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Experts weigh in on the future of European utility business models

The utility industry worldwide is undergoing major transformation, spurred by decarbonisation, decentralisation and digitisation.

With these drivers also comes increasing pressure to find new sources of profitability and efficiency, and an emerging business model, known as ‘energy-as-a-service’, looks to be a significant solition.

This broad term describes a growing market of selling not only energy, but also technology, analytics, access to the grid, and personalised services.

“We are seeing more effort now to develop a new retail model than at any time over the last 100 years,” says James Sprinz, head of decentralised energy at Bloomberg NEF.

This market trend is in part driven by technology under the scrutiny of technologically-savvy consumers – looking to reduce costs and demonstrate their individual commitment to climate change. The second factor propelling change is utility-driven as major European energy suppliers look to recover market share lost to renewables.

“Energy providers are looking at other things they can sell besides electricity, which has seen a large increase in capital in the market, as well as more mergers and acquisitions,” he added.

UK majors move into energy-as-a-service by acquiring new companies

Most of the UK’s Big Six energy suppliers have increased their range of services through acwuisition – Centrica for instance bought AlertMe, who provide energy and home-monitoring hardware and services, as well as Panoramic Power, which helps companies improve operational efficiencies.

In 2017 a Bloomberg NEF report tracked 30 selected companies’ activity in decentralised energy products and services, and noted an upturn in investments and partnerships in technologies like battery storage and virtual power plants, as well as existing capabilities including micro-grids and energy management.

Competition

These companies are facing outside companies, such as Amazon’s Alexa, Google, with its Nest offering, as well as startups, such as ONZO and WATTY.

“There are many companies looking to move into this sub-sector because digitalisation allows them to aggregate and control assets, resources and demand in a way that previously wasn’t possible,” said Professor David Healey, director of smart energy at WSP.

Though still nascent, this market is poised to grow as electric vehicles and smart cities are adopted, and according to Navigant Research, the energy-as-a-service market for commercial and industrial customers is expected to reach $221 billion annually by 2026.

What about the existing hierarchy?

“No one can be sure where it will go, but certainly the business models of the large utilities will have to change dramatically over the next five to ten years to keep up with the changes,” says Professor Healey.

As the market moves to distributed, greener power, he adds, the sector will see new suppliers entering the market to offer more localised services at a lower cost, based on local generation supply.

This, according to Charmaine Coutinho, a principal analyst for Delta-ee’s New Energy Business Model Service, could see big tech players capitalise on their brand affiliation with new energy-as-a-service options.

“In their favour, they have a great understanding of data and data analytics, which is a key part of energy-as-a-service,” she says.

Trojan horses lead the way

Technologies such as Google’s Nest are a ‘trojan horse’ for the industry, says Duncan Barnes, partner at Deloitte, and Energy and Resources sector lead for Deloitte Digital in the UK.

“Once a consumer has this technology in their house their agency is with Google not the Big Six,” he says. “Currently, these devices are controlled by customers, but in the future, they could be run by algorithms, so those businesses that can manage data and provide insights will be the ones that succeed.”

Francesco Venturini, head of Enel X, says that the boundaries between energy and other sectors will continue blurring convention through new business models.

“If I think about electric mobility, utilities are competing with car manufactures; in energy managements systems, utilities compete with digital platform providers; in the field of the smart home, utilities are competing with the tech giants; and so on,” he says.

“Therefore, traditional utilities, which are not ready to tackle this new ecosystem, are definitely disadvantaged in comparison with those players that decide to deal with these new business models proactively.”

“We are at a stage where several companies are the market leaders and are making the necessary investments, while others are unconvinced by the demand. Over the next few years, we will see which companies are successful,” Mr Sprinz at Bloomberg NEF concludes.

What about energy prices?

More services and competition in the utility market can be generally considered to be a positive development, but it’s effect on cost to the consumer is unclear.

Venturini insists this will allow consumers access to better pricing through for example, demand-side-response services, where customers will be able to shape their consumption to off-peak, cheaper supply times and pay lower prices.

He added: “Through these new business models, more and more companies will join the game, blurring the line between sectors and increasing competition, with potential pricing benefits.”

But there’s always a risk, cautions James Sprinz at Bloomberg New Energy Finance, that some new services may be considered more valuable than others, and if services are oversold, costs won’t be reduced and “consumers will just end up spending money on different things”.

