1 CER SME Electricity Market Survey Results 2014 Prepared for: Prepared by: June 2014 &

1

CER SME Electricity Market

Survey Results 2014

Prepared for:

Prepared by:

June 2014

&

2

Background

● Electricity and Gas SME surveys conducted during March 2014

Total of 400 electricity and 250 gas interviews completed

Margin of error on a sample size of 400 is 5% and 6% on a sample of 250. For smaller subsamples the margin will be greater.

● Survey data collection methodology was Computer Assisted Telephone Interviewing (CATI)

Survey length of approximately 20 minutes

● Respondents were decision makers for electricity or gas supply related issues within the organisation

Included both private sector and public sector, government organisations and sole traders

● The final respondent set comprises a broadly representative of the SME sector organisations with fewer than 250 employees in Ireland

Sample was quota controlled on number of employees and region. A spread across sector NACE code was also ensured.

Respondent & Market Profile

4

Respondent profile(Base: All SMEs – 400)

● Population of respondents is representative of business sizes across the SME market

● 17% of respondents identified themselves as on Maximum Demand (2013:14%)

● 45% stated that they were on a variable rate tariff (2013: 43%)

Number of employees NACE 2012 2013 2014

Agriculture, forestry and fishing 5% 4% 2%

Industry Mining and quarrying Manufacturing 7% 5% 5%

Construction 5% 9% 11%

Wholesale and retail trade; repair of motor vehicles and motorcycles 17% 20% 23%

Business and Professional Services 31% 19% 18%

Public administration and defence; social security, Education Human health and social work activities

15% 14% 10%

Other Transportation and storage 2% 4% 5%

Accommodation and food service activities Leisure hotels Arts, entertainment and recreation

5% 8% 16%

Other service activities 13% 15% 10%

Activities of extraterritorial organisations and bodies 1% 4% -

0-5 6-10 11-50 51-100 101-250

62%

16%16%

3% 4%

69%

14% 14%

2%1%

59%

15%20%

2% 3%

2012

2013

2014

5

Respondent profile(Base: All SMEs – 400)

● Respondents sought for survey were those responsible for electricity supply related issues. There are a large number of roles within the SME organisations, whose responsibility encompasses electricity supply decisions

The highest proportion is the managing director/owners role, reflecting the large proportion of businesses with small numbers of employees

● There were no significant differences compared to 2013

RespondentOther/Shared

Nobody

Paying the bill 85% 16% 0%

Monitoring the level of usage

84% 8% 9%

Reducing the size of the bill 90% 9% 4%

Deciding on the tariff that suits your organisation

80% 17% 3%

Making changes to your account such

89% 13% 1%

Billing details, payment methods etc

88% 13% 0%

Deciding on which energy supplier will be used

87% 19% 0%

Acc

ounta

nt

Financi

al m

anager/

dir

ect

or

Opera

tions

manager

Main

tenance

manager

Managin

g d

irect

or

Offi

ce M

anager

Adm

inis

trato

r

Ow

ner

10%

16%

6%

1%

18%

10%7%

30%

6%

11%8%

2%

26%

10%8%

29%

2013 2014

Role of Respondent

7

Energy management: Cost and Usage Reviews(Base: All SMEs – 400)

● Business’ most commonly review both cost and usage annually

● Just over 20% of SMEs never review usage, while 12% claim to never review cost

● On average circa 10% review cost and usage at frequencies other than the options noted

Annually Three Monthly Two monthly Monthly Never

43%

11%9% 8%

27%

51%

12% 10%9%

13%

52%

9%7% 6%

12%

2012 2013 2014

Annually Three Monthly Two monthly Monthly Never

40%

12%

7% 8%

31%

49%

13%

7% 9%

18%

37%

9% 9% 10%

20%

2012 2013 2014

Frequency of electricity cost reviews Frequency of electricity usage reviews

8

Market share: SME electricity suppliers(Base: All SMEs – 400)

● Proportionate representivity by market share

● Satisfaction with service by Supplier in supporting the business continues to decline across all Suppliers

