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28 | 14Th - 20Th FEbrUarY 2014 | UTILITY WEEK Customers Market view At what cost independence? If Scotland chooses independence in September, it will prove a costly business for energy customers, says David Brown. T he Scottish referendum on independ- ence will take place in seven months and, if successful, will separate Scot- land from the UK politically. There will be plenty of wholesale changes, but none may be as problematic and financially important as those to the energy sector. The impact on retailers, and therefore consumers, will be significant. In his white paper, Alec Salmond is pro- posing that an independent Scottish govern- ment would be committed to centralising the costs of the Energy Company Obligation (Eco) and the warm homes discount, mean- ing a reduction in consumer bills of around 5 per cent (roughly £70 a year). This is good news for consumers, but this policy is different to that in the UK where retailers currently pass these costs on to customers. Should this be implemented, the result would be a system where retail- ers operating in both England and Scotland would need to produce materially different bills for people who are on the same tariff but live in different countries. Implementing and managing these sys- tems internally can be vry costly: Npower spent over £200 million in the past few years introducing what it calls a "customer service platform" to allow employees to access contract history, billing and payment information. The well-documented and divided politi- cal agendas in the UK when it comes to energy throws further problems into the mix. Labour leader Ed Miliband's pledge to freeze energy prices would put England at odds with Scotland, meaning consumers would be paying different rates for their energy, and the internal management of funding would be incredibly complex if centrally funded subsidies where introduced. David Cameron plans to lower bills by implementing the Energy Companies Obli- gation (ECO) scheme over four years instead of two, and fund the warm homes discount with taxes rather than from consumer pay- ments, which not only differs from an inde- pendent Scotland's approach but presents a significant shi from current UK policies. Any of these changes could result in a multitude of billing scenarios for energy sup- pliers and will require significant investment. It is also important to consider the regu- lations that affect the cost of transmitting energy, which make up about 20 per cent of an average bill. Relative to England, by head of population Scotland has a larger electric- ity grid for fewer people. This means the cost of transporting energy would be higher per person should the UK national grid be divided or replaced in Scotland. The effect on billing means that retail- ers operating in both countries would have different costs and would have to produce different bills for people using the same amount of energy. Placing different subsidies and other financial demands on retailers to maintain energy supply networks will just add more complexity and cost, which will be passed to the consumer. It is evident that the pressure being placed on retailers to manage their customer relationships and billing practices effectively will increase over the next few years. These systems are also likely to become more com- plex and potentially more costly if they are not managed effectively. David Brown, vice president for Europe, Gentrack • Separate billing systems • Different tariffs • Different subsidy regimes • Network cost-to-serve Pressure Points W e're seeing con- sumer activism on the rise with Britons more likely than ever to take action against companies they are not happy with – and energy companies top the list, according to the Consumer Action Monitor. It reveals that there were 38 million complaints about products and services last year – one complaint every 1.2 seconds. And energy companies were behind most of these complaints – accounting for approximately 11,647 (17 per cent), closely followed by retail (17 per cent) and internet telecoms (14 per cent). More than half of those who complained directly to a supplier had done so three times or more in the past 12 months. We've seen the evidence of this in our everyday work at Ombudsman Services, with energy complaints doubling in the past 12 months. There are several reasons for the rise in complaints, among them trust. Consumers believe companies are only inter- ested in making money, so when something does go wrong we're more likely to want to hold companies to account. Yet despite the increase in complaints, our findings also reveal that there were 40 million problems that weren't pursued and I think this links back to the cynicism people feel towards companies. They don't believe companies care enough to solve disputes satisfactorily, or they can't be bothered to put the time or effort in to seeking redress. I'm happy to say that companies and policymakers acknowledge some of these trends and are acting on them. Political parties recognise the growing importance of fairness and consumer rights and this is likely to be a key battleground in the 2015 election. We hope the findings from the Consumer Action Monitor research will help to inform and drive this vital debate. Lewis Shand Smith, Chief Ombudsman, Ombudsman Services This blog appeared first online at: utilityweek.co.uk We're more willing to complain than we used to be – and many Britons are complaining about energy firms. Blog Lewis Shand Smith