Energy suppliers can’t control prices – but we can provide value for money for all
2016 has been another year in which the energy market has been the subject of much debate and further change. From prices, to how customers can better engage with the market, through to the conclusion of the two-year Competition and Markets Authority investigation; our industry does not stand still and is rarely out of the limelight.
With all of that in mind at SSE we’ve been focused on delivering for our customers. We know that the price of energy is many household’s primary concern and I hope therefore that they will have had some comfort when we confirmed there would be no price rises for SSE customers this winter. This latest commitment means our standard prices haven’t increased since October 2013 and in fact we’ve cut them three times since then, meaning they’re now 12% lower on average than they were when customers were preparing for Christmas in 2013.
We constantly keep our prices under review and do all we can to keep them down, at the same time as offering excellent customer service and additional extras for our loyal customers. While, unfortunately, there are limits on the extent to which we can control fluctuations in wholesale energy costs, we do manage this risk for customers and we also find other ways to save them money and reward their loyalty. In addition to one and two year tariffs, we’re currently one of the few suppliers offering a fixed price for three years. During 2016 we’ve introduced a range of offers targeted exclusively at loyal SSE customers including a free ‘boiler rescue’ potentially worth over £300 to an innovative ‘no-ties’ broadband offer. Loyalty matters to us and should be rewarded, so we’re giving back to our customers with reasons to stay with us. That’s in addition to providing a high standard of customer service – earlier this year we set a new record for the lowest ever complaints score in the Citizens Advice Energy Supplier Performance report.
What’s more, this week we also announced a ground-breaking partnership with Dixons Carphone through which we’re developing a ‘one-stop’ essential and connected home services solution to enable customers to access all the help and support they need to control, manage and maintain their homes in one easy place. Existing SSE customers will be first to benefit from this. Meanwhile, our SSE Reward programme helps us say a small ‘thank you’ to loyal customers by offering early access to the best live entertainment at some of Britain’s biggest venues.
To help customers make more informed choices Ofgem this week published new comparison data on standard variable tariffs. We believe this puts to bed any suggestion long-term SSE customers are being overcharged. We do have a high proportion of customers on a standard tariff but with an average profit margin of around 5% in our energy supply business, it is clear our customers are getting a fair deal. Occasional, limited availability discounts are an important way of driving customer engagement but standard prices do reflect the risks and costs associated with managing a volatile cost base.
While some customers do prefer the flexibility of a ‘no-ties’ variable contract, we need to make sure others are not simply disengaged. The key thing is to ensure customers are aware of all the options available to them and are making active, informed choices – even if that’s to stay on a variable tariff. That’s why we’ll soon be trialling new communications approaches to engage standard variable customers with the different products we offer. This will involve segmenting our customer base further to look at how different customers respond to different prompts.
Alongside this, it’s easy to forget there is a significant amount of work under way to deliver major transformations in the industry to benefit customers. Quicker switching and the national smart meter roll out are just two examples of huge, multi-billion pound undertakings to deliver very tangible benefits for customers and improve their experience of the market as a whole. Smart in particular will open up opportunities for much more innovation and tailoring of products. We also shouldn’t overlook the resources that we need to deploy to deliver the CMA remedies. I’m confident that in time these remedies too will bring real benefits for customers.
Energy is an essential household service. It’s our privilege to supply it to homes and businesses. Their custom is hard won and their satisfaction and loyalty matters a great deal to us: our customers are our greatest asset. We have to therefore offer them fair, stable and affordable prices and work hard to reward their loyalty where we can. That has been our focus in 2016 and we know we’ll have to work doubly hard in 2017.