Overall Airtricity BGE* Electric Ireland Energia

84%

76%

84%90%

78%77% 76%79%

77% 78%

70% 69% 67%72% 70%

2012 2013 2014

Satisfaction with service by Supplier in supporting the business

8

* Caution: Small base

Electric Ireland48%

BGE9%

Airtricity19%

Energia24%

Others<1%

% of respondents with each supplier

(Proportion of respondents with each supplier)

9

Bill Delivery and Frequency(Base: All SMEs – 400)

● Majority of SME’s receive their bill by post with evidence of an increase in the website channel

● Continued increase in those reporting a two month bill frequency

Airtricity BGE Electric Ireland Energia

46%

87% 81% 84%

42%

5% 19%24%

25% 14% 10%13%

Post Email Website

Bill delivery channel

2012 2013 2014

80%71%

76%

14%24% 23%

5% 4%

13%

Post Email Website

Bill delivery channel – by Supplier

Bill Frequency 2012 2013 2014

Monthly 44% 45% 43%

Two Monthly 49% 52% 54%

Quarterly 5% 2% 2%

Other 2% 1% 2%* Caution: Small base

1010

Perceptions of price change over time(Base: All SMEs – 400)

5744 44 38

7

210

10

25

4436 42

11 11 9 9

Increased Decreased Same Don't Know

Price Change by SupplierElectric Ireland Bord Gais* Airtricity Energia

% % % %

49%

8%

33%

10%

Has the price charged by your supplier changed in the last year?

Increased Decreased

Same Don't Know

● Almost a half of the SME respondents perceive that there has been an increase in the price charged by their supplier in the past 12 months

● This is most noteworthy in the case of Electric Ireland, where 57% held that perception


11

Payment Record and Arrears(Base: All SMEs – 400)

Stated bill payment record

● 88% of SMEs claim to pay on time and in full, a decrease on previous measurements

● This continued high rate may reflect a ‘broad’ interpretation of what constitutes arrears and perhaps some reluctance to disclose such sensitive information

2012 2013 2014

97% 95%88%

1% 4%8%

1% 1% 3%

Paid on time/in full

Sometimes in arrears, but not currently

Currently in arrears

12

Awareness of competitors(Base: All SMEs – 400)

● Unprompted awareness reflects top of mind presence in the consumer mind and provides a good estimate of perception of competitive activity in a market

● For electricity suppliers 85% mentioned Electric Ireland or a prior name (ESB, Customer Supply): 49% mentioned Electric Ireland in 2013, up from 37% in 2013, and 23% in 2012

Unprompted awareness of Electricity Suppliers

Electric Ire-land (ESB

etc)

Bord Gais Airtricity Energia Vayu

85%

50%

68%

41%

1%

Supplier Named - Unprompted

2010 2012 2013 2014

Electric Ireland (etc)

71% 79% 79% 85%

Bord Gais 54% 45% 47% 50%

Airtricity 72% 59% 65% 68%

Energia 39% 28% 26% 41%

Vayu 2% 1% 1% 1%

Competition & Deregulation

15

Satisfaction with Aspects of Competition

Level of Competition

Quality of Competition

Range of Offers

● Notable decline across all metrics of competition, in particular Satisfaction with Range of Offers

● Indication of consumers disengagement with the market as consumers now more likely to rate satisfaction with competition as middle of the road (neither/nor).

● Relatively low levels of Satisfaction with Competition articulated by SME sector

10%

35%

22% 22%

7%11%

23%

39%

15% 12%

2013

2014

V.satisfied Satisfied Neither Dissatisfied V dissatisfied

8%

33%

21% 22%

7%10%

16%

40%

20%

11%

20132014

V.satisfied Satisfied Neither Dissatisfied V dissatisfied

7%

30%

23% 24%

8%7%12%

39%

25%

14%

20132014

(Base: All SMEs – 400)

16

Awareness that prices are not regulated(Base: All SMEs 400)

● There is a comparatively low level of market knowledge amongst the SME respondents, with 49% not aware that prices are no longer regulated

● This is symptomatic of the comparatively low level of engagement with energy, also seen in terms of low awareness of unit costs amongst the SME sector.

