As he vacates his chief executive’s chair, Tony Cocker sees a “Sword of Damocles” hanging over the UK energy sector.
When Utility Week meets him in Eon UK’s soaring glass offices next to Victoria Station – only recently occupied by the company – the snap election and a Conservative pledge to cap energy prices have not yet come to pass, though many had already labelled the latter an inevitability.
If Cocker is despondent or frustrated to leave Eon in such an environment, he hides it well.
During five years as captain of the firm’s UK arm, and 20 years with the wider business, Cocker has steered Eon through stormy waters and navigated a potentially treacherous sea of sector transformation with a patient and dedicated hand.
His approach to leadership has earned him widespread respect and it was little surprise to see his name appear in a list of the utilities sector’s top 10 most transformative leaders, nominated by the industry ahead of Utility Week Live 2017.
“We’ve got this constant talk of intervention – which is effectively a Sword of Damocles hanging over the sector – which is concerning.”
But now, another political maelstrom could threaten Eon’s, and the wider sector’s, ability to continue innovating and investing in its strategy for customer-focussed, smart energy services.
Cocker doesn’t deny the seriousness of the situation for Eon and its market contemporaries. But he is characteristically reserved and measured in his appraisal, picking his words thoughtfully, occasionally tapping the table in his corner office firmly with his fingers to emphasize a key point.
He retains a lingering optimism that price regulation could be avoided and mourns the sidelining of recommendations made by the Competition and Markets Authority (CMA) to address perceived market dysfunctions.
“Our hope for that was that we would have an analytical investigation into the industry which would come out with some clear recommendations and clear the air,” he reflects.
“There are some clear recommendations from the CMA. We agree with some of what they’ve said. We don’t agree with all of what they’ve said but we don’t kind of treat it as an a la carte menu. It is what it is.
“Our strong belief is that we should implement the CMA’s measures – the ones we don’t like as well as the ones we like and give those measures the time they need to bed in.”
Instead, Cocker acknowledges, “we’ve got this constant talk of intervention – which is effectively a Sword of Damocles hanging over the sector – which is concerning. And…I think…it really adds to – big picture – investor uncertainty in the UK energy sector”.
This uncertainty is the result of accumulating political interventions in recent years, Cocker explains.
“We had a number of interventions early on [under the last] government on ROCs, LECs, which, to a certain extent, undermined confidence, eroded confidence in the UK as an attractive place to invest.”
Cocker says these interventions, just as price regulation would be, are not “evidence-based policy”.
“They were not based on deep evidence and consultation, they were based on manifesto commitments.”
In a post-EU referendum environment where populist politics reigns and respect for experts and institutions is confined to nostalgia, Cocker’s hope for a “return” to evidence-based policy may seems fruitless to many.
Cocker admits that there are fundamental questions being asked across the energy sector and its investor community about “whether the UK still believes in competitive markets”. But not wanting to dwell on this negative train of thought, he is determined to find some positives to talk about.
Remaining with policy, Cocker makes sure to be balanced and give government credit for some sound thinking in its plans for regional development, industrial strategy, and for investing in skills – an issue Cocker has dedicated great time and attention to during his time as chair of the Energy and Utilities Skills Partnership (which recently launched its first sector strategy for skills and workforce renewal).
The first of these sensible policy “planks” links to the “possibilities of distributed energy”. Because these are intrinsically local and regional in nature, Cocker welcomes a devolution of power to the regions which will allow a national market for distributed energy solutions to prosper.
Eon has a keen interest here. Cocker becomes animated as he talks about Eon’s increasing work with municipalities, councils, and cities on strategies to service their social and economic needs with joined-up, clean energy solutions like energy storage (grid scale and domestic) and heat networks. The company even has a division for highways lighting to play into this agenda.
Secondly, with regards to industrial strategy, Cocker welcomes the fact that government’s recent green paper and consultation “calls out the energy sector and the fact that it will compose a huge part of national infrastructure investment in the next decade. It also calls out energy as a business cost” and highlights the transformative impact the electrification of transport and decarbonisation of heating should bring to clean growth potential in the UK.
“I think that at our kind of scale there clearly is always a risk of being faceless – which we have to manage.”
Cocker says all of this is “absolutely in tune” with Eon’s strategy for customer-focussed, clean energy solutions that has been dogma since the company split away from its conventional generation and trading business, where Cocker himself spent his early Eon days.
