At the start of the year, E.ON Energy launched its Reset Review with the aim of overhauling its relationship with its customers - including businesses. So it’s against this background that it has announced a seven-step plan to help its business customers, including a new Code of Conduct for third party intermediaries or TPIs (like uSwitchforBusiness). Will it make any difference to your business?
E.ON has introduced a new Code of Conduct for TPIs - a crucial link between businesses and energy suppliers. Image by rubybgold via Flickr.
The first six points are (I’ll address the seventh point, in more detail):
1. Backbilling - E.ON will not back bill SME customers for charges going back more than three years and will aim to reduce this to one year by the end of 2013.
2. Fairer debt repayment - if a business customer gets into debt, E.ON will get in touch earlier to discuss their circumstances, their ability to pay and set up a realistic repayment plan.
3. 2,500 pay-as-you-go smart meters - 2,500 businesses will get pay-as-you-go smart meters by the end of the year.
4. Better Direct Debit policy - small and medium business customers who join E.ON and pay by fixed Direct Debit will have their payments reviewed regularly, to ensure that their account balance is at zero on their anniversary of joining the company. Previously, this was done at the same time for every customers, irrespective of when they signed-up.
5. Contract renewal - E.ON has said it will work on the way it communicates with its customers when they’re approaching the end of their contract to help them make more informed decisions;
6. Bill improvements - the supplier is going to look at changing the format of its bills and will work with customers to design a new and improved SME bill.
We think these six initiatives are to be welcomed - any potential improvement in service is good news for businesses.
So now onto point seven, the new Code of Practice for TPIs like us. The Code is pretty much in line with Ofgem’s Retail Market Review, and is in keeping with OFT standards and other industry codes of practice. Here’s our quick summary of some of the most significant points:
- ‘Honest, accurate and clear’ - all sales material must be ‘honest, accurate and clear’; TPIs have to be clear about when and where they get commission from and their agents must clearly identify themselves and who they work for.
- No pressure - agents shouldn’t pressurise customers and should be respectful and courteous at all times.
- Annual estimates - TPIs must give customers an annual estimate before they sign a contract.
- Punishment for breaches of the code - if a TPI breaches the code, they can be fined, give a warning, put under ‘enhanced supervision’, or temporarily or even permanently suspended from selling E.ON tariffs.
So what do we make of the Code? Ashton Berkhauer, our commercial director thinks it's a step in the right direction, but doesn’t go far enough.
He said: “"Our experience indicates that only 12-15% of businesses switch their energy supplier. Our success as an industry depends on our ability to change customer attitudes and make them feel comfortable that they will be fairly treated. We're welcoming the Code as a positive step towards this.
“We already take a great deal of care to make sure that we're straightforward in our transactions with our customers, so the principles of the Code are not new to us. Sadly not all everyone operates in this way, which is why a Code is necessary.
“Unfortunately, the Code will only apply to TPIs, and we can't stress enough that all market participants should be held to the same standards to give customers the best possible service.”
For more information on industry codes of practice visit our partner company Business Juice.
There's plenty of talk about sky-rocketing bills, but what kind of increases are we actually talking about? Well, we've been taking a look at our numbers and doing a bit of analysis to see how much business electricity prices have really been going up by. Here are the results (hover over the lines to see exact numbers):
On the positive side, the price increases seem to be slowing down. The biggest rise happened in 2010, when bills went up by 27%. Growth slowed significantly to 12% on 2011, and in the first quarter of 2012, the average bill only went up by about £10.
We've added in a projection of where bills might be by the end of the year if prices continue to go up at the same rate as they did last year. Another 12% increase would mean an average electricity bill of £2890.35 a year - that's a potential increase of 70% in the space of three years. (I can image many of you are wishing you'd signed up to a two or three year fixed rate energy contract back in 2010 now!)
These numbers should be a wake up call to think about your business energy bills. You can’t stop prices going up, but you can make sure that you’re getting the best possible deal.
There’s an average difference of 70% between the unit rates businesses pay before they come to us and the unit rates they pay after they switch - that’s not a saving to be sniffed at. And if rising prices are real worry, we can help you decide if a two, three or even five year contract would be a good choice for your business. Give our energy advisors a call on 0800 688 8568.
In a speech at KPMG in Canary Wharf today, Nick Clegg will announce an 'historic' agreement between the Big Six and the government. It's good news for domestic energy customers, but what about businesses?
Image from Liberal Democrats via Flickr. Credit Alex Folkes/Fishnik Photography.
Under the agreement, domestic customers will get a letter from their energy supplier once a year, telling them what the best tariff for them is. There will also be barcodes on bills which customers can scan with a smartphone, making it easier for them to compare their tariff to others on the market and switch if there's a cheaper one on offer.
It's great for domestic customers, but where does it leave businesses?
From the details of the speech released by the Cabinet Office, it doesn't sound like businesses can expect the same treatment.
Even if the rules did apply to businesses, they wouldn't have such an impact. 99% of domestic customers are with a Big Six supplier (British Gas, EDF, E.ON. SSE, Scottish Power or npower), compared to only 76% of businesses. (Based on figures for our customer base from 1st April 2011 to 31st March 2012).
In addition, the best tariff is often likely to be with a different supplier, not your existing one, so there's no guarantee this agreement will guarantee you get the best deal.
Mr Clegg is expected to say that families "could save up to £100 a year", and I'm sure I'm not the only one wondering whether the money they save will be clawed back from businesses? In fact, I know I'm not - Caroline Flint MP, Labour’s Shadow Energy and Climate Change Secretary last week accused the Big Six of doing as much.
Paired with yesterday's proposals for compensation for domestic energy customers, which would fall short for many businesses, it's a pretty frustrating time for businesses looking to the government for help with the burden of energy bills.
- The draft Energy Bill: a five-minute summary
- 60% increase in business energy costs as average turnover falls by 6%
- Business week in brief: 11th May 2012
- Ed Miliband and the Queen talk energy
- Interview with Steve Fitzsimons of new business energy supplier, Hudson Energy
- Business week in brief: 4th May 2012
- The see saw of corporate profit
- Business week in brief: 27th April 2012
- EDF Energy’s Business Customer Commitments: four key pledges
- Businesses buck the trend when it comes to smaller energy suppliers