By Spark Energy CEO, Chris Gauld
“This week it was announced that complaints to the Energy Ombudsman are at their highest level, more than doubling in the first six months of 2014 compared with the same period last year.
Are we surprised?
Not really. Customers rightly expect a better service than ever and are being encouraged to seek help rather than suffer in silence. Switching rates are also steadily increasing with small suppliers like us gaining customers from the traditional ‘Big Six’. It’s a pity that customers should need to switch to make sure they make the right consumer choice for them – they should expect a good service from day one.
At Spark, our speciality is rented properties because we know that historically customers renting their homes have an even tougher time than home owners.
Tenants often find that the energy supply to their homes is shrouded in mystery, with little or no information to help them make the right consumer choice because most energy companies don’t specialise in this market and don’t recognise the needs of tenants. Landlords and letting agents have lost track of supply arrangements and they suffer for the same reasons while the property is empty between tenancies.
Our own recent survey shows that one quarter of tenants are unaware that they can switch. Others fail to do so because of the perceived hassle, not knowing the process and mistakenly believing a cost is involved.
As a result 52% of tenants stick with the supplier they inherit – for better or worse. In fact, as long as you are the bill payer it is your right to be able to change energy supplier and choose the one that is best for your needs.
Know your energy rights
It’s pretty simple. When you move in you’ll inherit the existing supplier. You should engage with them, give them a meter reading and check you’re on their best deal. If you don’t like what you hear you should shop around.
Your landlord can only choose the energy supplier while they’re directly responsible for paying the gas and/or electricity bills – often during the empty period before a new tenancy.
Often a default supplier is named in the tenancy agreement and this can be to your advantage – renters can benefit from arrangements negotiated on their behalf – but once you become responsible for paying for the energy you can choose the supplier that suits you best.
It seems this logic isn’t always understood and the lack of knowledge has been furthered by a lack of transparency from the Big Six suppliers, who make up 95% of the energy market. The current system is structured against tenants – who are a significant proportion of the energy-bill-paying population.
For example, many fixed rate deals are limited to 12 month contracts whereas tenants often have six month rental contracts or have a six month break clause which would prevent them from accessing this tariff, worse they may even have to pay an exit penalty- at Spark we specialise in variable tariffs with no tie ins or exit penalties.
Tenants also tend to inherit the most expensive tariffs from suppliers whose default tariffs are not their cheapest and some are even hit with demands for additional deposits followed by fees when they do switch or move out. At Spark, tenants start off on our lowest standard tariff because we know they are busy moving home and energy might not be top of their ‘to do’ list. We don’t want to penalise our customers while they get organised in their new home. With us, there’s one less thing to worry about, and we hope that means incoming tenants will stay with us.
The initial account set up is a tenant’s opportunity to access the best tariffs and, if they choose, to switch supplier. It’s often made unnecessarily difficult or even impossible because the previous occupier’s account has not been administrated properly by the current supplier and this can also include new tenants being pursued for historic overdue bills. It’s taken a while, and we’ve had to build bespoke IT systems and processes, but as the only specialist in the rental sector we make sure new customers energy is set up and ready to go on a low rate from the minute they turn their key on the door and dump their boxes in the hall.
These are the reasons why I think it’s important that we have a variety of energy suppliers who are able to offer something different and to better whichever customer need they are able to focus on.
Times are changing
Across the industry things are set to improve, with the new commitment to reduce switch-over times from the current five weeks to three days by the end of 2014 and next day switching should be in place by 2018. As I said in my previous blog about switching times, this is a good thing providing it’s done properly and doesn’t add to the complications with previous tenancies.
Not all providers are the same when it comes to the treatment of tenant customers. At Spark, tenants make up the majority of our customers, so our entire business model is centred on how to best serve our valued customers. And we appear to be doing a good job too because, unlike the rest of the energy sector, our customer complaints have remained consistently around 3% and have not experienced the same jump as the rest of the market. We hate getting complaints though, so work hard to resolve over 90% within just 24hrs, hopefully letting our customers get back to their moving-in party or to empty the Ikea bag and relax!”