Lockdown, social-distancing and furlough are three terms suddenly part of the common lexicon. Their combined impact has handed an unprecedented challenge to the leaders of the UK’s energy retail market.
Juliet Davenport is an industry stalwart who founded Wiltshire-based challenger brand Good Energy in 1999. Since then the former climate scientist has witnessed much turbulence in the sector but nothing compares to the speed and the scale of change coronavirus has sparked.
Speaking to Utility Week, Davenport updates us on how she and more than 300 staff at Good Energy are coping with the pandemic. She begins by admitting customer service dipped for the first day as staff shifted to homeworking but says business is “up and running” now.
“The day the lockdown was announced we sent all our customer services staff home because we wanted to be sure that we had everything in place. Our customer service probably dropped for a day but by the end of the week, we had 300 people working at home online, dealing with customer queries”, she begins.
“From the point of view of our teams and the business itself, everybody working at home is a new thing we’re having to cope with but operationally we are up and running,” she adds.
Certainly smaller challenger brands such as Good Energy, which has c.260,000 customers, do have more flexibility to work from home than their larger counterparts with huge customer service call centres. Davenport recognises the importance of having an agile business that could enable home working overnight.
“We realised if we want to attract great staff, then you need flexible working practice and so that stood us in really good stead”, she says adding that her IT team built 50 laptops in just one day to ensure staff could work from home when the lockdown was announced.
Naturally much of the focus on the health of the industry’s workforce has been of a physical nature, but one thing that must not be underestimated is the psychological impact coronavirus has on the mental wellbeing of staff, something which Davenport is keen to highlight.
She adds: “We are also making sure we’re looking after the mental health of our staff as well, because being in isolation is quite tough. We’re doing a lot of work around that and have a whole load of mental health first aiders who continue to support everybody.”
A shift towards business customers
As with any other power supplier, Good Energy faces challenges in relation to its customer base, especially considering its recent shift towards business energy customers. In September last year the supplier reported a “continued but anticipated” fall in domestic customers as it increasingly targeted businesses. The timing of this shift is less than ideal, considering one of the major concerns flagged by the industry as of late is the effect coronavirus is having on business customers, with many anticipating a drop in revenue as the economy takes a huge blow.
Davenport explains it is early days yet to tell what the full impact coronavirus is having on Good Energy’s business customers, which make up almost 50 per cent of its total customer base. She says the supplier is encouraging its business consumers to contact Good Energy to provide regular updates on their current situation, especially those who are unable to provide meter readings. Without regular readings, there is the possibility that customers will continue to be billed as they would if they were consuming their regular amount of energy.
“One of the challenges is we don’t have accurate data on some of those non-half hourly customers and so to be able to make sure that we’re buying the right amount of power, and they’re being billed the right amount so they’re not racking up a massive debt based on an estimate, that is a challenge at the moment. We’re working with customers to try and get them to explain to us what happened in their business and what they think the downturn will be.”
Addressing concerns about the accuracy of customer profiles used to estimate bills last month, code administrator Elexon said it was still assessing the impact of the lockdown on behaviour but did not believe any changes should be made at the moment.
In March the industry, led by trade body Energy UK, began lobbying the government for assistance to help the sector weather the effects of the virus, with specific concerns being raised about business customers being unable to pay bills. There was speculation that a scheme worth up to £100 million a month may be needed to allow suppliers to provide payment breaks to struggling businesses.
“We’ve been working very closely with BEIS to make sure that there is financial support for small businesses, and really trying to help and segment our customer base to see which of those customers really do need help”, Davenport explains.
One point of great concern that she raises is the possibility of some suppliers abusing any form of assistance from the government.
“It is a risk that a lot of the measures to support businesses which are genuinely being run very well during a period where they really can’t do anything else, are misused.
“There will be some businesses that were not doing well already and coronavirus is just giving them an opportunity to get some free cash. That’s probably a little bit harsh but I would say there would be some unscrupulous businesses out there definitely.”
Despite the potential for companies to misuse funds, Davenport fully understands the need for help and warns of the dangers of seeing multiple supplier failures. The market has proven to be volatile in the past two years, with a spate of failures since early 2018.
Furlough
Across the UK millions of workers waited and continue to wait anxiously to hear if they’ve been placed on furlough. Introduced by chancellor Rishi Sunak as one of the government measures designed to ease the burden on UK businesses, the scheme pays 80 per cent, or up to £2,500, of a worker’s monthly salary.
Already the energy sector has seen more than 10,000 workers furloughed with Eon, Npower, Ovo and Centrica-owned British Gas all having furloughed thousands of their respective workforces. For Davenport however, the furlough scheme should only be used as a last resort.
“We take furloughing very seriously, and we don’t believe that we should be taking any more money from government than necessary”, she says.
Davenport adds: “It has to be a last resort. It should be for those people who absolutely cannot do any work. And also this can’t just be about saving money for shareholders, it should be about making sure that we’re supporting employees.”
Assistance from the state comes with responsibility however and looking ahead to the government’s exit strategy, Davenport has a clear sense that energy suppliers have their duty to help the economy get back on track.
“My view is that we as a society and an economy need to be pressing now, about how we come out and make sure that we don’t crash the economy in the process. That’s why I’m so keen to make sure that we take support from government when we really need it, not when we don’t need it.”