Will The Energy Industry Ever Be Able To Restore Consumer Trust?
By Cynthia Taylor
Can the energy industry ever be able to restore consumer trust in the battered energy industry, if they implemented green energy policies.
Green Energy companies have higher levels of consumer trust compared to their mainstream rivals, however, the energy industry is reluctant to move more towards the more popular and cleaner business models.
There is a big problem in the energy industry, and it does not look like it will be resolved soon. This follows a tsunami of headlines with negative overtones, such as increased prices, unethical and illegal sales practices, that are facing Westminster as well as Fleet Street for the dubious title of being the least trusted sector in British society.
In a recent survey conducted globally, by Edelman a communications company, about 38% of UK consumers polled, said they trusted their energy company to do the right thing. This has revealed a trust crisis that is not the same as other countries, where the global average on trust scores was 57% and in India and China it was 75%.
This is no surprise to most people in the UK energy industry, and the energy companies have become a ‘media punch bag’ over recent years as they faced everything from increased gas prices globally to mis-selling on doorsteps, the poorly managed efficiency schemes, questionable tax arrangements and much more.
Although energy companies still remained profitable and new figures released have suggested thatfuel poverty levels were lower last year, it has become clear that the utility companies are no longer able to ignore this crisis in trust levels.
Individual companies have realized that the lower levels of customer trust and satisfaction by their consumers have posed a serious problem for the individual companies, that they were now vulnerable to their rivals as well as the new entrants into the energy market, who are pioneers of business that are customer centric and service models.
But a more serious problems facing the energy industry, apart from lack of consumer confidence, is that it affects the economy as well as being unable to attract investment into low carbon projects, that are carbon transition based which included the large programme of energy efficiency improvements.
Laurence Evans of Edelman, said that ‘trust gives one the license to be heard; he explained that when a person heard good news with regard to a trusted sector, then people invariable believed that it is true, but that conversely bad news about a trusted sector, the majority of people also believer it to be true, and that any presumption of guilt happens because of lack of trust in the first place.
Caroline Flint, the Shadow Energy and Climate Chance Secretary for Labour, said that this was bad news for the energy companies as well as for consumers. She emphasized that the people who lost the most, are the consumers, not the companies through lack of trust. She also stated that high levels of trust were vital for the industry, to get people involved in initiatives, that are able to benefit them, for instance the planned smart meter rollouts and energy efficiency improvements.
Angela Knight, EnergyUK, has acknowledge that the industry faced challenges to try deliver the socital policies for instance the ECO scheme as well as the mandated energy efficiency programs for the fuel poverty customers, at the same time the politicians are requiring companies to be able to deliver such programmes, are also stating to the public that they are not to be trusted. This is a contradiction, and thus, makes it awkward for energy companies, on people’s doorsteps, who are trying to give customers good energy efficient improvements.
The diagnoses for the cause of lack of trust is not difficult, it shows that there is a host of factors that have combined, that erodes confidence of the public in energy suppliers. Factors such as mis-selling, increasing prices, predatory pricing tactics, all during a time of economic hardship, have all helped to make energy companies ‘persona non grata’ among consumers. This situation is not helped by the lack of transparency with regard to the wholesale prices as well as the root cause of price hikes.
The lack of transparency meant that there has been a long running row with regard to the global oil and gas prices, on one side and the costs of green and societal policies on the other hand, have led to increased energy bills.
There was an argument that played out on the panel between Ms. Flint, who has called for greater transparency of wholesale costs and Mr Stephen Fitzpatrick of Ovo Energy, who has argued that the wholesale prices have been ‘flat’ for about 2 years and has put the blame squarely on societal policies for the increases.
In addition there is the failure of Ofgem in not cracking down on the dubious practices, which Consumer Futures spokesperson Richard Hall likened to A referee having lost control at a football game, because he did not dish out a few yellow card early in the game.
In the meanwhile, there was a series of cultural changes that left the energy companies facing quite considerable expectations which are arguably unrealistic.
In a societal shift, consumers want the benefits that they can get from large companies, but they want the type of service they can receive from a small company in a friendly manner, said Ms Knight, when she detailed a customer service challenge that is faced by the giant corporations all over the world.
Juliet Davenport, founder of Good Energy spoke to BusinessGreen, about a poll by Which? related to energy customer satisfaction, that it identifies another cultural reason that is behind the trust crisis in the energy industry. She said that one of the biggest issues faced was, as she quoted from a phrase of the thatcher years: “Too cheap to meter”. She continued that she thought it had got embedded in many people’s minds and thus lulled people into a false sense of security, because she said it was not too cheap to meter in fact it was quite expensive.
Ms. Davenport continued that the biggest challenge for the industry, was not the diagnoses of the root causes, with regard to the unpopularity in the industry, but to work out what is to be done about it, however, on this question that is not much agreement.
Although everyone appears to agree on the vague characteristics that what is needed is a more trustworthy energy industry with greater transparency, honesty and simplicity, however, it is harder for the translation of these qualities to be implemented into cold, hard and fast policies.
Ms. Knight has indicated some of the steps that the industry was already taking, for instance, the simplification of billing, initiatives of working with local authorities that can be trusted, and also charities to deliver the energy efficiency improvements for households that are in fuel poverty.
Ms Flint has made a case for proposals by Labour for a watchdog that is tougher, an energy pool the will deliver clear wholesale prices, and that there is a need for acknowledging and apologizing in the sector of past misdemeanors.
It was also highlighted the importance of good basic customer services practices, easier switching, clearer pricing, resourced and researched support services that are adequate. It was also mentioned that the utilities in other countries were better at marketing the highly crucial role that they play at keeping the lights on.
It was agreed that greater competition as well as the tearing down of some of the barriers that blocked the new entrants in the energy market, and that this will benefit startup companies as well as incumbents.
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