British Gas says it remains highly focused on the industrial and commercial (I&C) energy market despite suggestions to the contrary. The company also believes it is finally emerging from the “painful” billing system upgrade that soured relationships.
Centrica stated in interim results earlier this month that it would focus retention activities on higher value SME customers as B2B energy supply profits collapsed.
However, Dylan Crompton, head of corporate sales for I&C customers at British Gas Business, said a renewed SME focus is not to the detriment of its I&C business.
“We employ over 400 people to work on large I&C accounts and it accounts for in the region of £1bn a year [of billings] across 11,000 customers. So it is not a market that we are retrenching from in any way,” he told The Energyst.
On the contrary, the firm is “highly focused” on strengthening relationships with brokers, which buy energy on behalf of the bulk of the I&C market.
Management fees ‘low as possible’
Crompton said those relationships, as well as direct relationships with customers, focus increasingly on smarter consumption as opposed to eking out percentage gains on procurement.
“Some procurement remains very traditional: A tender every two or three years where the lowest price wins,” said Crompton. “But customers are starting to recognise that management fees are probably as low as they can be. So to attack the energy cost base, we have to work in partnership to avoid policy and non-commodity costs.”
Crompton estimates around 25-30% of I&C customers now take that approach.
But that suggests around three quarters of the UK’s largest energy consumers are yet to recognise that management, procurement and flexibility are beginning to converge.
“There is a lot of correlation between those three data sets, and that is well understood by some [I&C clients]” said Crompton. “But the biggest challenge we face is to engage with the rest of the market.
“Many I&Cs still buy on a fixed price contract [versus contracts where charges can be avoided], so cannot take those strategic decisions [around consumption and cost avoidance],” Crompton added.
“Energy just seen as a fixed cost that can’t be influenced. But is is not as fixed as you think it is.”
Flexibility gains
While there are incoming changes to avoidable charges such as network red bands (DUoS) and Triad, Crompton believes businesses that take an agile approach to flexible consumption are primed to avoid whatever replacement schemes emerge to recoup sunk network costs.
“[Policy costs and network charges] largely fall on I&C customers. If you have flexibility within your flexible consumption arrangements, you can act when those charges are replaced by different mechanisms and change strategy accordingly.”
That calls for an ‘always on’ approach to management and procurement, said Crompton, who urged firms to fully harness energy data, and for individuals to take responsibility for driving energy strategy.
“Somebody has to define that strategy and how it fits into business operations. People make businesses agile,” said Crompton. “There are different solutions for different organisations and we can help deliver them. But the business has to define the mechanism by which they participate.”
While Centrica’s interims cited ongoing impact of its billing system upgrade, Crompton believes there is light at the end of the tunnel.
“We can’t shy away from the pain that we have gone through and are very grateful to the customers that stuck with us through that period” said Crompton.
“We want to improve further but it genuinely feels like we are out of the back end of that now – and the billing performance is greater than what we had,” he added.
“Now the conversations are around working together to unlocking savings. To me, that suggests customers see that the worst is behind us.”
Related articles:
British Gas business energy supply profits wiped out
Centrica to pay £9.5m for business customer billing failures
British Gas: £4bn energy efficiency opportunity for UK firms
Centrica buy’s Ener-G’s CHP unit in bid to scale distributed generation business
Centrica to cut 3,000 jobs as utilities feel heat
Centrica sells power stations to Czech firm
Centrica to close Rough, UK’s largest gas storage facility
Centrica calls for suppliers to build capacity market gas plant
Centrica to start work on 49MW battery plant, calls for local suppliers
Centrica: Floodgates on battery storage to open in 2017
Centrica’s ENER-G: Flexibility and grid services will drive future revenue
Power prices to remain low to 2020: Moody’s
Click here to see if you qualify for a free subscription to the print magazine, or to renew.
Follow us at @EnergystMedia. For regular bulletins, sign up for the free newsletter.
