Why doesn’t somebody do something?
July 04th 2007

What a sad state of affairs that in the first decade of the 21st century, in what we are told is the most competitive energy market in Europe, business

consumers still cannot rely on their suppliers for timely, accurate consumption

information and bills, comments Allan Asher of Energywatch

Given the supply industry’s poor track record of service innovation, and the regulator’s misplaced optimism that such issues will be addressed by market forces, multi-site consumers should not be waiting for a solution to be delivered through external regulatory intervention. ESTA and the members of the automatic Monitoring & Targeting Group represent the cream of the theoretical, technical and practical knowledge of both the problem and the potential solutions and have the potential to lead the definition of a solution driven by consumer need rather than industry convenience.

In common with their domestic counterparts, problems relating to billing brought to energywatch by business consumers make up around 60% of all contacts. Surely the need to provide consumers with regular bills based on timely and accurate consumption data is not just a basic consumer right, but also you would like to think an imperative for suppliers in a competitive market. At the very least bill is the supplier’s major tool for securing cash flows but is surely also the best opportunity for customer contact.

The reality is that there is disturbing tendency among suppliers to pitch their billing and meter reading services at the level of the regulatory minimum, which as indicated above, is not much of a hurdle to clear. If we look at supply license conditions, we see no standards for billing at all, and metering requirements limited to safety checks every two years are set to disappear following the current supply license review. The feedback that we receive from larger multi-site business consumers is generically bad.

Where an item of industry data on a site is incorrect and has been for years, and this error comes to light on a change of supplier, the risk defaults to the consumer, unless a supplier makes a goodwill gesture. Suppliers talk about the overall picture balancing itself out over time and from the industry point of view where periodic settlements take place between industry parties, this may be true. But an individual customer is not a party to this settlement process and there is absolutely no justification for him to be subject to this “swings and roundabouts” view of the world. It is wholly unfair.

The innovative ECOES system where multi-site electricity consumers can verify site information is a step in the right direction, but this does not address the industry’s institutional failure address the need for consumption data. There is apparently no regulatory liability on any supply side party to accept responsibility for errors and we have seen cases where a consumer has queried an account as being too low over a long period of time, with no response, and yet when industry parties themselves recognise an under billing, the action is swift and decisive, with no acceptance of liability or recognition of the business disruption that such an out of the blue bill can cause.

And how many times have we heard about the switching premium – the decision point where, no matter how bad the situation seems to be with your incumbent supplier, the potential cost of switching, in terms of sorting out closing reads, incomplete portfolios being transferred, potential for paying out of contract rates, losing the benefit of data cleanup exercises and so on means you are better staying with the devil you know. This cannot be symptomatic of a market characterised by quick and flexible switching based on transparency of information.

Now we are faced with the challenge of all lifetimes, to make big cuts in carbon emissions.This exercise used to only engage very large industrial producers, ignoring the fact that every businessman is motivated to save on his running costs. And this imperative adds one more layer to the desperate yet basic need for consumers to have timely, accurate information about their energy consumption, enabling them to:

• only pay for what they use and avoid the resource intensive process of sorting out billing queries manage consumption and allocate energy costs

• work with E-billing standards that are open and uniform, that do not involve consumers in large investments which then restrict the consumer’s ability to switch when price or service becomes uncompetitive

• receive accurate bills

• have confidence in the data held in industry systems

• complete environmental returns which will become an increasingly important part of every business’s reality

How many teaching posts are going to be lost, how many hospital wards closed, how many pence in the pound added to council tax, how much will university tuition fees have to increase because councils, PCTs, schools and universities were denied the possibility of reducing energy costs through efficiency measures because they did not have timely and accurate consumption data? Or because they were hit with back billing, which seems to be a feature of the consolidation through acquisition that has characterised the supply side? How much cost will continue to be passed on to consumers by retailers who have had to invest in bespoke measurement and control system simply because their suppliers were unable to provide such basic information?

Tesco and M&S have both recently announced multimillion pound plans to reduce their carbon consumption. Innovative large group consumers like Boots, BT and the Co-op to name just a few, have installed AMR meters in order to benefit from the near real time consumption data that is enabling them to take prudent energy efficiency action, both improving their bottom line and enabling carbon savings.The costs can be kept down by accepting a reasonable time lag for viewing consumption data; viewing data a day or week later avoids the higher costs of real time presentation but is a vast improvement on annual reporting. The ability for some of these meters to be traded in the voluntary half hourly market already exists, and is enabling further savings to be made.A number of suppliers are offering this service but the potential downside is that some are using this to lock customers in to longer contract periods in order to recover the metering costs. One way round this would be to contract for the handling of data with an independent accredited data collector or data retriever.

Elexon put out a consultation in March in connection with the BSC smart metering review and this provides a valuable opportunity for consumers to influence industry’s response to this challenge.

This is a challenge for all consumers, but let’s resolve not simply to package the problem and wait for somebody else to pick it up and solve it for us. For the longest time the gas and electricity industries have worked according to their own arcane rules which usually require consumers to work around them. Let’s recognise that it is the consumer who is in the driving seat, using the energy, motivated to make efficiency savings,paying the bills and is the best possible source of data for billing, settlement and information purposes. As informed consumers act to implement solutions that are available and in use today, this will provide industry parties and the regulator with a clear framework for the changes that will be required to deliver the benefits to all consumers, in terms of:

• uniformity and interoperability of systems,

• protection for the consumer’s ability to change supplier,

• ensuring that industry data improves over time, this improving both the quality of settlement and customer billing

• timescales and targets on the implementation of solutions and

• frameworks for producing the best analytical tools available so that consumers can make the best possible use of the information available to them.

Market forces are not going to fix this any time soon. Ofgem shows no sign of acting to require suppliers to fill this yawning gap in their basic service proposition. The knowledge,experience and desire to produce a solution capable of being adopted into industry practice is growing all the time. The supply side has had their chance to get it right and have singularly failed, so now it’s up to consumers to define the solution that suits their needs. Imagine a future where you the consumer, charges your supplier for access to your consumption data so he can bill you – what a nice thought.