Data is the undisputed new value in energy, a vital tool for empowering consumers, driving decarbonisation and unlocking the decentralisation of the sector.
It brings an unprecedented opportunity for utilities to forge new relationships with their customers, change how they interact in the future and transform service. Access to huge amounts of data can allow energy and water companies to reset the dial on outdated systems of working and enable greater efficiencies.
Yet with this changing landscape and powerful information come new responsibilities for utilities, who must protect customer data, respect ethical boundaries and ensure legal obligations are met. In short, they must ensure they use customer data for good.
It was this critical and burgeoning issue for industry that was chosen as the topic for this year’s spring forum of the Utility Week/WNS Customer Trust Council, held at the Charlotte Street Hotel in London and hosted by Utility Week magazine editor Suzanne Heneghan.
Members were joined by two expert speakers in consumer data. One was former MP Laura Sandys, now the chief executive of policy think-tank Challenging Ideas, and chair of the Energy Task Force, which was created to advise government, Ofgem and industry on how to harness value from data within the energy system. She opened the discussion with a talk about the potential of data to revolutionise the utilities industry.
Ardi Kolah, former director of the GDPR transition programme at Henley Business School, and data protection officer (Europe) for Hitachi, followed with a view “from the coal face” about getting to grips with the regulation, as well as the NIS Directive.
The lively roundtable debate focused on five central consumer data themes and brought together industry leaders in customer functions from across the sector, including energy retailers, networks, water companies and consumer lobby groups.
What came through loud and clear was a consensus of recognition about data’s ability to rewrite the rules on good customer experience and engagement if used well – such as offering seamless processes or helping priority service customers.
However, among the many shared positive ideas and stories there were lessons about the potential pitfalls and challenges ahead, including those around data breaches.
Equally, there were calls for some swift, relatively straightforward action to clear frustrating roadblocks. Utilities, we heard, were often thwarted by a lack of joined-up thinking from policymakers and regulators.
A strong message coming through was the potential benefits of more collaboration among utilities. This talked well to a question posed at the outset by WNS senior vice-president and business development director Ian Belfield, who wondered if concerns about GDPR and the data risks associated with it could be effectively crushing what would otherwise be an opportunity for utilities. Could we deal with customers in a better way if we were able to share more of that data, he asked.
Knowing and understanding customers much more will prove invaluable in the data-driven journey ahead. And transparency will be critical to building trust and removing anxiety.
In a quote that summed up the essence of the discussion, Sandys described data as being “the new bloodstream of the energy sector”. Keeping it flowing, and safely, for both customers and industry is one of the sector’s most pressing challenges ahead.
Join the dots
Ardi Kolah offered the council some sharp perspective on what data really represents.
“It’s about business continuity, it’s about risk and it’s about technology – and it’s about joining those dots. It’s not about the fines, the sanctions. It’s about empowering people. And we have to start from the right point. We are all forces for good.”
Which means being a safe place to do business, said Kolah. “The best way to demonstrate trust is to make sure you are compliant. When GDPR is explained, companies realise it’s not such a bad thing. It’s about trying to understand who we are trying to serve, their needs, their requirements.
“When you look at the [GDPR] legislation, it is actually a piece of human rights legislation. It’s about how do you go about deepening digital trust to do more not less with personal data.
“If you do the right thing because it’s the right thing to do you won’t get fined, or sanctioned, but that’s not necessarily going to make you successful, to deliver profits and the services your consumers want – that’s just a hygiene factor.
“It’s about empowerment. When you boil GDPR down, it’s about transparency, accountability and control. It’s about being absolutely, completely clear about what you’re doing, why and who else you’re doing it with, so that people understand that.
Technology as an enabler of change is increasingly allowing customers to be controllers of their own data.
“Join the dots on business continuity, look at risk from the lens of the consumer, and use technology to achieve this. If you can join the dots you will be hugely successful.”
In the blood
Data will inform future customer service but care is needed, says Laura Sandys.
A “mismatch of understanding” was how Laura Sandys characterised the approach to customer data by some utilities.
Referencing an industry conversation with a director of data strategy, Sandys revealed how they proudly proclaimed that they had 87 per cent of all their customers’ postcodes – although this was seemingly where the plan ended.
Such insights suggest a sector still “pretty far behind the curve” said Sandys, whether in skills, capabilities, or just basic understanding. Yet there is “great opportunity”. “We can leapfrog, we can learn from others.”
Learning from others is not something utilities have always been great at, even if that is changing, she said. She pointed to how there are currently around six “consumer archetypes” in the energy sector, used to segment 60 million people via 30 million households. Amazon segments those 60 million into an eye-watering 150,000 different archetypes.
“So do we really understand our customers? Are we really shaping things that are wrapping around their lives? Or are we expecting consumers to become electrical engineers and heating engineers?
“As we move into this digital world, where consumers deserve tailored products, and easy-to-access platforms to buy and sell energy, we should be careful that we are actually regulating where risk lies – rather than crushing choice, opportunity and new business models.
“The use of data is also going to be very important in terms of balancing the system, regulating it and interacting with it. Not so long ago there were probably 50 key players in the whole of the energy industry. We are now a sector of many more players.
