and pay-as you-go electricity is fully accepted in the marketplace.” said Gunnell. “Go back to 2012 and that wasn’t the case, so over a three-year period an entirely new market has developed."

Expensive field sales and direct marketing “feet on the street" campaigns, have been central to growing the business. Yet both involved a big upfront cost. The recession gave rise to the business opportunity, yet the down turn also made it difficult to raise funding. “Part of the challenge over that period of time was having the funding to invest in the ambition,"he said.

Gunnell leveraged the contacts gained through working at Mazars and raised about €12m by the end of 2013. Pinergy's funding position was changed substantially last year with the arrival of billionaire Stoke City and Bet365 owner Peter Coates and his family on the share register.

Gunnell said he was introduced to Coates through a contact. The tycoon liked the business and invested. Last year, it raised €4m in a loan note.

Accounts for Pinergy show it recorded a loss of €2.4m in 2013, but Gunnell said the figures were a reflection of the continuous heavy investment in the business.

The battle to win customers is intense, he said. Rival power companies are offering C200 cash incentives to consumers to switch for a 12-month contract, a move that “can only result in a net loss to the company”.

On price-comparison websites such as bonkers.ie, Pinergy is listed as one of the more expensive providers largely because it does not offer discounts. Gunnell says the Pinergy strategy is not about cutting tariffs a confusing concept at the best of times it is about cutting bills. So there are no special tariffs, cash payments or other gimmicks -its focus is to help customers cut down on electricity use.

It will retrofit a customer's house with LEDs, which can reduce their electricity consumption on lighting by 86%. “I am not a tree-hugging sandal-wearer," said the besuited accountant. “It is just cutting down on waste . . . and trying to reward people for using what they want."

He believes this philosophy will play well with middle Ireland. By focusing on reducing waste and giving control to the consumer, Pinergy is betting that it can target the savvy consumer. Hence the O'Connell ad campaign.

The rugby star is not just hugely recognisable; he was chosen as “a strong, reliable leader” and trusted spokesman. Savvy too. Gunnell recounts how O'Connell rang him up to begin negotiations at 7pm on Christmas Eve two years ago.

To coincide with the rollout of Ireland's first smart meters, Pinergy is launching an app that will give customers real-time information on how much power is being used in their homes at any given time. It will also allow consumers to pay bills when it suits them.

The pay-as-you-go model still has some way to go, Gunnell believes. It taps into the growing “rental economy", where consumers want to pay as they use. Pinergy is also targeting the professional landlord market, offering tailored solutions for student accommodation providers and landlords with multiple properties.

The company employs 89 people, including Gunnell's brother Tadhg. The former head of finance at the stockbroker Bloxhams, Tadhg found himself at the centre of the collapse of the firm, and a large Central Bank fine and disqualification order ensued.

It is not an area, understandably, that elder brother Enda wants to talk about. He is much keener to expound on how he plans to poke the eye of Bord Gais and Electric Ireland. Gunnell is examining ways of incentivising the forgotten segment of the market, those loyal customers who do not switch provider every year.

He is exploring interest payments for customers when their accounts are in credit. The key is to approach the market as a consumer, not as a power-plant operator. The ultimate aim is to grow the customer base and start making a return on the C18m invested in the business.

“We are trying to offer solutions for consumers that create long-term value,” he said. “Not using gimmicks or short term cash incentives. There is a different way of doing things."


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