Tim McManan-Smith fires some questions about the changing nature of energy market, and how customers should fashion their approach to it, at Total Gas & Power’s new director of major business, Mark Rose.
In general, what is the customer’s number one concern, and how can you help them mitigate it?
It does depend on the customer, but there is a very real concern from all customers about understanding the end-to-end cost. How does the bill they actually pay come to that amount? And what can I do to consume less and overall save money?
It is something we pride ourselves on at Total Gas & Power (TGP), that there is no ambiguity over where the costs come from. Transparency is needed to win the trust of customers and part of this is that it is key to have a contract that you understand every element of.
Removing the ambiguity over how we reached the amount that the bill says, allied to up-to-date market information, limits the chance of unwanted surprises.
With costs rising, particularly from the non-commodity side, customers are asking what can be done about it. And it’s important that a supplier is able to do certain things in order to help the customer.
Rose is keen to stress how no one has cracked the one-stop-shop approach and he believes that is not always the best approach. TGP follows a much more delineated approach offering solutions where it works, such as solar power but also working with niche players as partners at other times, in the case of its EV charging infrastructure partnership, launched in July. Rose rhetorically asks:
If you’re buying something specialist, do you go somewhere generic for it?
The absolute aim over time is for TGP to deliver integrated solutions including gas and power supply, solar, EV, batteries, energy efficiency, financing and other related services. Right now and in the future I want to ensure that we offer customers solutions that we have confidence in and we can give the relevant guarantees and support, rather than saying that we can do everything.
Across Europe, many of the above solutions are tried and tested, delivering value for customers now. I’m excited about the prospect of bringing some of these to the UK market, enhancing what we can deliver now.
How are you leveraging the scale of Total to deliver keener prices to customers?
Being a large global company in a massively changing world, Total Group is going through a really exciting transition with the 20-year ambition of becoming the responsible energy major, providing reliable affordable and clean energy to as many as possible. This is combined with the vision for TGP to become the UK’s most trusted energy supplier. We are a lean and focused organisation. We built our reputation in the gas market where margins are tight, and we have an ambition to grow in power. As competition in our markets increases, it is important that we continue working with streamlined processes and as such it’s a business model that enables us to be competitive and have success in this area.
Given that costs of decarbonisation are largely loaded onto electricity rather than gas, are customers looking more intently at things like on-site CHP?
The way costs are going is driving people to reduce their demand from the grid. There are two ways to do that: you don’t consume as much, or you generate it yourself. Solar is an example of how you can do this and it becomes more and more attractive as the cost of power increases. Total Solar is soon to launch in the UK, expanding our experienced global operations.
When to comes to embedded generation, because of the way that the total cost of electricity is heading, it’s natural that customers will more and more start to look at that. However, after a period of time, the government are going to look and say hang on a minute, ‘if x demand is coming off the grid, therefore x amount of revenue is not being recovered’. As this often impacts the smaller consumers I expect that the government would act, so you have to ask how long is this going to be available?
Having said that, there are opportunities now if you want to be an early microgrid adopter.
On the flip side, is uncertainty over network charging regimes, limiting uptake of those types of onsite schemes?
The real concern is with constant uncertainty. A lot of customers, for instance, have shaped their business around avoiding triad costs and potentially this mechanism will change. Customers want a level of certainty of how renewable charges are levied and how network charging will be applied so that they can make investment decisions on the back of that. But it always feels a little bit short term at the moment. How long is it actually going to last?
Right now, I think the key thing in network charging for us is ensuring that we keep our customers as up-to-date as possible regarding various regulatory changes and ensure that our customers hear about changes from us and are as informed as they can be.
What is TGP’s DSR offering?
We offer contracts that are flexible to enable DSR and understand the growing importance of flexibility, however, we are currently considering our best approach in this space accepting that Demand / Grid services play an important part in our future integrated offering.
I feel it is important that we have DSR as part of our proposition. Having the capability to have a more all-encompassing volume optimisation proposition is increasingly important.
If you had one piece of advice for an energy/procurement manager, what would it be?
Remember what it is you’re buying and partner with a supplier that’s focused on delivering what it is you need.
If you need a flexible gas or power contract, then partner with someone where that’s fundamentally at the core of what they do. If you need someone to help you with DSR, there are DSR specialists out there, and we are interested in finding the right one to partner with. If you are looking for solar or EV charging, choose a partner that has a track record in delivery.
Some suppliers are trying to be all things to all people, I don’t believe that’s delivered particularly well anywhere as yet.
We aim to focus on the right technology niches that will give best value to our customers, rather than be average at everything.
If you could ask government or regulator to do one thing, what would it be?
Simplicity for the customer regarding the various different non-commodity costs. The commodity market is now well-known and well-regarded. The non-commodity charging mechanisms, whether it’s for the various different policy charges or the delivery charges, can be confusing and difficult to understand. With power you have about 16 different elements to the bill, which make comparing offers difficult.
Certainty in policy and simplicity in the way this industry works. When it’s complicated someone will be making money out of it.
Unidentified gas charges
An example of TGP’s desire to keep customers informed of any changes is that of unidentified gas (UIG) charges. A reader of The Energyst highlighted the revised method being used to charge for unidentified gas in the system (effectively the losses across the gas network) which is expected to add between 3 and 5% to the cost of bills. Rose said that customers have been made aware of this both through the website and a direct email alert.
TGP says that with the previous regime, the cost incurred through unaccounted for gas for I&C customers was between 1 and 2%. However, under the new regime, it is seeing monthly costs between 6 and 11%. The reconciliations that we have seen so far over time, as meter reads are submitted, have not made significant reductions to these costs.
As a result, TGP has raised an urgent UNC modification 0658 to enable Xoserve to set up a UIG task force. The proposal will provide funding for Xoserve to properly assess the issues as central industry expert and to take control and lead rather than rely on instructions from various industry committees. It will also allow Xoserve to ring fence experts within the team and recommend actions (mods) to correct the causes.
This modification will progress to a compressed urgent timetable and Ofgem is expected to reach a decision on implementation in the near future.
About Mark Rose
Mark Rose has a pedigree in the power industry, having started with British Energy that was subsequently aquired by EDF Energy and then to Npower prior to his arrival at Total Gas & Power. He commented that ‘it was an opportunity for me to be part of one of the world’s largest energy companies and one that is going through an exciting transformation. The global transformation programme ties in to Total’s slogan “committed to better energy”. It has restructured its business, resulting in TGP being a fundamental part in the newly formed GRP – Gas, Renewables & Power division. The strategic change has given a real focus on to customer facing operations in addition to upstream activities.
Rose comments that with a “strong reputation, credit standing and brand in the UK market and with opportunities to develop the power side of the business, it was a good tie-up with his own skill-set, as his background was electricity rather than gas focussed.
“TGP aims to be the UK’s most trusted energy supplier and although many may say that, the fact that we do work in a really transparent way really appealed to me.”
From Rose’s industry experience he said that he genuinely believes that TGP work with their customers in a way that looks after their best interests.
This story is part of a sponsored cover package, and appears in the July print issue of The Energyst.