Energy prices to increase for millions as Ofgem raises cap

More than half of British households are set to see an increase in the cost of energy in April after the regulator, Ofgem, raised price caps.

Ofgem sets maximum prices that can be charged for gas and electricity to those who have not switched suppliers and are on default tariffs.

The new cap could see these households typically pay an extra £117 a year.

The regulator is allowing suppliers to cover the higher costs they face on the wholesale market.

“We can assure these customers that they remain protected from being overcharged for their energy and that these increases are only due to actual rises in energy costs, rather than excess charges from supplier profiteering,” said Dermot Nolan, chief executive of Ofgem.

About 11 million households are on default, or standard variable tariffs, and are set to be affected. Such a household, which uses a typical amount of energy and pays the bill by direct debit, should now expect to pay £1,254 a year.

Consumer groups say they can shop around for a better deal.

Another four million people are on prepayment meters, so pay for their energy in advance. The price cap will rise on their tariffs too, with the typical customer paying £1,242 per year, up by £106 from the previous cap level.

One customer set to see a price rise is Jackie Foran, of Northenden, south Manchester. The 65-year-old ended up on a default tariff after her original supplier went bust, and pays about £100 a month despite living alone.

“I think quite a lot of elderly people will be caught by surprise, because when somebody says [the price] is capped, you think you don’t have to do anything, you don’t have to worry, it will all be perfectly fine,” she said.

“But you could still be on an expensive rate, even though it is capped. It could make a big difference to the bills.

“In my mind, they are not really capping it are they?”

She intends to shop around for a better deal before April.

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How do these caps work?

Energy price capping is a flagship government policy designed to protect the vulnerable and those who have stayed loyal to their energy supplier.

Ofgem sets the cap for households in England, Wales and Scotland. Northern Ireland has a separate energy regulator and its own price cap.

Ofgem sets a cap on the unit price of energy for electricity and gas, and a maximum standing charge.

Energy companies are not allowed to charge default tariffs that are higher than these thresholds.

 

The first cap came into force at the start of January. Ofgem said this price limit meant households typically saved £76 a year on what they would have been charged without the cap.

Ofgem has now reviewed the cap and will allow suppliers to charge more from April.

The cap for those on prepayment meters came into force earlier but has also been reviewed and revised up.

Why are prices rising?

Prices are rising because Ofgem is allowing suppliers to charge more to cover the higher wholesale costs they face owing to the higher global price of oil. Wholesale costs account for more than a third of a typical energy bill.

The regulator considered the costs faced by suppliers in the six months to the end of January when setting the new cap for April.

About £74 of the £117 increase in the default tariff cap is due to higher wholesale energy costs, it said, with costs of transporting energy and environmental costs also rising for suppliers.

Alex Neill, from consumer group Which?, said: “This eye-watering increase to the price cap will be a shock to the system for people who thought that it would protect them from rising bills.”

“Energy suppliers have traditionally been the ones blasted for blaming price rises on wholesale costs,” said Richard Neudegg, from price comparison site Uswitch. “Now, shamefully, Ofgem is doing the same thing, as the reality of energy prices catches up with the political hype.”

But Lawrence Slade, chief executive of Energy UK, which represents suppliers, said that energy companies were facing “drastically rising costs” which were outside their direct control so it was correct for Ofgem to reflect that when setting the cap.

Will my bill increase automatically?

The cap is per unit of energy, not on the total bill.

So people who use more energy will still pay more than those who use less.

The new cap takes effect in April, after the worst of the winter has gone, so the impact of higher prices might not be as great as it could have been.

Ofgem points out that, without the existence of the cap, households would have been paying more.

Its analysis suggests that default tariff customers could be paying around £75 to £100 a year more on average for their energy had the default tariff cap not been introduced, despite the increase just announced.

People can also shop around for a cheaper fixed deal. This would make the cap irrelevant for them.

Ofgem and consumer groups say switching could save a typical household £200 a year, although this differential has narrowed from about £300, partly as a result of price bunching after the cap was introduced.

The level of the cap is updated every six months, at the start of April and the start of October, this year and next year, and possibly beyond.

Forecasts are already suggested that the cap could be lowered next time, saving households money from October.

