Since taking up the role of chief executive at the end of last year, the one question I’ve been asked more than anything else is “How can the energy industry rebuild trust?”
This won’t come as a surprise to anyone: other than the banking sector, no industry is less trusted than energy companies. My view is that, in the past, large companies and institutions acted rather like benevolent father figures, who wanted customers to blindly trust that they would look after their best interests. With the advent of greater transparency, it’s clear that many institutions failed to get it right for customers – whether that’s MPs, banks, energy utilities or even the Church.
So how do we rebuild trust?
I believe an important first step is to acknowledge that, in many ways, the energy industry as a whole has got a lot wrong over recent years. We have not been as transparent as we could have been and we’ve not always listened to what customers want. We’ve also failed to explain the need to make a fair profit – in order to invest in renewing the energy infrastructure, create jobs and keep the lights on – while keeping prices as low as possible for customers and businesses. Put simply, we’ve failed to answer the question, “what has the energy industry ever done for us?”
And we cannot tell people to trust us; instead we have to earn trust by doing what is right for customers every day, day in, day out. At Npower, we have made a public commitment to change the whole way we do business. Until this year, Npower’s generation and retail businesses were fully integrated, and although this had its advantages, it meant our focus wasn’t solely on our customers. This has now changed: everything we do now has customers at the heart of it, building on our intention to be number one for customer experience by the end of 2015.
Of course, announcing an intention is just the start – and we will be able to rebuild this trust only through tangible demonstrations of our change in culture. That’s why, this year, we’ve been engaging in a whole range of customer closeness activities from the board downwards, right through the company – so we can actively listen and engage with our customers and respond to their needs. We’ve set up a Voice of the Customer panel with thousands of members – and the Npower leadership team recently spent time working with a group of customers to understand how we can improve, and what really matters to them.
We’ve radically simplified our bill for domestic customers, building it from scratch, cutting out the confusing parts and prioritising what people really care about. Our goal was to put customers in control of their energy, with a bill that’s simple to read and understand –and even easier to act on.
We’ve also dramatically cut the number of tariffs we offer down to four clear choices – making it much easier for customers to select and compare the best one for them – and we’re in the process of moving our entire customer base on to these Ofgem-compliant tariffs.
For business customers, we’ve pledged to end auto-rollover contracts for SMEs, and are working in partnership with our industrial and commercial customers to offer them bespoke solutions.
We are committed to getting it right for customers and these changes are just the beginning – watch this space.
But, to go back to my question about how we can rebuild trust, as well as acknowledging where we’ve got things wrong, there’s a second action we must do – and that’s to have an open and honest conversation about the need to invest in our energy infrastructure and how that is going to be paid for.
As the election approaches, and the battle ground of “affordable living” is staked out, politicians of every colour will be tempted to put forward simple solutions as “silver bullets”. For some, it seems an easy option to place all the blame at the door of the energy companies by talking about inefficient markets, huge profits and a “rip off culture”. But, as H L Mencken said: “For every complex problem there is an answer that is clear, simple, and wrong.”
The truth is that there is no simple solution to juggling rising bills, increasing global demand and the need to transition to a low-carbon economy. That is why, as energy emerges as an ever more hot topic, we need to refrain from pointing fingers, and start having grown-up, frank conversations instead.
The cost of paying for renewable energy, social programmes and energy efficiency is increasing much faster than any other element of an energy bill: a recent report from Decc showed that the cost of government policy will add £286 to the average energy bill by 2020.
Customers have the right to know what decisions have been made on their behalf by government and the impact these decisions will have on their bills. To help with this, we’ve launched Energy Explained, a report showing data about the likely trend of energy bills, which looks at why we think they are steadily increasing.
To negate the cost of its policies, the government expects households to make huge energy efficiency savings. That’s a big ask for customers and we need to help them take control of their energy usage by providing information and tools (such as Green Deal and smart meters) for them to make sensible decisions on saving energy. Let’s be very clear: the only real way to combat rising bills is to use less energy.
The energy industry needs to be upfront and acknowledge where we’ve gone wrong and work harder to improve things for our customers. But it also needs to have a mature discussion, between government, industry and NGOs, about how to solve the impact of rising bills, the issues of growing fuel poverty and effective ways of encouraging customers to save energy. If we can do this, then maybe we can truly start to rebuild trust.