“Data is going to be the new bloodstream across the sector – but we are also going to have to be really, really clear about how we manage that. As we move, potentially to 150,000 different archetypes, we are going to have lots of dispersed consumer propositions. A lot of it will have to be informed by data.”
But this is not just an energy problem, Sandys said, there are economy-wide, consumer protection issues.
The complexity of choices will require greater access to data, and customers will therefore want to have much greater visibility over what they’re being sold, how and what the terms and conditions are.
Utilities should be able offer a tailored and targeted response, she said, also warning against underestimating the importance of connectivity for consumers. “Our energy is going to become more and more conflated with data, communications, connectivity and other products, so we have to start to understand how that is going to be developed, and also regulated.
“It’s important that we actually address the right risk, and not say that data is the problem.
“Data isn’t the problem. It’s about what people do with the data that can be the problem. And, yes, there will be scallies, or there will be people who unintentionally mis-sell. And there will be problems about data not receiving its right value. We’ve got to start this journey and start to explore it.
“As it is an economy-wide issue, we as the energy sector should say we have a very important role to play, but that we are also looking for leadership across the economy to start delivering true value, true control and true benefits to consumers as we use our data in a much more effective way.”
Data discussions – some key themes
Transforming relationships through data
“We do a lot of listening to our customers, taking feedback, it drives all of our product development,” said one energy retailer, whose service centre tracks all contact reasons and drivers to understand every customer. It builds offerings – such as helping customers better manage their accounts and data preferences, which are things people say they value.
“When rolling out smart meters we saw a step-change in our uptake when the conversation became a proposition-led one using data, such as providing a breakdown of energy usage.” And offerings can be split out, with distinct products for more digitally engaged customers.
But another supplier said it was important to differentiate between the possible – “innovation doesn’t come cheap” – and what people actually desire.
Customer engagement with technology is an issue, agreed another, as people look for the balance between seamless convenience and control. “No-one wants to spend time managing energy use. They want to set parameters and let technology take over. The challenge we have is that products delivering that kind of sophistication aren’t on the market yet, but we probably need to spend time now setting out principles for how such data would be used.”
Another challenge for utilities will be as parts of the market move ahead at different stages, some customers will want to unwind decisions – requiring data portability, and deals that do not lock people in.
Collecting, using and protecting data
One networks delegate said a fundamental hurdle was the fragmented nature of the sector, its differing protocol, and protections in the wrong places.
“We don’t all have access to the same supplier data about customers, but people expect us to know about them entirely from a utility perspective. These basic data issues must be sorted first.”
On data breaches, utilities should operate on the assumption not of “if” but of “when” customer data will be compromised, said another member. They should demonstrate how they would respond, as more authorised data entry points (such as smart meters) enter the utilities realm.
“The pace of change is greater than the pace of maturity in cyber-security. But there’s a lot we can learn from financial services, which realised a lot of the data would be compromised and were quite open about that.
“Customers are intelligent. They realise there is only so high you can build a wall. It is how you respond to the threat, and any breach, that matters. Also, if things play out as you say, it can raise a company’s reputation.”
Identifying vulnerable customers, without compromising their rights
Data roadblocks can drive you to depersonalise your response, said another operator, particularly for vulnerable customers. “It’s an interesting contradiction. Plus, there is real suspicion about data, even extreme anxiety for some customers, certainly around smart meters. They want to know why you have their data, what you plan to do with it.”
Ensuring we support those customers at the margins is vital, said another speaker. “We need to think more about the ones who are slightly different in all of our systems – how do we know about them, and how do we keep up to date when their circumstances change?”
Delegates offered examples where cross-utility data-sharing, between networks and water companies, had worked well.
And a water representative who has seen much ethical work done in this area, with those struggling to meet bills, revealed it can empower customers as well as build trust.
Data can also help “red flag” emerging problems, highlighting those going through life-changing events, like job loss or bereavement.
There was a word of warning, though, from a delegate who said knowing customers’ deeply personal data can prove a double-edged sword. When things go wrong and they think you are not recognising their need, then trust can suffer.
Supporting debt collection in an ethical and fair way
“The challenge of debt collection is finding there’s something you didn’t know about when you’re too far down the road,” said one delegate.
“Utilities have long used data to enhance debt collection activity but, ultimately, it’s always that customer you didn’t know a key piece of information about until it’s too late – when you’ve perhaps caused distress.
“You’ve always got that group of customers who just don’t get back to you – until right at the end when you have the bailiff at the door, or whatever the end process is.
“It’s the Holy Grail – getting that bit of information that stops you. Because no one wants to do that. It costs a fortune, causes delays and closes relationships with that customer forever. And as a utility in a monopoly position I don’t want to break that relationship. Data seems the best way to help us.”
One retailer pointed towards the potential benefits of helping customers save in advance for colder months, an idea already being trialled.
All our panel believed utilities were working hard to comply with guidelines – although they would appreciate more understanding from regulators about the issues such obligations can cause on the ground.
“We have brought them to our call centres to show them some of the problems. They have listened, gone away, but nothing changes,” revealed one speaker.
However, overall the new data rules were helping industry, the council concluded.
“Our customers tell us they really value GDPR,” said one speaker. “It’s a virtuous circle. The security measures and the regulations help them feel more comfortable that we will do the right thing with their data.
“Though, of course, we all still have to work to earn that trust in our own right.”