Service Issues

Competition in energy supply has enabled customers to negotiate for their supplies on the basis of price and their perceptions of the service they will obtain from their new operator. There is a strong perception, particularly from

suppliers, that competition remains very much a price-based activity for

customers who do not, therefore, fully value service. From the customer point of view, dealings in the competitive energy markets can be accompanied by service problems with their suppliers. These problems can occur for many reasons, either specific to the individual supplier, or reflecting the wider market situation. They can also impact on different sectors to different extents, as is noted in more detail in Section 7.2.2, even to the point of acting as a deterrent to some customer participation in the market.

Supply competition requires complex information systems on the part of suppliers, both at the ‘front office’ customer service level and in ‘back office’ settlement and trading functions. These systems reflect their interpretations of the trading regime and tend to have evolved as market rule changes have been implemented. Standard accreditation and testing procedures are in place to ensure timely communication between wholesale buyers and sellers, and a

rigorous testing regime is in place with which new entrants have to demonstrate compliance before they can commence trading.

From time to time in the development of competitive energy supply markets in the UK, difficulties arising from such complexity appear to have been

compounded. This complex trading environment has sometimes been cited by suppliers and some believe has reached a point where it is discouraging new supplier entry. An example of this is the introduction of new settlement

arrangements from 1998 to support the abolition of the electricity market access level from 100 kW maximum demand.

5.3.1. Energywatch Complaint Information

Energywatch handles complaints from business as well as domestic customers concerning their dealings with suppliers. Information on them is stored by Energywatch in a database which defines more than 40 complaint types34 _across

four broad categories: • the sales process;

• metering issues;

• the supply relationship, mainly billing and payment issues; and

• the transfer process.

As a part of this analysis, a brief review of summary data of complaints from business customers received by Energywatch between November 2003 and May 2004 was undertaken. It shows that, over the seven months in question, 7,795 complaints were received by Energywatch from business electricity and gas users in Great Britain. These represent complaints by consumers who have been unable to get a satisfactory resolution from their energy supplier. Whilst this data should not necessarily be deemed representative of business customers’ concerns about the service they receive from the energy suppliers, as Table 5:7 shows, it does reveal some points of note:

• more complaints were received about disputes concerning established

supply relationships (61%) than any other source issue;

• twice as many customers have complained about issues involved in the

switching process (23%) than in the way they were sold to (11%); and • issues with metering form a small, but notable proportion (5%) of business

customer complaints.

This headline review tends to suggest that more customer concerns are generated by the independent actions of suppliers rather than more industry- wide structural issues, that unresolved billing and payment complaints represent nearly 60% of all complaints received, and that mis-selling is no longer a

significant issue in the business market.

Table 5:7: Summary of Complaints Received by Energywatch from Business Customers – November 2003 to May 2004

Number Share (%) Sales 870 11.2% Metering 404 5.2% Supply 4,760 61.1% Transfer 1,761 22.6% Total 7,795 100.0%

Source: Cornwall Consulting analysis of Energywatch data.

Consideration of the individual complaint categories defined by Energywatch serves to underline the points made above, as Table 5:8 shows. Energywatch also collates complaint data by supplier involved. Whilst Figure 5:3 presents a summary of this information, care needs to be taken with its interpretation. Absolute complaint numbers may reflect the scale of the supply businesses involved rather than any tendency to provide better or worse customer service, triggering fewer or more complaints to Energywatch. A review of the

information presented in Figure 5:3 reveals the following:

• the six companies with the most customers35 _{are all amongst the ten}

companies for which Energywatch received the most complaints during November 2003 to May 2004; and

• a handful of smaller suppliers attracted similar level of complaints despite having very significantly fewer customers.

Table 5:8: Main Complaint Types Received by Energywatch from Business Customers – November 2003 to May 2004

Issue Type Proportion

Disputed account Supply 36.1%

Sales Misinformation Sales 7.6%

Estimated bills/consumption Supply 6.5%

Frequency/Infrequency of bills Supply 5.3%

Refunds Supply 4.6%

Transfer in error due to incorrect data Transfer 4.1%

Problems arising from contracts Transfer 3.7%

Billing problems with old Supplier Transfer 3.6%

Supplier objection to transfer under contract Transfer 2.8%

Inaccurate Meter Reading on Transfer Transfer 2.3%

Source: Cornwall Consulting analysis of Energywatch data.

Figure 5:3: Complaints Received by Energywatch from Business Customers by Supplier – November 2003 to May 2004

0 500 1,000 1,500 2,000 2,500 3,000 3,500 Key:

integrated energy retailer

other

major electricity and/or gas producer