Energy Minister Claire Perry said: “We were clear when we introduced the cap that prices can go up but also down.” She added that energy suppliers were “no longer able to rip off customers on poor value tariffs”.

But Labour’s shadow business secretary, Rebecca Long Bailey, said: “This government is resting on its laurels while big energy companies are ripping off their customers.”

E.ON UK to raise energy prices by 10 percent from April

LONDON (Reuters) – E.ON UK (EONGn.DE) will raise its standard variable energy prices by just over 10 percent from April, becoming the first of Britain’s “big six” energy firms to announce a rise in line with regulator Ofgem’s new price cap.

Last week, Ofgem said the cap on duel-fuel bills – both gas and electricity – would rise by 117 pounds a year, or 10.3 percent, to 1,254 pounds a year from April 1 for average energy use.

“In line with that, we’ll be making changes to our standard variable tariff prices from 1st April and expect to see similar movements across the energy industry,” an E.ON UK spokeswoman said via email.

Ofgem was told by parliament last year to set a limit after lawmakers said customers were being overcharged for electricity and gas. Prime Minister Theresa May had called the tariffs a “rip-off”.

The regulator last week said the cap would rise from April to reflect higher costs for energy suppliers such as wholesale prices, which it said were 17 percent higher than during the last cap period.

Several of Britain’s biggest suppliers, a group known as the big six, which control around 70 percent of the market, complained the cap was initially set too low and most are expected to up their prices to match the cap level.

Innogy’s (IGY.DE) npower said the cap was partly why it announced plans last month to shed 900 jobs.

Britain’s other big six energy suppliers are Centrica’s (CNA.L) British Gas, SSE (SSE.L), Iberdrola’s (IBE.MC) Scottish Power and EDF Energy. (EDF.PA)

 

UK carbon emissions down 38% since 1990

Carbon emissions in the UK are 38% lower than they were in 1990.

That’s a fall from around 600 million tonnes of CO2 (MtCO2) in 1990 to around 367MtCO2 two years ago, according to new analysis by Carbon Brief.

The decline is largely due to a cleaner electricity mix based on gas and renewables instead of coal as well as falling energy demand across homes, businesses and industry.

The transition to renewable energy, i.e. wind, solar and bioenergy, is the largest driver – collectively responsible for 37% of electricity sector emissions reductions in 2017.

Wind accounted for the largest share at 20%, followed by bioenergy at 12% and solar at 5%.

The report adds reduced fuel consumption by business and industry accounted for 31% of emissions reductions while a reduction in electricity use, mostly in the industrial and residential sectors, was responsible for 18% of the fall.

Changes in transport emissions from fewer miles driven per capita and the use of more efficient vehicles also resulted in around 7% of reduction in emissions.

Emissions in the domestic sector were largely offset by increased CO2 in imported goods until the mid-2000s, however, reductions since 2007 have not been offset by that.

Carbon Brief finds CO2 emissions form the electricity sector could have been expected to continue increasing in line with past trends without the effects of gas, renewables and reduced power use – by 2017, the figure would have been almost four times higher than they are today.

Its analysis adds: “Domestic emissions in the UK have declined in the past 30 years faster than nearly any other country on Earth. Nevertheless, additional rapid reductions will be needed to meet the UK’s legally-binding climate goals – and even faster cuts will be required once the country aims for net-zero emissions in line with the Paris Agreement.

“While it is useful to understand the factors behind CO2 reductions to date, additional government policy will need to play a role in driving the deep reductions required to help avoid potentially dangerous warming. The UK’s emission reductions to date have been concentrated in electricity and industrial sectors, while future deep decarbonisation will require large reductions in emissions in more difficult areas, such as transport and farming.”

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Avoiding pause in smart meter rollout ‘priority’ for Energy UK

The industry must avoid any hiatus in the smart meter rollout programme when installation of the SMETS1 devices ends in mid-March, Energy UK’s director of regulation has told MPs.

In a letter to Rachel Reeves, chair of the House of Commons Business, Energy and Industrial Strategy (BEIS) select committee, Audrey Gallagher writes that the industry body’s “immediate priority” vis-à-vis the smart meter programme is to avoid any pause resulting from the end date for installing the less sophisticated devices on 15 March.

The letter addresses outstanding points following the committee’s hearing into the National Audit Office’s recent report on the rollout of the smart meter programme.

