J.D. Power and Associates Reports: Widespread Rate Increases Lead to Decline in Customer Satisfaction with Electric and Gas Utility Suppliers in the UK

LONDON, November 17, 2011 -

Atlantic Ranks Highest in Customer Satisfaction with Electricity Suppliers; Scottish Hydro Ranks Highest among Natural Gas Providers

Overall satisfaction with gas and electric suppliers in the UK has declined from 2010 as customers react to widespread price increases implemented by utility companies, according to the J.D. Power and Associates 2011 UK Electricity and Gas Supplier Customer Satisfaction Study(SM) released today.

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Overall satisfaction with electric utility suppliers has declined to an average of 612 on a 1,000-point scale in 2011, a decrease of eight points from 2010. Satisfaction with gas utilities has decreased to an average of 636 in 2011 from 647 in 2010.

The study finds that monthly customer-reported bill amounts have increased considerably in 2011, compared with 2010. Monthly electricity bills in 2011 average 50.90 pounds-4 percent higher than in 2010. For gas customers, monthly bills in 2011 average 51.58 pounds-an increase of 8 percent from 2010.

“There is confusion among customers about the necessity and fairness of rate increases that have been imposed by all utility providers in the UK, particularly since oil prices-which typically drive utility pricing-have declined recently and utility companies are posting large profits,” said Stuart Crawford-Browne, director of the services and emerging industries division at J.D. Power and Associates.

Customer backlash against increased utility prices has manifested in greater likelihood that customers will switch utility suppliers, with 30 percent of electric customers in 2011 saying they “probably will” or “definitely will” switch, compared with 26 percent in 2010. Among gas customers, switching intent has increased to 30 percent from 25 percent in 2010.

Customer churn is still very low relative to other industries such as telecommunications, but the increasing propensity of customers to switch creates an opportunity for utility providers to differentiate themselves from their competitors.

“There is currently very little that differentiates one utility supplier from another in the view of the customer, so those who switch will likely base their decision solely on price,” said Crawford-Browne. “Using incentives and rewards programmes may be helpful in capturing those customers who are seeking to switch. Utilities that become well-known for providing excellent customer service, for providing particularly clear, simple billing statements or for heavily promoting energy and cost savings plans may also generate more consumer interest.”

The study also finds that the proportion of customers who have an online account with their energy provider has increased considerably year over year. Nearly two-thirds (63%) of gas customers say they have an online account with their provider, compared with 43 percent in 2010.

“By using online accounts, customers are able to become more engaged with their energy supplier and better understand their energy consumption,” said Crawford-Browne.

The study, now in its 12th year, examines customer satisfaction with electricity and gas utility suppliers by examining six factors. For electricity suppliers, the factors are price and value; customer service; power quality and reliability; environmental responsibility; billing and payment; and meter reading. For gas suppliers, the factors are price and value; supply quality and reliability; customer service; environmental responsibility; billing and payment; and meter reading.

Electricity Supplier Rankings

Atlantic ranks highest among electricity suppliers with a score of 663, and performs particularly well in five of the six factors: price and value; customer service; power quality and reliability; billing and payment; and meter reading. Southern Electric (624) and E.ON (617) follow Atlantic in the segment rankings.

Gas Supplier Rankings

Among gas utility suppliers in the UK, Scottish Hydro ranks highest with a score of 665 and performs particularly well in environmental responsibility. Following in the rankings are Atlantic (662) and E.ON (658). Atlantic performs particularly well in the supply quality and reliability, billing and payment and meter reading factors. E.ON performs well in price and value.

The study finds that, despite the negative effect of price increases on overall satisfaction, electric and gas utility providers have improved from 2010 in the areas of billing and payment, electric power and gas supply quality and reliability and meter reading.

“The strong operational performance of utility providers in 2011 has been outweighed by the significant increase in bill amounts, coupled with general economic uncertainty,” said Crawford-Browne. “Utilities will need to more clearly communicate the value they provide in order to assuage customer fears to help improve satisfaction.”

The 2011 UK Electricity and Gas Supplier Customer Satisfaction Study is based on 2,799 responses from domestic electricity customers and 2,812 responses from domestic gas customers throughout the UK. The study was fielded in September 2011.

    Electricity Suppliers
    Customer Satisfaction Index Ranking      J.D. Power.com Power Circle
    (Based on a 1,000-point scale)           Ratings
                                             For Consumers

    Atlantic                      663        5

    Southern Electric             625        4

    E.ON                          617        3
    EDF                           616        3
    Scottish Hydro                615        3
    Industry Average              612        3
    British Gas                   611        3
    SWALEC                        609        3
    npower                        601        3

    ScottishPower                 596        2

    Customer Satisfaction Component Weights
    Electricity Suppliers
    Price and Value               25%
    Customer Service              20%
    Power Quality and Reliability 18%
    Environmental Responsibility  16%
    Billing and Payment           12%
    Meter Reading                 9%

    Gas Suppliers
    Customer Satisfaction Index Ranking      J.D. Power.com Power Circle
    (Based on a 1,000-point scale)           Ratings
                                             For Consumers
    Scottish Hydro                665        5
    Atlantic                      662        5

    E.ON                          658        4
    Southern Electric             646        4
    SWALEC                        645        4

    Industry Average              636        3
    EDF                           635        3
    British Gas                   632        3
    ScottishPower                 631        3

    npower                        612        2

    Customer Satisfaction Component Weights
    Gas Suppliers
    Price and Value               23%
    Supply Quality and
    Reliability                   19%
    Environmental Responsibility  18%
    Customer Service              18%
    Billing and Payment           12%
    Meter Reading                 10%

    Power Circle Ratings Legend:
    5 - Among the best
    4 - Better than most
    3 - About average
    2 - The rest

About J.D. Power and Associates

The European headquarters of J.D. Power and Associates is located in Munich, Germany. With world headquarters in Westlake Village, California, U.S.A., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

McGraw-Hill is a leading global financial information and education company that helps professionals and students succeed in the Knowledge Economy. Leading brands include Standard & Poor’s, S&P Capital IQ, S&P Indices, Platts energy information services and McGraw-Hill Education. With sales of $6.2 billion in 2010, the Corporation has approximately 21,000 employees across more than 280 offices in 40 countries. On September 12, 2011, the Corporation announced its intention to separate into two public companies - McGraw-Hill Markets (working name), primarily focused on global capital and commodities markets and McGraw-Hill Education focused on digital learning and education services worldwide. Additional information is available at www.mcgraw-hill.com/.

J.D. Power and Associates Media Relations Contacts:
Stuart Crawford-Browne; Guildford, Surrey, UK; +44-1483-207610; stuart.crawford-browne@jdpa.com
John Tews; Troy, Mich., USA; (248) 312-4119; media.relations@jdpa.com

No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates. www.jdpower.com/corporate.

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