Utility Week

UTILITY WEEK | 13TH - 19TH DECEMBER 2019 | 27 Operations & Assets is key to the strategies of many suppliers to develop smart home propositions, numerous technical and operational challenges have soured any initial excitement around the transformative potential of the technology. In terms of ful lling installation require- ments, our group of challenger brand rep- resentatives pointed out that they o en struggle to get hold of the necessary hard- ware or strike installation contracts with asset providers since they lack appealing volumes. And when they can secure the kit, they frankly claimed "it doesn't work". In particu- lar, the group reported negative experiences of the latest SMETS2 smart meters, saying that the technology is less reliable than its SMETS1 predecessor – even given the inter- operability failings that were widely reported in association with the latter. All of the companies represented at the table said they found a high proportion of SMETS2 meters currently "drop o„ " com- munications systems shortly a er installa- tion, resulting in a poor customer experience and increasing the risk of billing errors. This raises the prospect of costly and resource- intensive work with meter manufacturers, the Data Communications Company (DCC) and, for most, the leading billing so ware provider in the challenger segment – Junifer – to overcome connectivity and integration challenges. And this is just for credit customers. On the prepayment side, which accounts for a substantial proportion of the customer base at some of the companies represented at the debate, the smart meter challenge is compounded. There is currently no working SMETS2 prepay technology on the market and a technology solution is "some way o„ ". Nevertheless, continued rollout of SMETS1 technology has been vetoed. Overall, the energetic debate and open sharing of experience demonstrated at Utility Week's roundtable reŽ ected a contin- ued determination from smaller suppliers to contend the market share of incumbents and bring better value to consumers. But there's no doubt the headwinds are strong and suppliers who do not run a tight ship, with carefully pitched pricing, lean operations, agile technology and a beady eye on gross margins, will remain dangerously exposed. There was a gloomy consensus that a continued focus on low-cost tari„ s and rapid growth at some challenger brands means that a wash of cash continues to mask sys- temic ine' ciencies and revenue leakage. Further supplier collapses will not come as a surprise. Brought to you in association with "Small suppliers must play to their strengths and capitalise on speed and agility." T he life of the challenger brands in the energy retail market is fraught with danger and even the soundest looking business plans can come unstuck in what is an incredibly di' cult and volatile operating environment. The reduced barriers to entry have encouraged an inŽ ux of challenger brands, many of which join the market with- out the same level of industry knowledge and know-how of the existing players. That, coupled with an unat- tractive wholesale market and a lack of support for suppliers when they are struggling, have put paid to many ambitious growth plans and have seen the demise of several of the smaller suppliers. It would appear that slow and steady may well win the race in this market. However, all suppliers – large and small, low cost and niche value alike – are faced with changes in regulation and escalating compliance costs that could unhinge even the healthiest of balance sheets. Among these, the obligations involved in the smart meter rollout are•key. The interactions suppliers are increasingly being required to support with the DCC, as well as parallel changes to intro- duce faster and more reliable switching for consumers, imply signi cant changes to internal IT systems. Smaller suppliers may have an advantage in the race to master these industry changes and keep moving forward. With visibility of end-to-end operations that the bigger beasts in the market can't hope to achieve, challenger brands can be nimble in adopting modular technologies to handle new industry data Ž ows and integrating these with exist- ing systems, including billing engines. The increasing availability of "pay as you go" SaaS-based options – including AMT- Sybex's MarketŽ ow – also plays into their hands by o„ ering pay- ment options that t with the predominantly op-ex oriented nature of challengers. The greatest learning from this roundtable was that there is a real appetite to continue building a healthy competitive market and for the smaller suppliers to keep challenging the big six (or whatever they may be called soon). There was a lot of passion shown for a market, based on a wealth of experience around the table, that has been going through a great deal of change and the resounding message was that they all wanted to do the right thing by their customers. To do this, it's essential that leaders within challenger brands equip themselves with technologies that can take some of the complexity out of back-o' ce processes, present industry processes clearly, make data more accessible, and free up energy retailers to focus on their customers. They need systems that enable them to communicate e„ ectively with the market and reduce the impact of avoidable market charges while increasing customer satisfaction. For more information, visit: www.amt-sybex.com Comment Graham Ribbons Client account manager, energy retail, AMT-Sybex

• Cover