A hiatus, which could be caused by a shortage of SMETS2 meters available for prepayment or in certain geographical locations in the northern communications network area, could result in engineers being stood down and customers missing out on smart benefits, she writes.

Gallagher adds that the continued rollout of smart meters is “essential” with suppliers taking all “reasonable steps; to install a smart meter in every home and business, not simply offer one.”

In her letter, Gallagher also expresses agreement with the committee’s concern that it is “unacceptable” that 30 per cent of customers cannot recall having received energy efficiency advice when their smart meters were installed even though the rate is much higher at some suppliers.

“It is clear that not all are performing at the levels they should be to ensure consumers obtain the full benefits of the smart rollout,” Gallagher writes, adding that Energy UK is leading on work with its members to share learning and best practice in the area.

She also confirms that all of Energy UK’s supplier members also use the Energy Efficiency Advice toolkit developed by the BEIS department.

In separate correspondence with Reeves, Rob Salter-Church, director of retail systems transformation at Ofgem has identified SSE as the best supplier at providing customers with energy efficiency advice when carrying out smart meter installations.

Out of the customers who have had a smart meter installed by SSE, 89 per cent recalled being offered advice on energy efficiency, he writes, the highest proportion of any supplier.

And Salter-Church writes that EDF has increased its recall rates on energy efficiency advice to 83 per cent.

He writes that both suppliers have shown improvements in the proportion of their customers who recall being offered energy efficiency advice when they have a smart meter installed.

The Ofgem director had been pressed to reveal the names of the two companies by Reeves who criticised him for not having the facts at his fingertips when he gave evidence to the committee at the hearing into smart meters.

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UK manufacturing and utility organisations focus on customer relations

Customer relations are becoming more of a focus for the majority of manufacturing and utility organisations, as 60 per cent believe that these have improved over the last three years, citing that this is mainly due to improved communications with customers. This is according to a global study commissioned by Fujitsu, which found the majority (56 per cent) of manufacturing and utility organisations believe that society and the public have become more critical of the business community.

Moreover, half (48 per cent) trust that their ability to contribute to society has improved, with 58 percent attributing this due to a focus on innovating products and services that have a positive effect on society. Nevertheless, the findings emphasised the role of trust as a key factor to a successful company, with eight in 10 (80 per cent) referencing it as an important influence in maintaining strong customer relationships.

Over the next decade, manufacturing and utility organisations are also planning to adapt to meet these customer expectations, with a fifth looking to make digital technology investments to improve business operations and efficiencies, which in turn will benefit employees and customers experience.

Graeme Wright, CTO for manufacturing, utilities and services at Fujitsu UK said, “In an era where digital technologies are undeniably disrupting the sector, manufacturing and utility companies need to ensure their organisations are built in a way that allows them to continually embrace innovation and drive productivity.

“It’s vital that all organisations across these sectors digitally transform as it can positively contribute to many different aspects of business, from customer engagement to innovation. Moreover, this will be the deciding factor between competitors.

“In doing so, organisations will be able to readily streamline processes and truly focus on customer needs and demands and increase trust.”

Digital transformation for manufacturing and utility organisations will continue to be a focus for many. Over half (56 per cent) believe it is vital for harnessing business innovation and improving products and services, with automation playing a key role in this. In fact, over two fifths (44 per cent) plan on automating some human tasks within the next three years.

Wright added, “Many manufacturing and utilities organisations are still using highly qualified workers for repetitive and mundane tasks, which adds a significant cost to production and does nothing for employee engagement.

“But with a widening skills gap, companies will increasingly use digital transformation to create more efficient, productive and cost-effective processes through the use of automation. This will allow skilled workers to focus on the bigger, more impactful and creative tasks, whilst offering breakthroughs in efficiencies which will close the gap in supply and demand for a skilled workforce.”

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Would you trust an energy firm run from a dingy, graffiti-scarred site – fronted by a rocker in a local band? That’s what the energy supplier boom has delivered

New suppliers have provided much-needed competition in the energy market, often undercutting the prices of the Big Six – British Gas, EDF, Eon, Npower, ScottishPower and SSE.

But some of the entrants, poorly resourced and woefully capitalised, have not lasted long.

Hit by rising wholesale prices and ever-increasing payments to the Government, they have gone into meltdown.

