Energy suppliers hit by customer service crisis

2006 has been a truly awful year for domestic households, who have suffered the ‘triple whammy’ of rising interest rates, council tax hikes and soaring energy bills. There have been an unprecedented 13 domestic energy price hikes in 2006, which have resulted in annual gas and electricity bills rising by an average of £277 or 38%. The average energy bill has risen from £735 since the start of the year to £1,013 today, and the number of energy customers struggling to pay their bills continues to escalate at an alarming rate, with an additional 1.25 million consumers estimated to have fallen victim to fuel poverty this year alone. At the same time customer service levels have hit rock bottom, while the energy companies themselves continue to enjoy healthy profits of £6 billion.

The latest Customer Satisfaction Report published today, by the leading independent comparison and switching service uSwitch.com, has taken the views of 7492 customers to evaluate the quality of service provided by their energy providers. The latest report is shocking news for the UK’s 25.5 million energy customers and highlights a widening gap in satisfaction levels between the best and worst performing providers of 17%.

The poll of 6728 electricity and 5714 gas customers, reveals some startling findings: overall satisfaction levels have fallen by 7% on average; 15.3 million (60%) of customers are not satisfied they are getting value for money from their energy supplier; and a further 65% are not satisfied that their supplier has them on the best deal.

Ann Robinson, Director of Consumer Policy at uSwitch.com comments: “The worrying thing for all of us is that whilst prices have gone skyward customer service has gone down across the board. For instance, npower has witnessed a 10% reduction in its overall customer satisfaction and an 8% reduction in the perception that they offer value for money. It’s not so much a case of energy companies resting on their laurels, as holidaying on them.”

“Until consumers say enough is enough, there is no pressure on energy providers to right the myriad of wrongs they are currently peddling under the guise of customer service and value for money. Energy companies have continually increased prices this year but their levels of service remain far from adequate. We know that some 7.4 million customers are thinking about switching and we implore them to do it now.

“We must all start acting like consumers and ditching misplaced loyalty in energy companies or any notion that we may be paying more for a better product because this is not the case. The key thing for consumers to remember is that contrary to what some people might believe, it is the same gas and electricity that comes into our homes. What is important is how good the customer service provided by your energy company is. It is the quality of the service, not the quality of the product that we are paying for after all. And the most expensive provider of all – British Gas – is the worst when it comes to customer service.

“There are over 10 million households in the UK who have never switched, who between them could save over £2.66 billion. Customers who have never switched their energy provider could be currently missing out on savings of up to £325 a year each.”

One in four (25%) or 6.38 million customers in the UK are now struggling to pay their energy bills, up 765,000 since the last survey in March. Meanwhile, 5.6 million households and 2.8 million pensioners are in fuel poverty.

Eight in ten (79%) said price was the most important factor when it comes to their gas and electricity supply. The top three performing suppliers in the survey have average ‘dual fuel bill sizes’ of under £1,000 while the bottom three are all over £1,000. Despite this there are still some 10 million households in the UK who are yet to switch either their gas or electricity to a cheaper provider. Consumers are missing out on a combined saving of £2.7 billion per year. To put this in to context, this is almost half of the combined profits (£6 billion) generated by the ‘big 6’ energy suppliers in 2006. If consumers were to wield their power and take their custom elsewhere, it would put a significant dent in the energy providers’ company coffers.

The winners and losers

Scottish and Southern Energy

Remains the best performer and the cheapest supplier with an average energy bill of £962, this represents a £158 saving over British Gas. SSE was voted the best overall provider for the second time running, although it did see a 9% reduction in its customer satisfaction score.

The dearth of quality service within the energy industry did not impact SSE too greatly as they are placed first in five of the seven categories including value for money, customer service and completing the transfer process for switching customers.

The survey results reflect SSE’s promise in June to spare customers from further price increases until the beginning of 2007 and its focus on energy efficiency initiatives.

Powergen

Saw the biggest improvement in overall customer satisfaction across the industry, up by two positions since the last survey – previously ranked in bottom position, the company came in fourth place this time around. The findings are supported by recent energywatch data which showed a 55% decrease in the number of complaints against Powergen over the past six months.

It is no coincidence that the turn around happened after Powergen brought its call centres back from India to the UK. However, despite this marked recovery – a 9% improvement in customer service levels to 43% – the score still falls short of being satisfactory.

Powergen improved in all categories but still remains third from bottom according to its customers who have an average bill in excess of £1,000.

British Gas

British Gas, whose market share remains unrivalled (52% for gas and 23% for electricity), came last for overall customer satisfaction with over 56% of customers not satisfied.

Its woes continue with recent energywatch figures showing a 93% increase in the number of complaints. Additionally, when Watchdog conducted 40 test calls to the British Gas call centre, the average waiting time was nine minutes and the longest was 47 minutes.

British Gas receives almost three times more complaints per million customer accounts than the other suppliers.

It remains the most expensive supplier - 12% more expensive than the other ‘Big 6’ for gas and 13% more expensive for electricity.

The energy giant also rated worst on value for money (with 67% of customers not satisfied) and comes bottom on aiding the transfer process to help customers switch to another provider.

British Gas tops the energy efficiency (46%) league for providing the best information for the second consecutive time.

npower

npower’s customer satisfaction scores fell in all categories to make it the second least satisfactory provider in the UK, with only British Gas coming below them.

Value for money has dropped by 8% to 36% and overall satisfaction was down 10% to 47% (meaning that 53% of npower customers are not satisfied with the service they get).

npower’s poor performance was compounded by the fact it has increased prices by the most in 2006-07, with average gas prices rising 56% and average electricity prices increasing by 43%.

Ann Robinson, comments; “Consumers want value for money and a drop in prices. While there will always be gap between what energy companies can provide and what customers want, there does need to be a radical change. The most expensive providers are seeing an increase in number of complaints being levelled at them and they are increasingly guilty of a dereliction of duty.”

uSwitch.com recommendations to improve the levels of service:

Be cheap – Suppliers need to work harder at lowering prices, 79% of people said that price was the most important factor when it comes to gas and electricity. Wholesales prices have fallen, and these savings need to be passed onto consumers.

Be transparent - The suppliers with the most satisfied customers are transparent about their pricing. The bottom two suppliers, npower and British Gas both have a habit of offering cheap rates during price rise season and increasing them later.

Be available - A customer's interaction with their supplier's call centre must be helpful and solutions-focused. Powergen have moved up two places in overall satisfaction and two places in customer service since investing in their call centres and moving them back to the UK.

Improve billing procedures - a customer's bill may be their only interaction with their supplier; it must be clear and easy to interpret and understand.

The uSwitch.com customer satisfaction report aims to provide consumers with the necessary information to make an informed decision about their existing or future supplier based on service as well as price.