For all the information and data, please click here

For all the information and data, please click here

Customers switch in huge numbers, a wake up call for inactive energy markets

Research by the Helsinki based VaasaETT Global Energy Think Tank indicates that between February 2009 and 2010, Bord Gáis Energy, the Irish Utility Company, won nearly 21% of the occupied residential electricity market in the Republic of Ireland. According to VaasaETT, the world’s leading source of global comparative customer switching trend data for the electricity industry, the Bord Gáis Energy campaign has been by far the world’s most successful marketing campaign ever for an electricity retailer, if measured in terms of the percentage of residential customers in the market who were won over a 12 month period.

According to Dr Philip Lewis, CEO of VaasaETT, this is additional proof that there is no such thing as a safe customer for incumbent energy companies. “Markets that are uncompetitive now, can become active very quickly if the conditions are right. In the coming few years we will see the same happening in other markets around Europe and elsewhere”. “Once truly active, such markets furthermore tend to remain active”, says Dr Lewis.

“The main reasons for this extraordinary level of customer switching have been price margins, the economic downturn in Ireland and outstanding marketing. Price margins were achieved through a combination of regulatory price controls placed on the incumbent, as well as clever energy purchasing strategies by Bord Gáis Energy”, says Dr Lewis.

Dr Lewis points out that one should not underplay the significance of marketing in all of this. “Energy companies typically fail to achieve sufficiently simple, clear and appealing campaigns. Energy may seem like a simple product to sell but few companies have ever managed to win many customers in this market”, says Lewis.

Only five national markets have ever managed a (calendar) yearly level of switching above 20% (the Australian markets of Victoria, Queensland and South Australia, plus Great Britain and New Zealand). Prior to 2009, the highest national switch rate ever recorded for a 12 month period was 28.33% in Victoria, Australia, between the 4th Quarter 2006 and 3^rd Quarter 2007, and that switch level was shared between competitors in the market.  “Within this context the 21% gained by Bord Gáis Energy alone is quite spectacular”, claims Dr Lewis. “No company has ever gained such a large proportion of the market in such a short time”.

Bord Gáis Energy are not the only energy company in Ireland that has won customers from the incumbent, Airtricity has also won significant numbers of residential customers, and new entrants into the market are now a possibility since the market has shifted from near inactivity just over a year ago, to being one of the most active electricity markets in the world. “It remains to be seen however, if there is yet enough long-term momentum in the market to sustain this level of activity” says Dr Lewis.

Nicky Doran, Head of Marketing at Bord Gáis Energy stated that the success of the campaign was down to a number of factors, “the right price point, the simplicity of the message and great creative were all major factors in the success of the campaign” according to Mr Doran. “The web has proved to play a huge part in the success of the campaign with as many as 30% of customers switching on our micro site thebigswitch.ie”. “Of course none of this would have been possible without great vision and leadership from Bord Gáis’ CEO John Mullins and Bord Gáis Energy’s Managing Director David Bunworth”.

According to Dr Lewis “VaasaETT will be publishing its free 2010 World Energy Retail Market Rankings report in May, and it will be interesting indeed to see where Ireland is placed. It is possible that Great Britain may be knocked off the top spot in Europe for the first time since records began”

More Information

Andy White, +44 871 315 7334, andy.white@vaasaett.com,

About the VaasaETT Utility Customer Switching Research Project

The Utility Customer Switching research project, founded jointly in 2004 by Dr Philip E. Lewis and Paul Grey, monitors switch rates and trends in all fully liberalised energy retail markets worldwide.

It was the first and remains to this day the only global view of utility customer switching activity, as well as being the most comprehensive and uniform source of comparable switching statistics in the electricity and gas markets worldwide.  More Information at: www.utility-customer-switching.com

About VaasaETT and The VaasaETT Global Energy Think Tank

The VaasaETT Global Energy Think-Tank is a unique collaborative concept based on a philosophy of mutuality. Through its network of thousands of senior executives, officials, researchers and other experts who are for the most part known and trusted personally, the Think-Tank provides value-to-all by combining an interactive community and collaborative projects.

The Think-Tank focuses broadly on practical strategic business and market issues, as well as envisioning state of the art innovations and developments.

VaasaETT has already established a world-leading reputation in certain fields, including Customer Psychology & Behaviour, Utilities Marketing, Smart Metering, and Demand Response (including Energy Efficiency, Demand Side Management, Eco Home and related issues).

More information at: www.vaasaett.com

Annualised customer switching in the retail energy market in Victoria in 2009 was the highest ever recorded in a fully contestable market according to world authority on retail energy markets, The VaasaETT Global Energy Think-Tank.

Download the Full Release (ERAA – Energy Retailers Association of Australia)

The data referred to in this press release relates to data collected as part of the SwitchstatsAustralia scheme by VaasaETT in collaboration with the ERAA and the 10 leading Australian energy retailers. This data and data from nearly all the liberalised electricity and gas markets around the world will be summarised in the forthcoming Global Energy Retail Market Rankings Report 2010, published by VaasaETT, June 2010. For more information and to subscribe (free) for the new report, please visit:

www.utility-customer-switching.com

Click here for the press release (you will be transferred to Panasonic’s web site). For more information please contact Dr Philip Lewis at firstname.secondname@vaasaett.com.

