How energy consumers are influencing utility companies

Industry magazine, Utility Week, recently published the findings from their study determining what is causing utility companies to rank ‘customer centricity’ as an area for improvement in 2015. Utility companies don’t have the best reputation for being customer-focused and there will be many sighs of relief from consumers – both business and domestic – who are thankful suppliers now realise the importance.

The top three reasons for this change of heart are all related to the customers (compared to the bottom four reasons which aren’t customer driven). Top of the list is ‘considered necessary for business success’ which suggests that businesses are looking at this from a strategic point of view in order to give themselves a competitive advantage against other suppliers. The utilities industry has been in the news for a lot of the wrong reasons and has become a distrusted industry. Switching is on the up and small utility companies are beginning to report growth in profits and milestones in the amount of customers they have.

The second reasons was ‘response to customer feedback’ which again suggests it’s about gaining competitive advantage and perhaps related the rise in the number of complaints last year (and the amount of customers choosing to switch). The third reason was ‘it is considered the right thing to do’.

Within the bottom half of the reasons – the least highly ranked by utility companies – were financial reasons such as cost control and pressure from investors. Interestingly utility companies ranked ‘regulatory incentives and penalty mechanisms’ and ‘government policy’ low down on their list of reasons for improving customer centricity. This further suggests that this is more about customer pressure than anything else. Despite Ofwat placing the customer at the centre of the PR14 than any other price review or Ofgem introducing the RIIO price control regime, it looks as though customer pressure forces utility companies to behave themselves more than government legislation.

What the honest reasons behind this drive for customer centricity in 2015 is can be left to an educated guess. But with switching suppliers becoming more common for both business and domestic customers and the ethics of utility companies being questioned in the press it’s hard to ignore that these two things might be linked. Utilities are set to be a topic of debate at the upcoming General Election and the changes it could bring to the industry depending on who gets in (Labour promising a price freeze, UKIP saying they’ll reverse green incentives and the Green Party who want to increase renewable power). However the results of this study suggest that consumers currently wield a lot more power than the government when it comes to influencing change in the utility industry.

This article was originally posted on the Business Cost Consultants Energy Insights Blog: http://www.businesscostconsultants.co.uk/energy-consumers-influencing-utility-companies/