Utility Week

UTILITY Week 21st July 2017

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6 | 21ST - 27TH JULY 2017 | UTILITY WEEK People & Opinion Entering the energy market is easy – staying is difficult What are the risks that new entrants to the UK's domestic energy face? Chief executive's view Paul Richards, co-founder and chief executive, Together Energy T ogether Energy was born at a Utility Week confer- ence. It was the event where I met many state-owned European utility providers who wanted to come into the UK market. The first felt that UK regu- lation was six years ahead of Eastern Europe, and wanted to "play" in the UK market to keep itself ahead of the game at home. The next had invested in gen- eration in the UK when oil was $140 per barrel, and wanted to link generation to consumption. The third was a US company that wanted multiple brands and had been planning entry for "some years". Geoff Guenther and I devel- oped business plans for several companies, before breaking out on our own. Entering the UK domestic market is simple. What is dif- ficult is developing a proposi- tion that is sustainable, knits together all your partners and systems, and suits your growth and cash reserves. There is a small but increas- ing number of soware com- panies that sell off-the-shelf licences. The licence always comes with ties: normally a five to seven-year contract of other services. These ancillary services vary, but they include outsourced registrations, bill- ing, CRM systems, trading ser- vices, metering, pricing and quotation tools. There is not a single utility- in-a-box vendor that offers eve- rything. Depending on who you buy your market messaging from, that can limit your billing options, and this can also limit your metering options, trading options, and smart metering providers. It's a complex jigsaw puzzle, that, if you are not careful, can leave you with a suite of long- term contracts that could prevent you from being price competitive or agile for the next five to seven years. The obvious alternative is to build your own systems, but I don't know of a domestic sup- ply company that has managed to satisfy the regulator on a DIY option in less than three years. Once operational, regula- tory change is expensive, both in terms of lobbying and opera- tional readiness. A good example of this is the new generation of smart meters – SMETS2. Ofgem mandates: "SMETS2 installations must be appropriately prioritised during 2017. We therefore expect suppliers to be actively engaged in end-to-end testing with the DCC, and their SMETS2 asset and IT systems." The benefits to the consumer, particularly vulner- able customers, is huge. However, for a company our size, the set-up cost is twice the cost of our go-live. With 8,000 customers, that cannot be passed on to our base. Although the regulator has opened the market to suppliers, they need to be sensitive to the barriers they could be deemed responsible for creating. Finally, if you are consider- ing entry, and plenty are, be true to yourself. Create a brand that reflects you, and make sure your partners are agile enough to move with that. There may be 50-odd domestic energy sup- pliers outside the big seven or eight, but the choice is essen- tially binary: the greenest or the cheapest. That's something we're trying to change, through a commitment to trust. We believe that if you give customers transparency over margins, visibility of operational costs, and a strong level of ser- vice, they'll stick with you. It's a privilege to be building an anxi- ety-free service for households. Don't come into the market with- out a mission. It is probably the most competitive market in the UK today. Utility Week Awards 2017 open to entries The Utility Week Awards will return on 11 December at the Grosvenor House Hotel, London, and it is now open to entries. The deadline for submissions is Friday 8 September. The awards recognise excellence across the industry and reward organisations that have achieved outstanding performance in the past year. To win or to be shortlisted shows that you have reached the very highest standards, as judged by our panel of leading independent experts. For further information and an entry form, visit: www.utilityweekawards.co.uk

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