Pressure: Octopus Energy boss Greg Jackson is critical of regulator Ofgem
The heat is on for Octopus Energy boss Greg Jackson – and not just over the soaring bills faced by his customers. This weekend, he was blasted for shutting his main call centre in Manchester an hour early every Friday to host boozy social events for staff. Critics said letting employees crack open bottles of Prosecco at 4pm is ‘unforgiveable’, given the cost of living crisis.
Jackson, though, is a glass half-full kind of person. He paid for the booze by donating his £150,000 salary to his staff welfare fund, he points out, and insists the Friday sessions are a ‘morale boost’ in tough times.
‘If we’re going to look after our customers, we have to look after our staff,’ he says. ‘Imagine how brutal things can be for them at the moment.
‘That one hour on a Friday is what helps us attract and retain well-trained employees. If someone has been doing this job for a few years, they are a lot better than somebody using tick-boxes based somewhere overseas.’
Whether that pacifies irate customers at a time when they are under unprecedented strain is open to debate.
But Jackson believes he can empathise. While growing up near Middlesbrough in the 1970s, he experienced similar hardship to the one his customers face half a century on.
Despite his single mother’s best efforts to send a cheque promptly when the red reminder letters landed on the doormat, sometimes she was too late, he recalls – and the gas and electricity were cut off.
‘I know just how hard it is for families,’ he says. ‘I remember clearly the stress about using energy at any given moment in time.’
Jackson, now 50, drew on that experience when he set up Octopus Energy in 2015. With a £260million stake in the £4.1billion renewable energy firm, Britain’s fourth-biggest domestic supplier, he no longer needs to worry about heating his West London home or, indeed, charging his Tesla.
But as grim forecasts predict households’ annual energy bills will soar to more than £4,500 by the new year, he is determined to help insulate Octopus Energy’s 3.4million UK customers from the shock.
He plans to write to Tory leadership contenders Liz Truss and Rishi Sunak in the coming days to set out his blueprint for tackling extreme energy bills. And he will seek more help for society’s hardest-hit.
‘Energy bills should be the number one item for the new Prime Minister,’ he says. ‘And Ofgem, as the industry regulator, should be working hard to put ideas to that incoming Prime Minister on how to help Britain through this crisis.’
Jackson is speaking shortly after an influential committee of MPs published a damning report into Ofgem’s failings. Over more than 80 pages, the Commons’ Business, Energy and Industrial Strategy Committee, chaired by Labour MP Darren Jones, branded Ofgem ‘incompetent’ and ‘negligent’.
The lambasting came after it failed to heed multiple red flags about a string of poorly run suppliers that went bust over the past year, costing the taxpayer billions.
Jackson gave evidence to the inquiry that led to July’s explosive report. He claimed Ofgem had failed to recognise the difference between ‘fly by night chancers and serious challenger retailers’.
In the aftermath of the collapse of 29 energy suppliers, Octopus took over one of them, Avro Energy, which the committee’s report said had ‘improperly used customers’ money’. That included siphoning off cash to different businesses in the directors’ names. This weekend, Octopus is also close to buying Bulb Energy, the biggest failed supplier, whose dramatic collapse is being dealt with through a taxpayer-backed special administration. This is expected to cost more than £2billion, plus £1billion of hedging costs that will eventually be recovered – the biggest state bailout since the Royal Bank of Scotland in 2008.
As he mops up the mess, Jackson’s view of Ofgem has hardly mellowed. He tells The Mail on Sunday the regulator ran the retail energy market like an East End market stall – comparing it to Walford Market, the fictional bazaar in BBC soap EastEnders.
‘Ofgem is trying to recreate Walford Market, where you pile it high and sell it cheap and as soon as the going gets tough, you pack up your stall and disappear,’ he says. ‘That’s what has cost us dear. What Ofgem should be doing is encouraging extremely well-run energy businesses to offer better, cheaper, products for customers.’ +++++
To illustrate the scale of the energy crisis, he points out that the annual bill Britain pays for its energy on the global markets has tripled from £25billion to £75billion in just over a year. ‘We speak to up to 30,000 customers a day. When they see these increases in energy costs, they fear they won’t be able to pay their bills. There’s a deep anxiety about how they can afford it.’
The two Tory leadership hopefuls are split on how to tackle high energy prices. Truss favours tax cuts over handouts, but has pledged to temporarily scrap green levies on electricity. She is also considering scrapping VAT on energy bills. Sunak said last week that he would give families direct support on bills by making ‘efficiency savings’.
While declining to say who he wants to see in No10 next month, Jackson says more support on bills is vital. British households each need an extra £500 to survive the winter, he suggests, because the existing £16billion support package will not be enough as energy prices continue to soar.
‘The pandemic was like an earthquake,’ he says. ‘Now we are seeing the aftershocks – and they can be just as deadly. If we don’t put serious resources into dealing with them, we risk catastrophic energy bills and a terrible cost-of-living crisis.’
Longer-term, Jackson believes nothing short of full reform of the UK’s energy market will do, so that electricity bills are no longer linked to gas prices. This means that even though gas accounts for only half of the energy Octopus supplies, the charges for the remaining 50 per cent that comes from renewable electricity have risen, too.
Jackson explains: ‘National Grid sets the electricity wholesale price every half hour. Today, it’s based on the most expensive unit generated, which is usually from gas. This is crazy because renewables are often a lot cheaper. Ofgem should use its brainpower urgently to fix this so we can see more of the benefits of cheap wind and solar.’ Jackson also wants the Government to do far more to promote energy efficiency so Britain uses less gas – and weans itself off overseas imports.
Octopus Energy is working with housebuilders on new-build homes that have zero-energy costs because they incorporate green technology such as electric heat pumps and solar panels. Other projects to reduce bills include investment in four 3,800km-long subsea power cables linking Devon to a huge renewable energy farm in the Moroccan desert.
To unwind from tackling the climate emergency, Jackson listens to Iron Maiden or reads a few pages from The Apollo Guidance Computer: a manual for the software on board the Apollo spacecrafts’ missions to the Moon. ‘Whenever I can’t sleep I read a bit of it,’ he says. ‘I’m a real geek.’
But with Britain’s energy prices at the mercy of Russia sending gas through pipelines to Europe, he can never fully switch off. Even on holiday with his sons in France this month, he will work half the day throughout. ‘There’s never a day off in this job,’ he says. ‘This crisis must be a wake-up call to fundamentally change our energy market so we can never be held hostage by Putin’s gas prices again.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
‘What the money news means for you’
This is Money is part of the Daily Mail, Mail on Sunday & Metro media group