Aware of non regulation of price

2012 2013 2014

Aware 40% 36% 37%

Somewhat Aware

10% 11% 14%

Not Aware 50% 53% 49% Airtricity BGE* Electric Ireland Energia

37% 35% 34%44%

12% 22%11%

18%

50%44%

55%38%

Aware Somewhat Aware Not Aware

Aware of non regulation of price, by Supplier

Q: Are you aware electricity prices charged by suppliers are not regulated which means that suppliers can set their prices at whatever level they choose?

*Caution Small base

17

Improvement and Dis-improvement since Deregulation(Base: All SMEs 400)

Cost of Electricity

2012 2013 2014

Improved 32% 25% 25%

Dis-improved 27% 26% 21%

Level of service provided by suppliers Level of innovation in services provided by suppliers

Responsiveness of suppliers to business needs

Range of options available by suppliers to business customers

Ability of businesses to select supplier that best meets their needs

2012 2013 2014



2012 2013 2014



2012 2013 2014



2012 2013 2014



2012 2013 2014



18

Contact by Suppliers(Base: All SMEs 400)

● SME respondents recall higher levels of contact from competitors to their electricity supplier, with increased in the level of both phone and business visit contact

● Contact activity at supplier level is varied

56%

44%

Contacted by other supplier with a view to switching in

the past 12 months

Yes

No

Contact Channel

2012 2013 2014

Phone28% 21% 28%

Mail 6% 4% 7%

Business visit 29% 25% 34%

2013- Yes: 50% No: 50%

2012 2013 2014

Electric Ireland

51% 48% 57%

Bord Gais* 62% 46% 58%

Airtricity 40% 56% 45%

Energia 55% 30% 63%

Contact by Supplier

*Caution: Small base

19

Awareness and understanding of offers available(Base: All SMEs 400)

● There is a comparatively low level of market understanding, specifically of alternative offers, of which SME’s might avail

● An increasing proportion of the SME’s are indicating that they are not aware of other offers available

Level of understanding of other offers

2012 2013 2014

No/Small Understanding 30% 21% 15%

Some understanding 29% 20% 20%

Mostly/Fully understand 30% 42% 31%

Not aware of the offers available 12% 17% 34%

Electric Ireland BGE* Airtricity Energia

12%27%

14% 15%

17%

10%19%

32%

32%27% 31%

30%

39% 35% 35%23%

No/Small Understanding Some understanding

Mostly/Fully understand Not aware of the offers

Level of understanding of offers by current supplier

Q: Thinking about the different offers available from electricity suppliers, please rate your understanding of the offers available.?


20

Ease of comparison of other offers

13%

10%

16%

9%15%

37%

Very difficult Difficult Neither easy nor difficult

Easy Very easy No comparison attempted

Awareness and understanding of offers available(Base: All SMEs 400)

● The comparatively low level of market understanding is confirmed in the high proportion of SME respondents who report that they have not attempted to compare other offers

● This ease of comparison has decreased since 2012 and is now under 1/4 of SME’s

Ease of comparison of other offers since 2012

2012 2013 2014

33%

30%

24%

Switching

22

How many times have you ever switched electricity suppliers?

33%

22%18%

28%

Never Once Twice More than twice

Electricity Switching experience – level of switching(Base: All SMEs 400)

● The level of switching (in the last 12 months) has increased to 22% in 2014, compared with 15% in 2013 – of these 42% were switch backs to their previous supplier

● One third of the SME respondents have never switched supplier - with over 50% of Electric Ireland’s SME respondents indicating that they have never switched –

● In contrast 28% have switched more than twice

● Amongst the switchers, 30% have switched once or more than once on the last 12 months.


56%

14% 7% 12%

14%

39%

32% 27%

14%

17%

26%20%

18%31% 36% 43%

Never Once Twice > Twice

How many times have you ever switched electricity suppliers – by supplier?

