People who still sweepingly classify the energy industry as one of slow-paced change and stale corporates are living in the past. Last week, Utility Week interviewed Sara Bell, the tenacious chief executive of tech-driven Tempus Energy. This week we’re with Peter Haigh, a veteran of old school incumbents Eon and Elexon but now managing director of one of another new strain of fast-moving energy retail start-ups.
Bristol Energy is among a fresh wave of energy market entrants popping up all over the UK – municipal energy companies. These companies come in a variety of hues, and with city councils as their shareholders they could be a perfect answer to growing consumer interest in locality and individualism. Not to mention to local government’s interest in serving citizens better while finding new sources of revenue in a time of austerity.
“Disruptive” has become the word of choice for describing new technologies and approaches to customer engagement in the energy sector. But as Utility Week meets Haigh in Bristol Energy’s smart new offices (currently shared, somewhat oddly, with the Bank of Ireland) a stone’s throw from Temple Meads station, there is a sense that market disruption is brewing. Next to our meeting room activity is buzzing as the small hive of staff prepares for controlled market entry, starting 18 November.
Haigh, though new to entrepreneurship, is full of enthusiasm for the approaching launch. He loves the detail involved in taking a company through its first steps. “It’s special,” he says, “because you see the whole business every morning when you walk into work. You’re involved in lots of basic decisions every day that impact customers and colleagues.”
However, although the nitty-gritty of operations are still fledgling, don’t be fooled into thinking Bristol Energy’s strategy – its raison d’etre – is similarly immature.
Haigh took up his position at Bristol Energy in September. He was the first salaried employee, which means he got his first pay cheque “with the number one in the top right hand corner”. It’s an experience that clearly thrilled him – you get the impression he’ll frame it.
But before Haigh joined, a long and rigorous process of planning and strategic positioning took place. “It was one of the things that attracted me to the role, if I’m honest with you,” says Haigh. “The structure and the strategy had had a huge amount done to it and had been subject to a lot of challenge from long before I got here. That clear understanding of what we were taking on.”
And what is that? “The opportunity for a more socially responsible way of selling electricity and gas.”
It’s an ideal that fits nicely with the wider work of the shareholder, Bristol City Council. The city is known for its quirky individualism, for its love of independent businesses, for its green-living collectives, artists and, more recently, for its establishment of its own currency, the Bristol Pound.
The city council is keen to nurture and reflect this quirkiness and in the energy space has invested significantly in renewable energy, energy efficiency and schemes to help the fuel poor. In 2015, Bristol was named European Green Capital by the European Commission.
With all these things converging, and against a recognised backdrop of public disaffection with mainstream energy supply, the council began “well over a year ago to look in earnest at what an energy company might look like. This has been well-considered and is part of a coherent strategy for Bristol”.
That said, while the council’s social motives for Bristol Energy mean that it “is not a pure play commercial” enterprise, as a wholly-owned but “entirely separate” subsidiary, the company must also stand on its own two feet. It will not be a subsidised initiative and it cannot become “a burden” on the council, says Haigh.
“It’s my job to run the energy company,” he says, to ensure the right profitability model can be achieved and that the business can offer viable products that can compete with those being dangled by bigger, more established brands.
Haigh is confident that by majoring on customer experience and taking advantage of the agility inherent in a small firm, this is achievable. That said, he is aware of the challenges ahead and wants to be “prudent” by making sure that the company can “walk before we run”.
The upcoming period of controlled market entry – required by Ofgem for new entrants – is therefore critical. This process will select a couple of hundred domestic customers – from “hundreds and hundreds” who have expressed interest online – to “go live” and test the billing and trading systems, telephony and so on.
To play it safe when putting these systems through their paces, Haigh says the Bristol will keep its offering “fairly vanilla” at first, but he’s keen to innovate and offer a “fairer” range of products. As the company grows, these will reach out to business customers as well as domestic ones, and will break the boundaries of the city too. Haigh says Bristol Energy will be open for business to anyone – but with a focus on the South West.
The characteristic which Haigh says must link all its innovations and offers is a sense of “fairness” and “accessibility”. And these words, which no doubt any supplier would say they subscribe too, must go more than skin deep. “Bristol’s offering has to be distinct. We have no desire to be a ‘me too’ operation,” says Haigh.