VaasaETT is proud to announce the launch of the Capgemini European Energy Market Observatory 2009, 11th edition, a report conducted in collaboration with VaasaETT. This in-depth 98 page report is arguably the leading annual summary or pan-European issues in the energy industry.

The Eleventh edition reveals the full impact of economic crisis on Utilities sector and sheds light on challenges around continuing investments and meeting legislative targets

Selected Findings:
The report outlines how the global recession has put utilities under pressure with expectations of a historical drop in global electricity consumption (-3.5%) and global gas demand (-3%), forcing them to take short-term and longer term measures:

1. in the short-term, utilities are deferring or cancelling investments in much needed infrastructure and also divesting assets;
2. in the longer term, a deeper change in their business models is needed.

In addition, the report indicates that there is still action needed on climate-change issues in order to meet the 2020 objectives laid out by the EU Climate and Energy Package, although the European Union is ahead of other regions in this area.

» Read the Press Release

» Read the Executive Summary

» Request the Printed Report (FREE). You will be transferred to the Capgemini web site. Please Note that only Utilities as well as Oil and Gas Companies and other selected organizations are eligible for the printed hard copy version of the report. Other organizations will be provided access to the e-book edition of the report (see below).

» Request access to the E-Book version of the report. please send your request to firstcontact@vaasaett.com. Please Note: Capgemini reserves the right to choose who is granted access to the report.

» More Information. You will be transferred to the Capgemini web site.

VaasaETT has been chosen to prepare a synthesis reports on the topic of innovative communication/information tools from utilities and agencies. More precisely this evaluation will compare the policy implementation concerning smart metering and more generally Demand Response (DR) programmes among selected best practices spread over the world.

For more information please contact Jessica Stromback: +358 40 725 6023  / firstname.secondname@vaasaett.com

Full Title: Electricity Market Reforms in the Nordic Countries – Historical Evolution and Differences in Customer Choice Behavior. Report Number YO8036.

Main writers: Toshio Ariu, Dr Philip E. Lewis and Hisanori Goto.

DOWNLOAD REPORT NOW FOR FREE !

ABSTRACT

In the debate about deregulating the electric power industry, it is crucial to develop a quantitative, long-term understanding of issues such as supplier switching by customers and variation in electricity rates after deregulation, while keeping in mind whether or not there is a benefit for the customer. In this regard, it is expected that useful lessons can be drawn from trends in Europe, where there is a track record of deregulation, particularly in the Nordic countries, namely, Finland, Sweden, Norway, and Denmark (Iceland is excluded from this study), where there is a high rate of supplier switching.

The purpose of this research is to describe the situation after liberalization, such as the variation and actual status of supplier switching by residential and commercial/industrial customers, and the handling of customers by electric power companies, in the Nordic countries, and derive implications for Japan. Main findings are as follows:
1. Looking at the rate of supplier switching by residential and commercial/industrial customers, switching is most frequent in Norway, followed by Sweden, Finland, and Denmark. One possible reason for this is differences in the starting year of full retail deregulation, which was 1991 in Norway, 1996 in Sweden, 1997 in Finland and 2003 in Denmark. In addition, when deregulation was introduced in Norway, there were originally some constraints on supplier switching by customers, such as a charge of 246 Norway kroner (approx. ¥3,000) for each switch when switching 4 times or less per year, and a requirement for the customer to self-pay for an automatic meter reading system, but after 1998 it became possible to switch at no charge in 1 week units. In contrast, free switching was realized in 1998 in Finland and in 1999 in Sweden. For residential customers, supplier switching is also related to the annual average consumption per household of approx. 26,600kWh in Norway, approx. 17,000kWh in Sweden, approx. 7,500kWh in Finland and approx. 5,000kWh in Denmark. The results suggest that the regulatory environment and market conditions, which vary by country in this way, have a large effect on supplier switching by customers.
2. With retail liberalization, there was a rise in price competition and service competition to secure and retain customers by the 100 suppliers in Norway, 130 suppliers in Sweden, and 70 suppliers in both Finland and Denmark. During this process, the supplier switching rates of all countries varied greatly from month to month. For example, the supplier switching rate increased as significant disparities in supplier rates appeared due to factors such as rising fuel prices and drought. On the other hand, it was also found that supplier switching rates have tended to decline in recent years because suppliers have worked to improve customer satisfaction and build customer loyalty. They have done this by enhancing customer service with better response using call centers and service centers, and improvement of billing related services.
3. After deregulation, the major electric power companies with operations in the Nordic countries underwent repeated cycles of M&A, and were reorganized with specialization in the energy business. As a result, it was found that, among the five leading electric power companies such as E.ON, FORTUM and VATTENFALL, there was improvement in profitability and growth, as well as improvement in overall corporate performance, such as steady performance of stock prices.