* Caution small base

25

Electricity - Contact method used to switch(Base: All switchers - 85)

© 2013The Research Perspective

Method used to switch

64%

12% 12%

3% 2%7%

54%

13%15%

3% 3%11%

58%

14% 13%

5%

0%

8%

2012 2013 2014

● Site visits are still the primary channel, through which SME’s switch supplier

26

Electricity - Switching Package/option with existing supplier(Base: All non-switchers - 315)

● Among non switchers, 18% reported changing package to avail of discounts related to direct debit or online billing.

18%

82%

For Non switchers - Changed the package with existing supplier –

e.g. for a better discount

Yes No

27

Electricity - Changing Payment channel and Bill frequency with existing supplier(Base: All SMEs – 400)

● Evidence of increased engagement in the areas of changing bill frequency and payment channel, but levels of change are still comparatively low

Q: Have you telephoned/emailed your supplier to enquire about other packages, other payment methods or bill payment options in the past 12 months?

18%

82%

Yes No

28

Electricity – Switching consideration(Base: All non-switchers - 315)

Switching consideration:

Considered switching Contacted alternative supplier

43%

28%

40%

27%

2013 2014

● At 40%, reasonable level of SME activity in the self-reported consideration of alternative suppliers, of which 27% reported making contact

● Consideration is more pronounced among Airtricity customers and least pronounced among Electric Ireland’s customer.


29%41%

54% 52%

24%17%

37%24%

Considered switchingContacted alternative supplier

Switching consideration – by supplier?


29

Electricity Switching – Experience with Dual Fuel

● Those on dual fuel showing the highest incidence of switching electricity suppliers, with 2 in 5 dual fuel consumers having switched suppliers more than twice.

33%

22%18%

28%

21%

21%

14%

43%

How many times have you switched electricity suppliers?

All Electricity Consumers(Base: 400)

All Dual Consumers(Base: 28)

All Non Dual Fuel Consumers(Base: 372)

Never

Once

Twice

More than twice

Never

Once

Twice

More than twice

Never

Once

Twice

More than twice

33%

22%18%

27%


30

Electricity – Reasons for switching, amongst switchers(Base: All who have switched to new supplier in last 12 months – 52)

Top 5 reasonsImportant

Not Important

2013 2014

2013 2014

To achieve a reduction in the total cost of electricity 71% 89% 17% 5%

The new supplier offered a more flexible tariff structure 54% 61% 27% 26%

My business’ bill increased in size because my previous supplier had increased prices 46% 44% 44% 35%

To avail of a combined offer for electricity and natural gas 17% 43% 50% 38%

I expected the customer service from the new supplier would be better 27% 37% 46% 37%

● The Top 5 considerations for switching focus on the quest for a reduction in cost and service requirements

31

Electricity – Reasons for switching, amongst switchers(Base: All who have switched to new supplier in last 12 months – 52)

Important

Not Important

2013 2014

2013 2014The previous supplier had recently announced a price rise 54% 38% 37% 32%

The new supplier offered greater assistance on energy reduction initiatives 32% 32% 39% 42%

I was unhappy with the service I have received from my former supplier 15% 26% 66% 53%

My business was not satisfied with the service provided by our former supplier 22% 25% 56% 55%

To get more information on electricity usage 22% 20% 51% 53%

I preferred the online billing option from my new supplier 20% 18% 61% 60%

● Additional considerations for switching include increases in the relevance of meeting service expectations

32

Electricity – Reasons for switching back to old supplier, amongst switchers(Base: All who have switched back to previous supplier – 33*)

Top 7 reasons: ImportantNot

Important

To achieve a reduction in the total cost of electricity 94% 0%

The business expected to get more savings by returning to my original supplier 70% 0%

My original supplier contacted me with a better offer if I would switch back 52% 34%

My business’ bill increased in size because my previous supplier had increased prices 59% 25%

The price the business received from my new supplier was not as good as I had expected 42% 39%

The previous supplier had announced a price rise 47% 28%

The original supplier offered a more flexible tariff structure 43% 29%

● Top 7 reasons for returning to the original supplier all related to price/tariff considerations