Perhaps one of the most tangible ways in which this desire to be different will manifest itself is in Bristol Energy’s plans for customer engagement channels. While popular consensus sees vast amounts of time and resources being poured into the development of digital platforms for customer engagement, Bristol is part of a small group of companies across sectors moving against the grain of online migration. It plans to open up shop in the physical world.
Does this hark back to a heyday of electricity board high street presence? “Don’t get me wrong,” laughs Haigh, whose first days in the energy sector were also the last days of Yorkshire Energy Board, “we’re not about to branch out into washing machines and fridges.”
The idea of opening up physical shops is based on a simple but persuasive argument that face-to-face communication is still the preferred option for many people when they are concerned or confused about issues that impact their day-to-day lives and – crucially – their finances. It’s something the telecoms and banking industry have long realised, he says. While their online and mobile applications are all in place, physical branches still serve an important purpose. “The same could well be true of energy”, asserts Haigh, and it could lead to a democratisation of switching, that key issue under the eye of the Competition and Markets Authority.
He explains: “I saw some recent research, which showed that the propensity to switch is highest among those people who shop online at Ocado. I thought that was a fantastic piece of insight. I thought that’s amazing.
“But it isn’t actually – when you think about the logic for it. The easiest way to switch is via a price comparison site. If you’re shopping at Ocado, you’re comfortable with using the internet – it kind of falls into place.
“And then you think about the broad church that is ‘customers’ – those who don’t have access to the internet, for whatever reason, those who have difficulty finding their way through all of the different tariff structures. When you think about that, you realise we have to do things differently in terms of open access. It is not fair to say we’ve got a really good offering for all these internet-enabled customers who self-serve and use paperless billing and pay by direct debit, but ignore this group of customers over here.”
Bristol Energy’s physical shops could offer the option to switch via a face-to-face negotiation and to pay energy bills by cash – maybe even using the Bristol Pound as currency. Perhaps most importantly, though, Haigh emphasises that the shop will be a key means of delivering advice about energy usage, especially to the fuel poor. It’s a back-to-basics approach which – although it will “come at a cost” – makes sense because it resonates with the company’s social values and because “you’ll have customers and potential customers walking through the door and you’ll know, just from the fact they are there, that they’re interested in talking about energy”.
All that said, Haigh is no Luddite. He’s very aware that Bristol Energy is launching straight into a year in which a supplier-led national smart meter programme will begin. And although he admits that this is a somewhat daunting prospect, he has high expectations of the transformative impact this technology will have on the energy market.
“So often the way that people pay for their energy, the linkage between doing something – putting the washing on – and paying for it is just lost. And that’s not true with other things.”
Smart meters will reinstate this link and help suppliers have “adult” conversations with customers – Haigh says he is “passionate about treating customers like adults” – and allow them to have “informed choice and a fair choice”.
Haigh knows that getting customers to think positively about this new world of choice will not always be easy – “you’ve got a whole range of views in customers’ minds as to the benefits or otherwise of the smart meter” – and that the logistics of getting those meters into homes will be tough for a start-up, given that installer skills are at a premium. But still, he’s fixed on the opportunities. “The smart meter is the laser-scanning till of our industry. Before they existed, shops knew that you’d bought stuff.” So the smart meter will lead to the Tesco Clubcard of energy? That’s right.
Talking more broadly about the rapidly developing world of energy technology, Haigh shows himself to be adherent of demand-side response, and says today “we are only scratching the surface” of what is possible. As Bristol Energy grows in 2016, hopefully expanding its offering to businesses as well households and so gaining a broader portfolio of demand, it’s an area he’d like to explore more fully. He’s keen to work closely with local distribution operators and renewables developers to see what’s possible.
This openness to opportunity and to partnership is a thread that runs through Haigh’s plans for Bristol Energy. With all its future before it, the company has a never-say-never ethos – even water provision, through partnership, might be a possibility come 2017.
But is Bristol thinking big? Is it a threat to the big six? Haigh doesn’t see it quite in those terms. “It’s less about the height of the hill and more about the direction of travel,” he says – in other words less about competition, more about playing a different game. “There is a general move in people’s psyche – moving away from energy for a moment – which is to go local. That is a result of people thinking more about community, more about wellbeing, more about individualism where we all want to be special.”
Haigh sums up: “I can’t think of any other commodity where there hasn’t been a really meaningful attempt at differentiation.” With local energy companies on the rise, that could be about to change.