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Does cheap energy mean poor customer service?

By Emma Lunn
Wednesday, February 14th 2018

You won’t get “better” electricity or gas from one energy supplier compared to another, but you will see a difference in customer service levels. Excellent service can be a selling point for many people, with some happy to pay a premium for efficient communication.

Energy suppliers offer more than just different prices – they offer different levels of customer service too. Some providers are responsible for more billing errors than their rivals, while there’s also a huge difference in the number of complaints the different suppliers receive.

Why customer service is important

When it comes to switching energy, the cheapest tariff might not always be the best one for you. It might be worth picking a supplier that’s easy to contact or gets the fewest complaints – even if it’s a bit more expensive. How energy firms treat customers has come under close scrutiny after a long history of below-par customer service which, before the market was deregulated in the 1990s, was exacerbated by a lack of competition.

But the energy market is a lot more competitive today. More than 50 providers supply gas or electricity, or both types of fuel, to residential homes. While price might be a deciding factor for the majority of bill-payers, many will also be influenced by a company’s customer service history.

From a supplier’s point of view, good customer service is vital to a firm’s success. Dealing with customer complaints efficiently saves firms time and money, as well as building trust with consumers. Trust in a company leads to loyalty and recommendation – key factors in acquiring and maintaining market share. Poor customer service can lead to customers dissuading other consumers from signing up to the company and poor press coverage.

What to consider when choosing a new energy supplier

Billing

Billing errors are one of consumers’ biggest bugbears when it comes to energy suppliers. In some cases, households receive much higher bills than they should for their usage, and it can be a stressful and time-consuming exercise to obtain an accurate bill.

In other cases, suppliers bill customers for less energy than they actually used and later send a “back bill” or “catch-up bill” to claim the money owed. This can lead to financial difficulties – not to mention bad feeling – if the customer doesn’t have the money to hand.

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Meter readings

Incorrect bills are often due to inaccurate meter readings. Your gas and electricity meters show exactly how much fuel you have used.

Energy suppliers have a legal obligation to ensure all gas and electricity meters are accurate, and they are required by law to send someone to read your meter once every two years.

However, you can read the meter yourself and send the readings to your supplier. This will help you receive accurate, rather than estimated, bills. Smart meters automatically send meter readings to your supplier for you.

Contacting your energy supplier

There are several reasons you might need to contact your supplier. These include to provide meter readings, tell them you’re moving house, query a bill, enquire about benefits or discounts (such as the Warm Home Discount) or to make a complaint.

If you call your energy supplier, how easy is it to speak to a ‘real person’? Will that person be able to deal with your complaint? Will they take ownership of the issue and call you back if they can’t deal with it immediately? Will they help you arrange a repayment plan if you have an energy debt? All these things are worth bearing in mind.

Complaints

No-one wants to have to complain to, or about, their energy supplier. If you do complain, you’ll want your problem to be resolved as soon as possible.

Energy suppliers are required to publish complaints data for domestic customers on their websites on a quarterly basis. They also publish their top five reasons for complaints and the measures they are taking to improve how they handle customer complaints, so you can easily check for yourself how they compare.

How do the big six compare against medium and small suppliers?

Ofgem, Which? and Citizens Advice all review and rank energy suppliers’ customer service performance.

The latest Ofgem data covers the period between January and March 2017. The data shows how the “big six” suppliers (British Gas, nPower, EDF Energy, Scottish Power, E.ON and SSE) fare against one another. EDF Energy came out top of the big six in all categories, including satisfaction with supplier service and billing, and ease of contacting supplier.

Ofgem also analyses complaint figures to look at how many complaints a company receives per 100,000 customers (10,000 for small suppliers), how many complaints are resolved by the end of the next working day, and how many are resolved within eight weeks.

Citizens Advice and the Ombudsman also publish complaints statistics but these are based on how many complaints are referred to their respective services.

The big six

Looking solely at Ofgem figures for 2017, British Gas received the lowest number of complaints per 100,000 customers, and Scottish Power received the most. In Q4 2017 British Gas received 1,304 complaints per 100,000 customers and Scottish Power more than double the amount at 2,813.

The number of complaints the big six receive has generally fallen over the past few years. In 2011 nPower had major issues with billing after a new IT system was introduced. Between September 2013 and December 2014, the company issued more than 500,000 late or inaccurate bills. Complaints peaked in Q1 2014 when nPower received 8,303 complaints per 100,000 customers, dwarfing the figures published by other suppliers.

As a result of the billing issues, and not resolving complaints promptly, nPower was eventually fined £26m by Ofgem in 2015. Things have improved greatly since then and its complaints figures are roughly in line with the rest of the big six.

Medium-sized suppliers

When it comes to medium-sized suppliers, the past two years have seen Utilita receive many more complaints than its rivals. In Q2 2017 it received 6,005 complaints per 100,000 customers. In comparison, Ovo Energy received just 79 complaints per 100,000 customers during the same period.

In fact Ovo has seen the least number of complaints out of all the medium suppliers every quarter since Q3 2015 and has received fewer than 100 complaints per 100,000 customers each quarter since Q3 2016. It also regularly offers some of the most competitive tariffs on the market.

Small suppliers

Complaints for smaller energy companies are measured per 10,000 customers due to the size of these firms’ customer bases.

Since Q4 2016 Extra Energy has seen a rapid rise in complaints, peaking in Q1 2017 when it received 371 complaints per 10,000 customers. In comparison Ecotricity received just 32 complaints per 10,000 customers in the same period and has also received the lowest number of complaints every quarter since Q3 2015.

Conclusion

Looking at the figures, there does not appear to be anything to suggest that a cheap energy tariff with a smaller energy supplier will mean receiving poor customer service. In general, medium and small suppliers actually receive fewer customers complaints in proportion to their respective customer bases, than the big six.

Plus, nPower’s previous billing issues prove that bigger isn’t necessarily better when it comes to energy providers. The £26m fine in 2015 was the biggest ever handed out to one of the big six suppliers by Ofgem.

And finally, in the latest Which? customer satisfaction survey, Utility Warehouse came out on top with a Which? customer score of 79%. Flow Energy, Octopus Energy and PFP Energy also made it into the top three energy companies. Interestingly, nPower was rated worst with a score of just 45%.

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