Over the past 12 months, nine suppliers have gone bust, the latest being Economy, which had 235,000 customers.

Although regulator Ofgem has promised to tighten the rules governing the granting of licences to new suppliers, it will not stop some existing companies from going bust, or their customer service standards plummeting.

In this special investigation, Toby Walne pays an unscheduled visit to some of the smaller suppliers to see with his own eyes whether they look either fit for purpose or just tin-pot operations. Jeff Prestridge, meanwhile, runs the rule over the finances underpinning these businesses – and their customer service standards.

Outfox The Market

Entered market: September 2017.

Location: Leicester.

What our reporter saw: Worryingly, my car’s satellite navigation system takes me to a derelict building site close to Leicester city centre. Has Outfox the Market, the company I am searching for, already been bulldozed out of existence without me knowing about it?

On the other side of the road is what looks like an abandoned cotton mill overlooking the Grand Union Canal. On it is a graffiti-emblazoned sign: ‘Fischer Energy: Powering the Future’. Perhaps this firm can help?

Walking through the iron gates a huge garage with shutters looms. I am at the exotically named Frog Island, a run-down industrial estate surrounded by crumbling Victorian buildings and broken windows.

Behind the garage is a modern glass-fronted reception with a Fischer placard. My arrival is met with a stony face and I am told not to move. A receptionist shuts the door on me and turns her back as she whispers into her phone.

Outside are two empty directors’ parking bays – with an electricity point in the centre for recharging vehicles.

Suddenly, surreally, a man who looks like a rock star pops out of the office. He is Tom Nurse, who I soon discover is lead singer of local band The Atlantics. He has a natty haircut and seems to have poured his legs into drainpipe jeans.

He whisks me off to an austere side room and explains he is communications manager for Outfox the Market.

In response to a recent wave of criticism from Outfox customers about woeful customer service and steep increases in direct debit payments (highlighted in The Mail on Sunday), Nurse is reassuring.

He says: ‘Service levels are back to normal. We admit to there being problems before Christmas and apologise for this. We have to adapt to be a sustainable business and we have a bold and brash model like Ryanair that is all about saving customers money.’

He then hands me over to the company’s head of customer relations who shows me a room of 35 staff manning the phones.

Outfox the Market, it transpires, is one of a family of companies owned by local entrepreneurs Keith and Maria Bastian, including Foxglove Energy Supply and Fischer Energy.

Indian-born Keith Bastian is 53 and has lived in Leicester since 1991 with his Spanish wife Maria, also 53.

He was UK sales manager for German heater company Wibo, before quitting in 2010 and setting up his own business supplying heaters. He then bought Fischer, a rival of Wibo. From there, his next step was to branch into energy supply.

Bastian is not frightened to speak his mind, in the past accusing the ‘Big Six’ energy suppliers of ‘acting like monsters’. But what of Outfox?

What the financials show: Outfox is classified by Companies House as a ‘dormant company’ – one not doing any business. Its latest accounts to the end of June 2018 confirm it has assets of just £2.

Of the 15 companies where Keith Bastian is a director and accounts have been filed at Companies House, only one has disclosed a profit – Fischer Future Heat UK.

Customer service: Website energyhelpline currently gives Outfox a star rating of one out of five – its lowest score. Review website Trustpilot is awash with customer complaints – ‘truly a shambles of an energy company’ while unhappy customers have also launched a 1,000-strong protest group on Facebook.

The Mail on Sunday has been inundated with correspondence from unhappy Outfox customers.

Go Effortless

Entered market: September 2013.

Location: Stoke-on-Trent.

What our reporter saw: The Chatterley Whitfield colliery in the Staffordshire city of Stoke-on-Trent is a ghostly ruin from a bygone era – having shut down in 1977.

The historic rusting complex is now fenced off but the colliery office is still open. It is a tired-looking art deco building with 30 offices rented out to small businesses. Go Effortless is among them – others include Wish Upon A Wedding and Laptop House.

The building is deathly quiet with only half a dozen vehicles in the car park. No one answers the door bell for Go Effortless.

A separate ‘reception’ buzzer goes straight to an answer machine. A cleaner eventually comes out of the building for a cigarette break – but will not let me in. He says: ‘I have never heard of the company.’

