Third-party Intermediaries (TPIs) have seen a decrease in growth in both the Small and Medium Enterprise (SME) and Industrial & Commercial (I&C) sectors, as a result of COVID-19 and general market uncertainty, according to Cornwall Insight’s Annual TPI report.
This led to a target revenue pool for TPI’s of £335mn/year, an 18% decrease on 2019 levels.
- TPIs operating in the SME segment saw total revenue fall from £225mn in 2019 to £190mn in 2020.
- Revenues for TPIs from I&C contracts also decreased to £145mn, compared to £170mn in 2019.
Molly Lloyd, Senior Analyst at Cornwall Insight, said: “The decrease in revenue was partly due to the temporary closure of businesses during national lockdowns. Also, during this time many TPIs furloughed sales staff which reduced the number of new business energy contracts TPIs were able to secure.
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“Distress in many businesses meant the renewal of energy contracts moved down the list of priority for customers. Many customers would have chosen to defer contract renewals until the outlook for their business operations became clearer.
“The impact of business closures was coupled with commissions in the SME sector being impacted by the reduction in volumes. In some instances, those TPIs that were paid by suppliers on a volume basis or using estimated rates of consumption are seeing suppliers clawback commission payments in cases where actual consumption was lower.
“Trends seen in 2019 for I&C TPIs such as increasing competition among TPIs have continued into 2020, coupled with reductions in volume due to the COVID-19 pandemic.
“TPI penetration in the I&C market remained steady on 2019, as the market is more saturated, with the engagement of I&C businesses with TPIs seen as unlikely to increase.”