33

Electricity – Reasons for switching back to old supplier, amongst switchers(Base: All who have switched back to previous supplier – 33*)

Other Reasons cited ImportantNot

ImportantThe business was not satisfied with the service provided by our new supplier 28% 47%

The service from the new supplier was not as good as the service received from my original supplier 26% 55%

The business’s original supplier offered greater assistance on energy reduction initiatives 29% 48%

I did not find the bill of my new supplier understandable 29% 56%

I did not like the frequency with which I received a bill 22% 70%

I preferred the online billing option from my original supplier 20% 64%

We would have had to pay a large deposit 24% 70%

To avail of a combined offer for electricity and natural gas 35% 65%

We would be charged a penalty and the saving to be made with a new supplier would not cover this penalty 24% 59%

● Top amongst non price considerations in the decision to return to the original supplier is service falling short of expectations


34

Understanding of Discount agreement (Base: All switched in past 12 months – 85)

Price Guarantee Period

2012 2013 2014

19% 18%12%

5% 5%

1%

7% 8%

4%

2% 2%

1%

31%36% 67%

2%

8%

5%

7%

2%

1%27%

21%

9%

No guarantee 3 months 6 months

9 months 1 year 2 years

< 2 years Don’t know

Q: How long does the discount you were offered when you switched last for?

NO restrictions on future switching?

2012 2013 2014

32%

59%

72%

Period of restriction

2012 2013 2014

6 months 6% 20% 3%

1 year 69% 56% 86%

2+ years 6% 8% 11%

Don’t know 19% 16%

35

Electricity – Non Switchers – reasons for not switching(Base: All who have not switched – 315)

Top 7 reasonsImportant Not

Important

2012 2013 2014 2014We are satisfied with the service that we receive from our current supplier 50% 64% 50% 24%

We do not believe that the prices will stay as low as the alternative suppliers claim 30% 37% 46% 32%

We do not believe that the level of discount is sufficient to justify switching 23% 39% 43% 36%

Other priorities have meant that this has not been considered 30% 43% 41% 37%

We do not believe that the prices will be as low as the alternative suppliers claim 28% 32% 38% 38%

We are concerned about whether the alternative supplier will provide a reliable supply of electricity 23% 31% 31% 53%

We are concerned about whether the alternative supplier will be as responsive if there is a power outage 24% 30% 32% 51%

● The First 5 considerations for not switching focus on lack of conviction that the alternative will be any better than the current choice

37

Rating the overall experience of switching

Experience of switching process(Base: All switched in past 12 months - 85)

• The overall rating of the experience of switching increased to 88% stating that it was easy or very easy – the process of switching is not a barrier to switching

• Of those who switched, 3% indicated that they were required to pay a deposit, which averaged at Euro 600

Rating the overall experience of switching by Supplier

2012 2013 2014

2% 2% 4%4% 7% 3%4%5% 4%

31%33%

15%

60%52%

73%Very Easy

Quite Easy

Neither easy nor difficult

Quite difficult

Very difficult

ESB/Elec-tric Ireland*

Bord Gais* Airtricity* Energia*0% 0% 5% 0%0%

20%0% 9%

3%

0%

4%4%

3%

0%

4%7%16%

0%25% 9%

78% 80%

62%71%

Very Easy

Quite Easy

Neither easy nor difficult

Quite difficult

Very difficult

Don’t know


38

Rating the overall experience of switching

Impact of switching process(Base: All who have switched & received a bill – 78)

• The impact of the switching process is broadly as expected for the SME’s who switched.

