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24 | 20TH - 26TH MARCH 2015 | UTILITY WEEK Finance & Investment Analysis E nergy company earnings have taken a hit across the board in 2014. But for one man, gloomy financial reports might weigh more heavily than for most. Npower chief executive Paul Massara heads the big six supplier with the worst reputation for residential customer service at a time when the political pressure on energy companies has reached pre-election fever pitch and the Competition and Markets Authority's industry probe is in full swing. In addition, the UK arm of German energy giant RWE last week posted operating results 26 per cent below the previous year's, in part due to the company's need to address its customer service woes. The rest of this year will not be an easy time for any energy company. But for Mas- sara the year began with media speculation that he could be axed by power's German parent company because of poor perfor- mance. He now has just nine months to make good on the ambitious targets he set on tak- ing up the role two years ago – to climb from the bottom of customer service polls to the top by the end of 2015. Bold aims have been met with bold action, but the costs have added up. In its 2014 financial report, RWE acknowl- eged that low temperature-led demand weighed on Npower's earnings, as it did across European markets last year. On top of this, the UK supply business "had to cope with a number of burdens" including a 6 per cent drop in residential cus- tomer numbers and "higher than expected" costs relating to a customer service restruc- turing, the parent company said. An Npower spokesman declined to com- ment on just how expensive an operation the company's customer service overhaul has proved to be, or how much "higher than expected" the costs have run. But the group's explicit concern over these mounting costs w ill do little to quash speculation that Mas- sara's role at the company is precarious. Npower's business relations manager, Dan Meredith, was quick to "categorically deny" the January reports, saying Massara is not going anywhere. He does admit, though, that the process of bringing change to the culture and processes of the business is "tak- ing longer than expected". Once you start "digging up the drains", there are oen deeper problems than you realised were there before you started the job, he said. Npower's customer service problems stem from 2013 when a new billing system was implemented to replace three separate regional systems. Teething problems resulted in some customers not getting bills for up to a year, while others received inaccurate bills or bills for accounts that weren't their own. By the end of 2013 Massara, aer less than a year in the job, was forced to make a very public apology to his 3.4 million customers, and pay a £3.5 million fine from Ofgem for mis-selling. At the time of his apology, Massara prom- ised that the problems would be in hand by spring 2014, but customer service complaints continued to translate into lower customer numbers. According to the Which? energy company Massara's mission Transforming Npower's appalling customer service is proving harder, and pricier, than the CEO ever thought, says Jillian Ambrose. Paul Massara was appointed chief executive of Npower in January 2013 and has been dogged by controversy ever since. January 2013 "We have to get right back to the fun- damentals of how we treat our cus- tomers and make sure we're giving them what they want… The changes we need to make are not going to happen overnight – but watch this space – the changes start here." In January 2013 Massara vowed to reach the top consumer satisfaction spot by 2015. June 2013 "RWE Npower does not, and will not, engage in tax avoidance." In June 2013 Massara was forced to deny the company dodged paying its taxes. November 2013 "We've let many of you down recently in the overall levels of customer service we've been providing. We apologise unreservedly." Massara is forced to apologise to customers in November 2013 for poor customer service. January 2014 "The actual unit price of energy in the UK is one of the lowest in Europe, but bills are high because British homes waste so much energy." Massara attracted criticism in January 2014 for blaming the UK's housing stock for high energy bills. August 2014 "The political and media pressures at the moment make it more difficult to reduce prices and then increase them again next spring. Then we are acutely aware that if the Labour party were to implement their proposed price freeze, we will be living with the consequences of our standard rate tariff price for a very long time." In a letter to The Times, Massara blamed sticky prices on the threat of a price freeze. In his own words Npower: the plan to put it right Npower's drive to overhaul its woeful reputa- tion for customer service has taken a two- pronged approach, focusing both on the needs of customers and the company's own internal process of dealing with these needs. In 2012 Npower debuted its "customer transformation plan", which aims to identify each stage of the customer journey through the segments: "I join", "I pay", "I enquire", "I leave" and "my terms change". "Segmenting these areas has meant that we can quickly and efficiently make changes to our processes," says business development manager Dan Meredith. The company now has dedicated teams for those with delayed bills, for instance, and a Bereavement Services Team has reduced complaints in this area by 60 per cent. "We now have senior advisers in our key