Energy suppliers or data companies? A new world of opportunity in the Utilities sector
02 February 2016
Utilities continues to be an incredibly exciting industry, with rapid change and whole industry projects.
Those projects and their scale provide great opportunity but also great risk and disruption, with the potential to directly impact the whole of the UK.
The 'Smart' meter roll-out programme has the potential to significantly reduce the burden on our national electricity infrastructure by ultimately enabling consumers to flex their demand in response to dynamic tariffs that are intended to smooth out the peak demand periods, providing a more stable generation profile without the need to be able to manage the existing extreme spikes in load and demand.
Some of the other benefits will include: more accurate billing based upon actual usage and real-time information to customers through home display units that means they can pro-actively manage their usage to reduce bills and environmental impact.
This programme though requires the replacement of existing meters across the country with a current target for completion by 2020. This is a major challenge for the utilities companies, not just managing the physical replacement but also the resulting changes to underlying systems, data and managing the customer experience during the transition period. All those challenges involve data, whether it be assessing the quality of the underlying meter data used across the industry, the accuracy of the bills issued to individual customers or informing the most optimum way to roll-out the meter assets across the customer base.
Data is being used increasingly to provide information to customers about their bills and their options. This can be seen in the continued rise in price comparison sites that take detailed data about a customer, their property and consumption to identify better deals. The regulatory drive by OFGEM to focus on the customer and to keep them informed has gone so far as to now require suppliers to include details of what customers could have paid had they shopped around for different tariffs and present that on the actual bills issued to them. There really is no excuse for not knowing if we could get better deals elsewhere!
We see companies trying to make more of their data assets by linking disparate legacy and new systems to try to identify the impact of issues on the customer experience and ultimately their retention and profitability. For example the linking of customer complaint systems with billing and debt recovery to see the impact of poor customer service.
Those legacy systems have provided a stable platform for providing various services to customers but have not proven to be flexible to the changes in the way customers want to interact digitally with their suppliers or indeed move into the world of Smart metering. Recent press reports have shown the risk involved for utility companies moving from those legacy systems, with significant financial and reputational impact of getting it wrong.
'Challenger' suppliers have taken the market by storm. Unencumbered by these legacy systems, and with smaller populations of customers, they have been able to identify and embrace customer wants, along with new technologies to provide a much more digital and dynamic service. This is having a real impact on the Big 6 electricity suppliers, for example, who are continuing to see significant numbers of customers moving to these challengers.
And the possibilities for linking data sets retained by the energy companies with third party data sets open up a whole new world of opportunity: improving billing, driving the customer experience, targeted marketing. A question to ask is 'are we talking about energy suppliers, or are we actually considering data companies?' It feels like the latter to me.
These are all major, exciting challenges and opportunities for our clients....and for PwC to support, assure and challenge them using data to provide the real evidence that they are looking for.
If you would like to discuss these issues, or the impact of emerging technology or data and analytics on your industry, then contact our Data & Analytics team.