There is no sign of any back-office operation unless it is underground.

Team work: Go Effortless is run by husband and wife team Andrew and Melanie Burns

Go Effortless is run by husband and wife team Andrew and Melanie Burns. Andrew, 45, has a background in electronics and three degrees to his name.

Melanie, 37, is an accomplished photographer.

The couple were inspired to set up their energy firm after becoming frustrated with the big suppliers.

The couple have a big heart outside of work, supporting a local good cause – the Alice Charity – which aims to help families that are struggling on low incomes.

What the financials show: The company behind Go Effortless is Effortless Energy Limited. Financial accounts for the year to the end of September 2017 show profits of £20,358. The average number of persons employed during the year, including the Burns, was three. Companies House indicates the couple have no other directorships.

Customer service: Energyhelpline gives it two stars out of five – and there are no comments on the Trustpilot website.

Tonik Energy

Entered market: August 2016.

Location: Birmingham.

What our reporter sawTonik Energy’s offices are in Lombard House, Birmingham. As I arrive unannounced, the security guard is not impressed but I am allowed to sit in a large waiting area and enjoy a latte macchiato.

Co-founder Simon Perkins bounds down the stairs in a blue checked shirt. The 38-year-old boss, who in the past has worked for energy supplier Eon, an estate agent and an insurance company, greets me with a winning handshake.

Although obviously put out by my surprise arrival he takes me upstairs to reassure me there is more than a hamster on a wheel running Tonik.

It all looks fashionable – brightly- lit desks surrounded by plants, wooden picket fences and even a picnic rest area all made from recycled materials.

Reassuringly, I see some 30 people busy on phones – though I am told there are 80. Does Mr Perkins suffer from double vision or are there other phone operatives hidden away from view?

He says: ‘We do not wish to be tarred with the same brush as other small energy firms – and we have nothing to hide. This industry is not just about flogging cheap energy.’

Perkins offers a messianic message. He believes his customers can cut their energy usage in half within five years – through much-maligned ‘smart’ energy meters and the provision of different tariff rates according to what time of day or night it is.

He says: ‘Trying to grow fast as a business in this industry is wishful thinking. I have worked 18 years in the energy sector.’

His Apple Watch alarm gives off a piercing ring. What a coincidence. Time for me to say goodbye.

What the financials show: Tonik Energy is a subsidiary of holding company Retig (of which Perkins is a director) as is Locus Energy. In the 18 months to March 25, 2017, Retig incurred pre-tax losses of £1.443 million.

In presenting the accounts in June 2017, it says both subsidiaries have seen growth and will grow sustainably over the next three years.

Customer service: Energy- helpline awards it two stars out of five. Reviews on Trustpilot average four out of five.

Toto Energy

Entered market: September 2016.

Location: Brighton.

What our reporter saw: The bracing sea air sweeps off the English Channel on to Brighton Marina. Situated on the first floor of a massive complex it enjoys panoramic views of the sea and expensive looking yachts.

Operations chief Tom Nicholas directs me inside. Through a glass partition I see some 50 staff manning phones.

Nicholas is unfazed by my unannounced arrival – and is desperate to distance his firm from financially challenged competitors.

He says: ‘Our business plan is to be profitable within three years. I fear there are others out there buying apples for £1 and selling them for 95p to attract new customers.’

He adds: ‘It is a dangerous plan that could end with customers of good energy suppliers picking up the bills for the collapse of other minnow suppliers. Trying to always undercut on price is a race to the bottom.’

Nicholas claims the secret of success – and survival – for firms like his is ‘hedging’.

This is paying up to a year in advance for energy supplies at a fixed price to avoid being hit by higher bills later on, caused perhaps by a sudden hike in demand as a result of a surprise cold snap.

And the name Toto? Nicolas says: ‘We came up with it after a brain storming session – it does not stand for anything. But apparently in Swahili it means baby.’

What the financials show: A note to the accounts for the year to the end of April 2017 state that Toto Energy has ‘elected not to include a copy of the profit and loss account within the financial statements’.

Examination of the company’s profit and loss reserves – accumulated profit or loss – show a loss of £1.146 million. Companies House also confirms a charge on the business (filed in November last year) by energy wholesaler Contract Natural Gas Limited.

