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Stuart Burnett joined Utility Warehouse in 2016, having started his career as a lawyer in the city before joining an insurance company.
He worked his way up in an unusual way: from senior lawyer to operational and ultimately co-CEO in November 2021.
The company itself also does things slightly differently. Unlike other players in the energy market, Utility Warehouse also offers broadband, mobile internet and insurance, and allows customers to purchase various services on one invoice.
The soft-spoken Burnett will take the reins himself later this year and is working on one mission to expand its customer base. It recently became the Britain’s seventh largest energy supplier, joining the established Big Six.
He told This is Money about his plans and why he thinks Utility Warehouse’s multi-service model can make Utility Warehouse the challenger all four markets need.
Stuart Burnett became co-CEO in 2021 and will take charge himself later this year
‘Not just an energy company’
FTSE 250-listed parent company Telecom Plus launched Utility Warehouse in 2002 as a subsidiary through which it could sell energy, mobile and broadband deals.
Its unique selling point is that it offers the most important household services in a bundle with one bill.
Customers can choose which services they want, but they must sign up for at least two services. The more services they add, the bigger the discount they get.
The company recently reached 1 million customers in the UK, the majority of which are energy customers. The company says that more and more customers are purchasing energy and one or two other services, with an average of three services purchased per customer.
“We don’t consider ourselves an energy company, even though we provide energy, just as we don’t consider ourselves a broadband, mobile or insurance company,” Burnett says.
‘That unique relationship across all these different services means we have a much closer, closer relationship with our customers than just an independent energy supplier, broadband or insurance company.
“They see us as an important part of the way they run their lives and their homes.”
It has quietly built a solid, but still relatively small, base in each of its sectors. In its latest results, Telecom Plus states that energy prices have been a strong driver of sales over the past year.
It also said its customer acquisition was largely due to its “unique and difficult to copy word-of-mouth model.”
The only reason we can price differently is because we bundle energy with other services
This is essentially a multi-level marketing scheme where customers are paid to recruit others. Utility Warehouse claims that ‘active’ partners can earn around £500 per month.
Given the lack of meaningful competition in the energy market at the moment, it is also trying to entice customers with its competitively priced offers.
The company is currently offering £20 off the Ofgem price cap, which is set at £1,690 until July, if customers have two services bundled. This increases to a £50 discount for three-service customers.
“The only reason we can price differently is not because we buy our energy differently than someone else or package our energy differently, but because we bundle it with other services,” Burnett says.
Time for a new wave of energy challengers?
The idea of being a challenger in the energy market has associations with the recent past that may not be entirely welcome.
Two and a half years ago there were 44 active domestic suppliers in Britain, up from a peak of 70 in 2018. Now there are just 19, following the collapse of many small businesses.
Smaller suppliers had flooded the market, offering cheap deals that were unsustainable in the long term. When wholesale energy costs soared in 2021, some of them fell victim to their own success and collapsed.
It has led to the Big Six suppliers once again dominating the market.
This time, however, the once-bold newcomer Octopus Energy has firmly established itself as one of the Big Six.
Utility Warehouse offers four main services to its customers, who receive discounts as they add more to their bundle
Figures from Ofgem show that it now has a 17.4 percent share of the electricity market, and that following the agreement with Shell Energy it is now seriously competing for the top prize.
Utility Warehouse is now the seventh largest energy supplier in the country, meaning it is well placed to be the next challenger. And it accepts the label with open arms.
“We are the biggest independent challenger to the Big Six,” Burnett said. ‘In recent years we have grown by almost 50 percent and have exceeded the 1 million customer mark. That’s because we’re doing something different and people recognize the value and benefits of what we do.
‘I don’t know what other suppliers are focusing on, but at the moment they are all working on the same thing.’
It is somewhat baffling that Burnett is positioning Utility Warehouse as a challenger, given that Telecom Plus is 25 years old and is a FTSE 250 listed company with a market capitalization of £1 billion.
But he thinks this actually works to his advantage: ‘The big difference with most challengers is that we have a long-term track record. We are a challenger with stability. There have been too many challengers over the years. That’s not us at all.’
“If they charge lower prices than everyone else, but do exactly the same as everyone else, that will ultimately be a problem.”
Considering the volatility of the energy market since 2021, Burnett is right. But Utility Warehouse isn’t the only stable, well-run company in energy – or even insurance, mobile or broadband.
That means its defining characteristic is still the fact that it’s a one-stop shop for home services, which while different within the energy market, hardly reinvents the wheel.
To be a challenger you must be a responsible and well-run company
Instead, it suggests a changing perception of what it means to be a challenger in the current climate.
Burnett suggests that there was a period “where being a challenger essentially meant offering the cheapest prices without doing anything different than anyone else.”
He says he thinks “there’s a realization that to be a challenger you have to be a responsible, well-managed company.” Whereas before maybe the mentality was maybe, anyone can give it a try.”
Now if a challenger is merely ‘smaller than the incumbents’, how much competition can there be?
Burnett admits that, as a multi-service provider, “you can’t be the innovator in these marketplaces for an individual… you can’t be the energy innovator that you could be if you were just an individual company.”
Instead, he thinks customers “just want these services to work and not get ripped off.”
Although Utility Warehouse is not innovating in the same way, the idea of a single household account is new.
If it wants to continue to distinguish itself from other players in the four markets in which it is active, it will have to continue to do so.
Smarter customers pose a challenge
Could we see more and more services being added? Burnett’s background in insurance (he was a lawyer at RSA) means he’s open to the idea.
“Because one of the key objectives is simplicity, we need to make sure we keep that in mind. There may come a point where having too many things as part of the bundle can actually increase complexity.”
‘The obvious next places are… we have home insurance, boiler cover… There are obviously other personal insurance policies that would also fit nicely into our bundle.
‘We have to make sure that we don’t just add more and more, but that it has to be done in a way that stays true to the principles of economy, simplicity and service.’
Word of wisdom: Customers these days don’t necessarily mind having a few different bills every month, but Burnett says his company aims to eliminate contracts altogether in the future
The problem for Utility Warehouse is that consumers have wised up and many aren’t as confused by the multiple bills sent during the month.
Simplicity may be the offering, but customers expect more and are more likely to shop around to take advantage of better discounts.
Although customers get paid for bundling different services at Utility Warehouse, it would still have been cheaper if they had signed a separate contract for each service elsewhere.
In addition, if a customer takes out a fixed energy tariff for 12 months and a broadband tariff for 18 months and chooses to leave after twelve months, they could face high exit costs.
It’s an area that Burnett acknowledges needs work: “Our ultimate wish is that you don’t have contracts for these services and you don’t have different prices.”
Utility Warehouse currently offers variable rates for its energy customers, as well as a small number of fixed 12-month rates.
The mobile SIM cards have a rolling 30-day contract, but the broadband deals usually have a term of 18 months.
“It’s an area where you still have those contracts and the difference between prices for new and existing customers,” he says.
This practice – known as price hiking – is already banned in the insurance industry, but other sectors have not followed suit.
‘Because it is so common in the broadband market, we must also participate.
‘It’s very difficult to go out alone. We would strongly advocate for it… There is a huge customer benefit if everyone has access to the same prices.”
As with Burnett’s own career, Utility Warehouse’s trajectory is likely to be unusual as it looks to make progress in all four markets.
But as each of the sectors faces uncertainty and near-constant volatility, this may be exactly what the company needs to fully embrace its title as a challenger.
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