Utility Week

UTILITY Week 6th November 2015

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10 | 6TH - 12TH NOVEMBER 2015 | UTILITY WEEK Interview Bell does not foresee difficulties in attract- ing further business. "Contrary to what you read a lot in the media that customers are not prepared to engage in these new services, that is complete utter nonsense," she says. While the rest of the market is struggling to come up with ways to engage customers suffi- ciently even to convince them to switch supplier, Bell has found simply turning up at the door to be quite effective: "We have had the most extraordinary customer conver- sations. 'Wow, you are the first electricity supplier who has ever come to see us!' they say." Why would companies not be interested in optimising their energy use to lower their energy bill, she asks. While interest has been good, the company has yet to turn a profit. The supply business is covering its own costs and those of the technology company, with Bell not expecting to break even until next year. Tempus sought initial funding largely from various grants, including the Smart grant from the Technol- ogy Strategy Board, now Innovate UK, and the energy catalyst grant. It also has a £250,000 loan from the GLA Growing Places Fund. Tempus raised a further £5 million in equity invest- ment in May and has a "very supportive" investor base, according to Bell. While her company is setting itself apart through innovation, Bell is perhaps best known in the energy world for her bold move against the government. At the end of 2014, she launched a legal challenge against the capacity market, claiming it unfairly discriminates against DSR by awarding only a single year's contract, compared with up to 15 years for other forms of genera- tion. If the European Court rules in her favour, £1 billion- worth of capacity payments may have to be repaid. It's a brave move – but Bell insists it's in customers' interests. "Customers should not have to fund the unwill- ingness to innovate by incumbent companies," she says. She doesn't doubt that the government set up the capacity market with the best intentions, but intense lob- bying from generation companies "terrified about what their new business model is" and without solutions, have scared it into subsidising traditional forms of gen- eration at the expense of innovation. "I find it somewhat outrageous that customers are asked to stump up because these entities have not inno- vated to a lower cost base," she says. If Bell believes consumers are being asked to pay the price for energy companies' unwillingness to adapt to the future, are energy secretary Amber Rudd's pledges to drive down bills for customers hollow? Rudd has a credibility issue, Bell says, adding that subsidising costly nuclear over renewables such as wind and solar that are nearing grid-parity, undermines her promises. "Unless you actually take the time to understand what's causing the cost for customers, simply saying the words doesn't mean anything. I don't doubt for a moment that she is genuine in wanting that; it's a ques- tion of how you actually deliver it." With the written element of the challenge complete, Tempus is awaiting an oral hearing. Bell has faith her challenge will be successful – "it contravenes the law" she says simply. Whatever the result, Bell's actions are unlikely to make her popular among the big six. She is equally clear on her opinion of the ongoing Competition and Markets Authority investigation of the energy market. Tempus' press officer shoots the outspo- ken chief executive a worried look as the subject comes up. The investigation's initial finding that vertical integration is not harm- ing competition means Bell has already given up. "We had some high hopes for the investi- gation. We actually bothered to go and give evidence. Even someone with a pea-sized brain can look at this market and see there is a market failure. If you invest in generation assets, you take money from share- holders, you build the plant, you must focus on maxim- ising revenue from that generation plant." While the CMA has extended the time it has to mull over possible remedies to increase customer engage- ment, the only options are already clear cut in Bell's mind. "Pretending this country is made up of customers who refuse to switch suppliers is an absurd notion. Peo- ple have better things to do with their time than switch- ing between apples and apples," she says. "You either make the generation business sell its power on the open market, or you do not allow the same corporate group to own both entities. Those are your two options; I don't believe there are many more." Bell's condemnation is not restricted to incumbents. The notion that new market entrants are being innova- tive is swily swept aside. "We are the first innovative supplier," she says. While she concedes there is innova- tion elsewhere, it is not "transformative change" of the kind Tempus hopes to achieve. One area of the energy market for which Bell has nothing but praise is Ofgem. She believes the regulator is genuinely trying to open up the market to new players, with the recent consultation on non-traditional business models being one example of its good intent. "When suppliers like us start challenging the exist- ing practices, such as moving to half-hourly settlement, challenges come up. We have found that Ofgem has been very responsive to solving those problems," Bell says, noting that staff go beyond the regulator's obligation to protect customers by supporting innovation. You get the impression Bell sleeps well at night – but if anything were to keep her awake, it would be the pres- sures of running a pre-revenue company for three years. "It requires a certain mindset," she admits. Despite the various grants she has been able to secure, at one point she worked four jobs in addition to running Tempus to keep the business afloat. But even if Tempus does turn a profit next year and its customer base continues to grow, the future for the supply company will always be limited, Bell reveals – at least as far as the UK is concerned: "Five per cent." That's all Tempus could ever hope to achieve in the UK market, and that is the true mark of the state of competi- tion in the UK energy sector, she adds. For all her fight- ing talk and promise of disruption to the old guard, Bell is not planning to stick around to slug it out with the big six. The future for Tempus instead lies abroad in the US. "We will be unlikely to push for five per cent, because there are markets that are genuinely transparent. Why would I wait in the UK? It's not a sensible strategy." The US instead offers the promise of a liberalised wholesale market, unlike in the UK, where bilateral transactions with hidden prices are commonplace. How soon Bell turns her focus on the US is yet to be seen, but with the legal challenge still to be concluded and Tempus Energy taking off, she has plenty more sur- prises in store for the UK market. "People have better things to do with their time than switching between apples and apples."

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