Directors of Toto Energy are Christopher Allen, 46 and Paul Fitzgerald, 44. Between them, they have a phalanx of directorships. Allen has ten and Fitzgerald has six.

Customer service: Energyhelpline gives Toto Energy two stars while Trustpilot gives it three. A recent post on Trustpilot talks of ‘shocking customer service and telephone wait times’.

Bulb Energy 

Entered market: August 2015.

Location: London.

What our reporter saw: This energy firm is currently topping best-buy tables. It has attracted almost a million customers since launch.

Bulb is situated in a retro-70s office complex in London’s East End near Brick Lane market. It is all rather trendy as hipsters on laptops discuss start-up business ideas over caffeine-free infusions.

The receptionist – one of four – is surprised when I ask about Bulb. I am told to email the company.

Apparently Bulb staff are too busy to see me so I am left to stew for almost half an hour. Eventually, head of brand Clementine Hobson pitches up.

She is nonplussed about me turning up uninvited, saying: ‘You can email me or the press office, but you cannot talk to anyone now.’

The attractive young manager bats away my questions about Bulb’s finances, simply pointing out it employs 300 staff within the building. Proof, she says, that Bulb is no tin-pot outfit. I am sent packing.

What the financials show: The financials – on paper at least – do not look good. Accounts for the year to the end of March 2018 report pre-tax losses of £23.732 million.

Directors of Bulb Energy are Amit Gudka, 34, and Hayden Wood, 35. Gudka is a former energy market trader for Barclays who outside of work likes to spin records as a part-time DJ. Wood is a former management consultant.

Customer service: Bulb is shining bright, judging by customer reviews. Both Energyhelpline and Trustpilot give it five out of five. ‘Happy with the service and bills are clear,’ says one satisfied customer on Trustpilot.

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Gareth Thomas: The water industry is failing – it’s time to put the public in charge

Margaret Thatcher’s decision 30 years ago to privatize our water industry has created a system which is expensive, unaccountable and unfair. No other country has completely privatized their system of water and sewage services. There is little competition and regulation has been deeply flawed. The consumer voice has carried little weight when up against the interests of distant investors and not surprisingly water bills have rocketed as a result.

Bringing the water industry back into public ownership by mutualizing the industry has long been the ambition of the Co-op party. Indeed, only a change in ownership so that the public are in charge will deliver the shift in priorities to make the water industry fit for the environmental, investment and financial challenges it faces.

The owners of Thames Water have particularly exploited their monopoly position. In the ten years to 2016 Thames Water’s shareholders paid themselves £1.6bn in dividends, ran up a pension deficit of £260m, loaded Thames Water with £10bn of debt and regularly paid zero corporation tax. In 2017 Thames Water was ranked 23rd out of 23 water companies for customer satisfaction according to, the Water Watchdog, The Consumer Council for Water. According to their own performance report for 2017/18 Thames are failing to meet basic targets in 17 out of 41 key areas.

Research by the Open University suggests that the owners took more in dividends from Thames Water than it actually earned from its income from its consumers over the last decade. Dividends, debt and the pension deficit weren’t the only things to increase in this period – customer bills and the number of complaints went up too.

Thames Water should be converted into a mutual, operating in the private sector but owned by its consumers and its employees. Thames Water would be jointly owned by a consumer trust and an Employee trust to share ownership of the new mutual company which would be limited by guarantee, similar to Glas Cymru who provide water in Wales.

Public ownership can take many forms but a mutual model, building on the success of what has worked in Wales and some of the lessons of the industry before privatisation would ensure Thames Water is well-resourced, accountable and effective.

Mutualising the water industry would also not require taxpayer money to be diverted from funding public services into buying out the current owners of water companies.

One of the key arguments used to bring in privatisation was that companies would deliver new investment. The government of the day cancelled all the former nationalised industries debts to help and huge sums have over the last 30 years have been borrowed, but it is questionable whether that has led to more investment than there would otherwise have been.

All of the investment in tackling leaks and improving water supply could have been covered using the resources garnered by customer bills suggesting that the debt on water companies’ books is at least in part delivering tax and dividend benefits for shareholders rather than new investment to help tackle leaks and improve services.

Mutuals would still be able to borrow for investment taking away one of the arguments opponents of reform would inevitably use to argue against public ownership and for reprivatisation.

