Prepaypower posts decline in profit but boosts customer base to 200,000

Energy supplier Prepaypower is closing on 200,000 customers, chief executive Cathal Fay confirmed, as it reported that rising costs left 2022 profits trailing at €2.9 million.

Sales at the pay-as-you-go electricity and gas supplier, renamed Yuno Ltd in August, rose 36 per cent last year to €307 million from €226 million in 2021. However, operating profits slid 72 per cent in 2022 from €10.3 million the previous year as fallout from the Ukraine war drove up costs. Its pre-tax surplus fell at the same rate to €2.4 million.

Mr Fay predicted that the business should have around 195,000 customers by the end of this year, aided by the addition of its Yuno bill-pay energy supply business in August. That business, aimed at supplying homes, is on target to have recruited around 10,000 customers by the end of the year, while the pay-as-you-go gas and electricity operations have 180,000 between them.

Sales continued growing this year, but Mr Fay expects 2023 profits to be broadly similar to 2022, as wholesale prices remained at two to two-and-a-half times their pre-crisis norms.

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Prepaypower cut prices this month but its chief executive does not see scope for further reductions as wholesale prices remain volatile. “We would need to see sustained decreases at the wholesale level.”

Mr Fay noted that natural gas prices on world markets ultimately determined wholesale charges. He added that every time gas prices began falling “something happens to push them back up again”.

At the same time European stocks of the fuel, critical to electricity generation, are at record levels while its liquid natural gas facilities are close to full. Securing enough natural gas to meet its needs has been a key concern for the EU and individual member states since the outbreak of the Ukraine war effectively eliminated Russia, its leading supplier.

Mr Fay said its hedging strategies had allowed Yuno to cut gas prices by 13.5 per cent and electricity bills by 12.8 per cent this month. That should save a typical electricity customer €223 a year, a gas customer €212 annually and €435 per year for a typical dual-fuel customer, the company calculates.

Energy suppliers “hedge” by buying of gas and electricity months ahead of the time that they intend selling them to customers, shielding themselves from market price fluctuations. Mr Fay noted that this allowed the supplier to “shelter” customers from the worst impact of the energy crisis sparked last year by Russia’s invasion of neighbour Ukraine.

Yuno’s chief executive said it focused on managing risks to customers and itself in what he called a very difficult market. “We also chose to absorb some of the rising costs, to protect our customers, which hit our profitability in the year. We believe we got the balance right given the extraordinary environment.”

The company provided €500,000 for customers most hit by the crisis, partly through a hardship fund operated in conjunction with the Money Advice and Budgeting Service.

Accounts show that the company cut the dividend paid to shareholders, who include Mr Fay, to €1 million in 2022 from €19 million the previous year.