Indeed, it is also in tune with the Eon UK “reset” programme which Cocker spearheaded when he first became chief executive.
His leadership throughout this significant programme of restructuring and cultural overhaul, designed to fix a failing relationship with customers and empower front line workers to “engage empathetically” with them and “do the right thing”, has won him the enduring loyalty of colleagues, throughout the business.
His combative select committee appearance in 2013, when he was grilled about prices by an unsympathetic Tim Yeo, reportedly received rounds of applause in customer contact centres where it was viewed on big screens.
Meanwhile, executive co-workers tell Utility Week how Cocker made himself a “visible” leader in a time of challenge and change. They speak of his continued willingness to listen to colleagues from top to bottom of the business, spending time with call centre and meter fitting teams. They point to his enduring determination to bring customers into face-to-face discussions about service and process improvements and his calm clarity of purpose.
“There used to be a ‘Heinz 57’ approach to strategy,” says one colleague. The reset changed that into “a one page strategy” that the whole company understands and is guided by – or at least 87 per cent, according to an employee survey conducted in autumn 2016.
This hard-won unity within Eon, which has been strengthened by the company split, has reaped reward. Net promoter scores have inched upwards year-on-year and the company now consistently tops league tables run by organisations like Uswitch and Citizens Advice for best customer service and complaints handling in both the domestic and non-domestic energy markets.
Furthermore, while Eon as a whole has displayed some decidedly lacklustre financial performance in recent years – for 2016, EBITDA was down 15 per cent to €4.9 billion and revenues fell by 11 per cent to €38.1 billion – the UK business has been relatively spritely. Full year results for 2016 showed profits up by 14 per cent on the previous year, despite customer losses which impacted revenues.
The record of good performance is not unblemished. Cocker acknowledges the “mistakes” which have led to fines from the regulator, such as a £7.75 million penalty in 2015 for overcharging customers. But the chief executive says such instances have served to reinvigorate internal efforts to drive out process error and find ways to improve systems for reduced cost, simplification, and better customer experience.
Some say that the big six energy companies – a term Cocker takes issue with – will never be able to drive out bad customer experience. They reason that their scale inevitably divorces customer reality from the ambitions of a faceless organisation.
Cocker ruminates on the challenge. “I think that at our kind of scale there clearly is always a risk of being faceless – which we have to manage.”
This has to be done by remaining committed to giving workers the time and scope to fully resolve mistakes and customer concerns, he says. It’s a tall order in an environment with “prescriptive” regulation and political scrutiny, but Cocker is firm that it is the only way to optimise service.
“People do understand that companies are staffed by individuals and that individuals make mistakes from time to time,” he says. “The key question is, does that company move to rectify that mistake?”
While colleagues sing Cocker’s praises, the leader himself is earnestly sincere as he speaks of his pride in the “passion” and “collegiate way of working” displayed by Eon employees.
He is modest about his nomination as a top force for transformation in the sector, saying it reflects more on the company than on him. But “part of what I hope I have achieved in my time as chief executive is to unleash some of that passion – liberating and enabling it”.
But what now? Cocker has already passed the baton of day to day leadership to his successor Michael Lewis – who previously headed up the Eon climate and renewables business. At the end of July, he will finally leave Lewis and the sprawling Eon team for good.
The businss will plough on to tackle the implications of new price regulation as well as the ongoing sector challenges of smart meter deployment (Cocker won’t be drawn on whether the deadline should be postponed), innovation, consumer confidence and more.
Cocker meanwhile, will go it alone. In a company release about his departure there were hints of a “portfolio career” in the wings. Cocker is not ready to give much more detail.
“I am lucky that I can chose to do something differently,” he says. “I want to take three or four or five things where I can use my skills in different areas and my ambition is that some will be for profit and some will be not-for -profit and some might be for large organisations, some might be for small organisations.”
During our interview, Cocker has spoken excitedly about Eon’s new venture in innovative fields like smart city solutions, heat networks and energy storage. Does he hope to attach himself to new businesses in these areas?
He remains guarded: “I would expect that at least one of my activities will be in energy” he says, given his many years of sector experience. But equally “I hope to branch out too.”
Along with many in the energy sector, within Eon and across the wider ranks of industry leaders who have worked with Cocker over the past two and half decades, Utility Week wishes him the best of luck.