Increasing the powers of Ofwat to reduce dividends, increase investment and put the consumers first would transform the ownership of the water industry delivering public ownership at no cost to the taxpayer and making re-privatisation much less likely.

The water industry needs reform. But if the reform is to be meaningful a change in ownership to put consumers and employees in the driving seat is essential.

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EU regulators to rule on RWE’s Innogy breakup deal by Feb. 26

BRUSSELS (Reuters) – EU antitrust regulators will decide by Feb. 26 whether to wave through German utility RWE’s (RWEG.DE) breakup of its networks and renewables unit Innogy (IGY.DE) with the assets to be divided between RWE and E.ON (EONGn.DE).

RWE said on Tuesday it had sought European Commission approval for the deal with the aim of completing the transaction in the second half of 2019.

The EU competition enforcer confirmed the request. It can either clear the deal after the preliminary review with or without conditions or open a five-month long investigation if it has serious concerns.

Innogy is Germany’s largest energy group by market valuation while RWE, Germany’s largest electricity producer, would become Europe’s third-largest renewable player after Spain’s Iberdrola (IBE.MC) and Italy’s Enel (ENEI.MI).

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National Grid says “distributed resource desk” will give a big boost to smaller generators

National Grid’s electricity control room introduced a new ‘Distributed Resource’ Desk on 23 January that enables power system engineers to give instructions much faster to smaller generators, battery storage operators, and demand side response providers – in the first 24 hours of operation, the number of bids and offers accepted by the control room from these aggregated providers was 87MWh, up 113% on average.

As the Electricity System Operator (ESO) the control room receives bids and offers daily from generators detailing the amount of power they can provide, the time they can provide it, and at what price. The control room accept or reject these bids based on what is needed to manage the network, while always opting for least cost, where it can.

Last year the system operator says it reached a significant milestone when it opened up the GB Balancing Mechanism Market, to enable small generators, battery storage and demand side response providers to compete with larger power plants to offer power and services to the grid.

Aggregators such as Limejump and Flexitricity act on behalf of several energy providers whose power in isolation is small but in total (or aggregated) meets the requirement for entry into the GB Balancing Mechanism Market. In combination, these providers have 52 Megawatts (MW) of power available within the GB Balancing Mechanism Market.

Staff managing the distributed resource desk focus entirely on optimising the use of these new assets and help them develop their capabilities to keep facilitating the growth of the market. By April 2019, National Grid expects market growth in this area will be up 179% to 145MWs, made up of batteries, combined heat and power, demand side response and gas reciprocating engines (heat power).

Claire Spedding, Balancing Programme Director, for National Grid Electricity System Operator said:

“I am delighted that, after facilitating the access of a number of new parties into the Balancing Mechanism Market last year, we are now able to take this next exciting step forwards. Putting a dedicated ‘Distributed Resource’ desk into the control room means we can create expertise in really understanding how these assets can contribute to balancing the nation’s electricity system.”

This development comes at a time when National Grid is in the final stages of preparations for transitioning to a legally separate system operator from 1 April 2019. Through legal separation, it says it is creating a trusted, impartial Electricity System Operator (ESO) that will make it easier for a wider range and variety of customers to connect to the network. During this transition, it’s critical that the ESO business continues to operate the electricity system safely and securely.

Claire added, “Who would think that a community energy scheme with a back-up generator in the North East, or a battery in the East Midlands could be helping you make a cup of tea when you get home from work in Reading?”

Responding, Hannah Smith, Senior Policy Manager at Scottish Renewables, said: “Small-scale renewable energy assets, energy storage, and demand side response all play a key role in delivering the smart system we need to tackle climate change and keep costs low for consumers.

“We welcome the move by National Grid to create a dedicated ‘Distributed Resource’ desk, which will help make the most of the benefits these assets bring to our electricity network.

“To reap the full benefits, it is crucial that the full suite of renewable energy technologies, at all scales, are able to offer services on a level playing field to other system assets.

“Renewable energy provides continue to face significant market uncertainty. Industry has no clear sight of the level of compensation small-scale electricity generators will receive for putting energy onto the grid, and a series of reforms to charging practices could prove damaging to the sector.

“We would encourage government, Ofgem and others to follow National Grid ESO’s lead and recognise the value of these assets in reducing emissions, reducing costs to consumers and balancing the nation’s electricity system.”