Utility Week

UTILITY WEEK | JANUARY 2021 | 23 Talking Points… Customers "Challenger brands have become the new incumbents" Comment Adam John Reporter A er years of mergers, acquisitions and the strong growth of new entrants, Ofgem nally decided to ditch the term "big six" in November, with suppliers now being ordered by size as small, medium and large. The retirement of the big six moniker – with all its accom- panying baggage – has been long debated. But with Bulb and Octopus now classed in the same category as British Gas, should the question be whether the label "challenger" has also had its day? Octopus and Bulb are two of the energy market's success stories. Both have long since surpassed one million UK cus- tomers and have made moves into several foreign energy markets. Furthermore, the pair are each targeting 100 million accounts globally by 2030. While opening the market to competition was always intended to end the dominance of the legacy suppliers, some would argue the reclassi cation means the pressure is now on these newer "large" players. Andrew Perry, a principal partner at Oliver Wyman, says having the label of being a challenger takes a lot of the pressure oŽ as newer suppliers can "attack" the incumbents for their approach and for being the root cause of the problems in the industry. Put simply, a lot of the challengers' success is based on "not being them", he says. Perry tells Utility Week: "As the 'challengers' themselves become the large incumbents, they now face the pressure and responsibility of being the leaders of the industry and the potential target of regulator and customer scrutiny, rightly or wrongly. "This presents a diŽ erent type of challenge for them to deal with, especially as they each now look to drive value from the customer bases they've built." So what does it actually mean to be a challenger in the current energy retail market? British Gas recently created British Gas Evolve, a low-cost digital only oŽ ering, to try and redress the balance. Meanwhile Eon announced plans to "rein- vent itself " by creating Eonnext and using Octopus Group's Kraken platform – the rst time a big six supplier adopted tech- nology created by a challenger brand. Both cases show how the lines between big six and chal- lenger had been blurring in recent months. Ovo Energy, another erst- while "challenger", is now a large supplier, having taken on SSE's customer base. Ofgem's reclassi cation of the big six not only brings an end to a term that has become synonymous with the energy market, it also brings into doubt whether the term "challenger" is still relevant at all. The news in numbers: £21 Increase Ofgem is proposing to default energy tari price cap when it is next revised in April 2021. 8,500 Excess winter deaths last year as a result of cold homes. 180 Sta recruited by Thames Water to improve its customer experi- ence during the six months to 30 September. £485 NEA's estimate for the energy market premium digitally excluded house- holds face. 41 minutes Average time it took Boost Energy to answer calls to its customer ser- vice line, according to a Which? ranking, which put Boost last. 74,000 Domestic custom- ers from Yorkshire Energy transferred to Scottish Power at the start of the month aˆ er the former exited the market. More ambitious response times to com- plaints as well as using data to improve service are among the suggestions for overhauling billpayer interactions with water companies. A review of complaint procedures was undertaken by CCW and Ofwat, which jointly published a report high- lighting "encouraging examples of com- panies doing the right thing" as well as "some disappointing shortcomings". It said rms must raise their ambi- tion on response times and publish their commitments for next year. The majority of written complaints are settled within ten days, while others are resolved in one day (2 per cent), up to 40 (13 per cent) or more than 40 (7 per cent). Data gathered by CCW and Ofwat from all companies showed unwanted contacts were generally sorted faster and 84 per cent were settled within ten¡days. Issues around supply or sewage were generally addressed sooner than people who got in touch about billing or an account dispute. However, the report noted variation between compa- nies of what constituted an issue being resolved. The report suggested companies should improve their understanding of how satis ed people were a er making contact and, where bene cial, should collaborate with others. Generally, it suggested improving the frequency and eŽ ectiveness of collaboration and good practice sharing on complaint handling. It noted companies have only limited understanding of the experience of vul- nerable complainants and should work to improve awareness here. The report suggested companies should assess complaint handling prac- tices beyond their own business as a wider review. CCW and Ofwat said consumers' trust is likely to rise if they feel lis- tened to and consequently people may be more likely to respond to company eŽ orts to change behaviours such as using less water. It said complaints practices are "intertwined" with the wider health of the industry and the knock-on eŽ ects of improving performance around com- plaints could bene t short and long- term delivery objectives. WATER Companies 'must be more ambitious on complaints'

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