]]> http://www.vaasaett.com/2009/07/new-report-customer-choice-in-nordic-countries/feed/ 0 http://www.vaasaett.com/2009/05/hepi/ http://www.vaasaett.com/2009/05/hepi/#comments Mon, 18 May 2009 08:00:46 +0000 admin http://www.vaasaett.com/?p=1

Media Release: Tuesday 19 May 2009: “Startling Differences in Prices Paid by Customers”

Depending on where an electricity or gas customer lives in Europe, the price that customer has to pay for electricity can be around 300% that of another country. This is just one of the many findings of the monthly Household Energy Price Index for Europe (HEPI), launched today by the Austrian Energy Regulator (E-Control) in collaboration with the VassaETT Global Energy Think Tank. At 30.88 euro cents/kWh, Copenhagen power customers are paying 270% more than power customers in Athens. And at 13.71 euro cents/kWh, gas customers in Stockholm are paying 322% more than gas customers in London.

Based on the electricity and natural gas prices collected both for incumbents and competitor companies in capital cities of EU15 member states, E-Control GmbH and VaasaETT have compiled an overall index: The Household Energy Price Index, HEPI. The HEPI is a weighted end user price index that assesses the overall price development.

The Household Energy Price Index for Europe is Europe’s only independent comparative monthly index of electricity and gas prices across the ‘EU 15’ states. Nearly a year of research and development has gone into ensuring a methodology whereby prices are comparable between companies and between countries. Data is collected directly from utilities and authorities in the respective markets.

E-Control GmbH and VaasaETT will continue to monitor the overall price development. An update will be available in early June 2009.

KEY FINDINGS AS OF MAY 2009

European Energy Prices Falling

The figures for the HEPI reveal that both for electricity and gas, end-user prices for households have decreased constantly across EU15 member states since January 2009. The is mainly due to lower wholesale market prices for electricity and gas which has fed through (sometimes with a delay, as in the case of natural gas) to the end user.

Big Variations in Prices paid by European Energy Customers

• Electricity customers in Copenhagen currently pay by far the highest prices within the capital cities of the EU15, around a third higher than Berlin, the next most expensive city. This is due largely to much higher energy taxes in Denmark, which make up the majority of the energy price. Customers in Helsinki and Athens pay the least, in fact just over one third of the prices paid by the Danes.
• For gas, it is customers in Stockholm who pay by far the highest prices within the capital cities of the EU15, over 50% higher than in the next most expensive cities Copenhagen, Berlin and Rome.
• Gas customers in London, pay less than in any other capital city, with the closest cities Luxemburg, Paris and Lisbon around 25% more expensive

Slightly Different Picture when Taxes are Excluded

• The picture is slightly different when taxes are excluded, with Luxembourg, Dublin and Amsterdam respectively the most expensive for electricity. Paris becomes the cheapest city for electricity, followed closely by Stockholm, Helsinki, Athens, Berlin and London respectively.
• For gas Stockholm remains the most expensive when taxes are omitted, followed by Athens, Dublin and Berlin. London remains the cheapest, followed by Rome and Copenhagen.

Mixed Savings

For electricity customers switching from the standard incumbent tariff to the leading competitors typical tariff, the biggest current typical savings are available in Stockholm, followed by Vienna and Lisbon, with annual savings (given constant prices) of around 103 Euro to 56 Euro respectively. Interestingly, savings in London, Europe’s most active energy market, are modest in comparison.

In some countries, however, savings are effectively zero where prices are capped low (as in Paris) or where the capital city incumbent has a very competitive incumbent price (as in Helsinki). Savings are much larger when gas and electricity and gas savings are aggregated, with Berlin and Brussels leading the way with savings of 164 and 144 Euro respectively. Savings in most cities are higher if customers switch to the cheapest competitor.

For More Information:

- Christophe Dromacque: Tel: +358449990138 / Christophe.dromacque@vaasaett.com (English / French)

- Dan Rieser, Tel: +43 664 621 0938 / dan.rieser@e-control.at (English / German)

Subscribe to free monthly updates on the Household Energy Price Index for Europe. Get the latest prices delivered automatically to your email. Just send a simple email request to either of the above mentioned email contacts.

About the Authors

E-Control

E-Control GmbH was set up by the legislator on the basis of the new Energy Liberalisation Act and took up work on 1 March 2001. E-Control is headed by Mr Walter Boltz as the managing director and is entrusted with monitoring, supporting and, where necessary, regulating the implementation of the liberalisation of the Austrian electricity and natural gas markets. More at: www.e-control.at

VaasaETT Global Energy Think Tank

The VaasaETT Global Energy Think-Tank is an innovative provider of collaborative expertise and solutions to the energy and utilities industry, through its network of thousands of senior executives, officials, researchers and other experts that are mostly known and trusted personally. Value is provided to partners through the synergy of Interactive Forums (both real and virtual) and Collaborative Projects. The Think-Tank focuses broadly on strategic business, market, innovation and regulatory issues, and is world renowned for its expertise in fields such as Customer Psychology & Behaviour, Utilities Marketing, Smart Metering & Demand Response, and Market Efficiency. More at: www.vaasaett.com