Everyone in the UK energy sector knows that profound change is under way; change which is scary for some businesses and exciting for others. It has forced some well-established operations to close down; various businesses to question their future and has provided fertile ground in which many others – often newcomers – are flourishing, or, expect to be doing so before very long.
The transition to the new world of energy depends on big investment decisions – in production, networks and technology – and as always in business, those decisions rely on a judgement of what customers want. The focus is on electricity supply, where the relationship is critical. At any given time, production of electricity must be balanced with customers’ demand and getting that balancing act wrong can have serious consequences – from damage to industrial machinery to power cuts. In that sense, the relationship between the industry and its customers is extremely close and it is mostly well-managed. In other respects, it is anything but close and the remoteness of energy companies from the people who pay their bills damaged the reputation of those businesses. Not surprisingly, that gap between suppliers and their customers, for years, has been fertile ground for politicians and the news media.
The journalists have a job to do and they know that the attention of the largely comfortable readers, listeners and viewers is easily drawn to bad news. Politicians and regulators have a job to do, too and they have often intervened on behalf of the customers. The price cap on energy companies’ tariffs was only the most recent example. Almost invariably, there are unintended consequences when governments intervene in markets and in this case, they have been well-publicised. But, one consequence that has not prompted any serious comment is the impact on the relationship between the larger companies and their customers. Does intervention improve that relationship? Surely not. In fact, it probably diverts the attention of the companies to the politicians and regulators and away from the real customer. So much so that the government becomes the ‘customer’ and when making their big decisions, it is towards that ‘customer’ that many companies will look.
In Great Britain, there are more than 25 million households that pay electricity and gas bills. Most of those bill payers are also voters, of course. If they have been paying attention, then they may have heard that big changes will lead to a smarter world where the energy customer is king. But, most are too busy to have taken much notice and even if they had been listening, they could be forgiven for being sceptical. Spectacularly misjudged by the political establishment in 2016, they lashed out and they are still in a bad mood. So, companies in the energy sector should be extra sensitive to what customers want. Some – probably the biggest – will rely on the government’s interpretation of that. Others will not only pay attention to what government says, but, will also understand more acutely what customers want. They deserve more attention and would probably be grateful for it.