2012 2013 2014

Agree Disagree Agree Disagree Agree Disagree

My business’ bill was reduced by the amount I expected

57% 25% 67% 15% 61% 30%

The service from my new supplier was satisfactory

79% 6% 80% 2% 78% 6%

We understood the terms and conditions of the offer the business had signed up for

77% 8% 83% 4% 81% 5%


39

Impact of switching process(Base: All who changed package with current supplier - 59)

• 19% of the respondents indicate that they are likely to switch again in the next 12 months

Changed Package -

Agree

Changed Package - Disagree

My business' bill was reduced by the amount I expected 47% 30%

We understood the terms and conditions of the offer the business had signed up for

74% 13%

We have complied with the terms and conditions (for instance online billing or payment by direct debit)

84% 8%

Dual Fuel

Billing & Payment

43

Bill Understanding and impact(Base: All SMEs - 400)

Change vs 2013

(-12%) (-15%) (-6%) (-9%) (-19%)

Understand the calculation of the bill

Bill is easy to understand Bill makes it easy to understand the electricity used

Makes it easy to understand the electricity charged for

Overall Airtricity Bord Gais energy*

Electric Ireland

Energia0%

40%

80% 69% 64%82%

68% 69%

Chart Title

Change vs 2013

(-8%) (-12%) (-11%) (-3%) (-12%)

Change vs 2013

(-14%) (-13%) (-28%) (-10%) (-19%)Change vs 2013

(-13%) (-19%) (-14%) (-11%) (-13%)


Electric Ireland

Energia0%

40%

80% 70% 64% 70% 71% 76%

Chart Title


Electric Ireland

Energia0%

40%

80% 65% 64% 57% 66% 67%

Chart Title


Electric Ireland

Energia0%

40%

80% 66% 60% 63% 65%75%

Chart Title


44

Bill Frequency(Base: All SMEs - 400)

My business would prefer to receive bills more frequently

12%

6%

14%

17%

52%

Strongly disagree Disagree Neutral Agree

Strongly agree

Business would prefer to receive bills more frequently– by Supplier?


16% 14%21% 19%

16%

5%

15%12%

68%82%

64% 69%

Agree Neutral Disagree


Complaints

46

Experience and knowledge of Complaint process(Base: All SMEs - 400)

● 10% of SME respondents had complained within the last 12 months

● The most common category of complain is in relation to billing and payment (29%), closely followed by Networks related issues such as reliability of supply

● Issues related to switching emerged at 4% this year

Proportion of respondents who complained over last yearComplaint topic(Base: All complained – 40)

2012 2013 2014

Billing and payment 55% 40% 29%

Late payment or disconnection 21% 5% 6%

Other issues 18% 40% 31%

Reliability of supply/power failures/supply issues

6% 0% 23%

Issue related to switching 0% 0% 4%

Connection/modification of supply 0% 5% 6%

2012 2013 2014

10%

5%

9%

47

Experience and knowledge of Complaint process(Base: All SMEs - 400)

● Suppliers continue to be the first port of call in terms of receiving complaints, with 78% of SME’s respondents indicating that they contacted their supplier and 23% reporting that they contacted ESBN

59%

41%

Aware that you can complain to CER?

Base: All SMEs – 400)

Yes

No2013- Yes: 53%2012- Yes: 54%

Who to complain to(Base: All complained – 40)

2014

Your current or previous supplier 78%

ESB Networks 23%

The Commission for Energy Regulation

7%

Don't know 3%

4848

Satisfaction with complaint handling(Base: All complained – 40)

40%

17%6%

18%

17%2%

Very Dissatisfied

Dissatisfied

Neither Satisfied nor Dissatisfied

Satisfied

Very Satisfied

Don't know

● 2014 Satisfaction with problem handling has returned to 2012 levels

Satisfaction with COMPLAINT HANDLING

29%

18%

10%

18%

22%

3%

Very Dissatisfied

Dissatisfied

Neither Satisfied nor Dissatisfied

Satisfied

Very Satisfied

Don't know

Satisfaction with COMPLAINT OUTCOME

Satisfaction with 2012 2013* 2014

Complaint handling 43% 0% 35%

Complaint outcome 41% 22% 40%*Very small sample size

1 CER SME Electricity Market Survey Results 2014 Prepared for: Prepared by: June 2014 &

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Transcript of 1 CER SME Electricity Market Survey Results 2014 Prepared for: Prepared by: June 2014 &