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The Role of Utilities Jim Dollard

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1 The Role of Utilities Jim Dollard
Executive Director, ESB Business Service Centre & Electric Ireland Energy Action Fuel Poverty Conference 2014

2 Electric Ireland Background Ring-fenced retail arm of ESB Electric Ireland brand est to meet deregulation requirements Customers & Markets 1.5m customers in All Islands market Highest customer satisfaction rating in SEM 37% share of all Islands market Products Electricity Gas Home efficiency services First of all, just to give you some background on Electric Ireland. We are the ring-fenced retail arm of ESB. The Electric Ireland brand was established just over three years ago, in line with a regulatory requirements to change our name so that we could compete in the market alongside other suppliers. We have just under 60% of the ROI electricity market and about 37 per cent market share on an all island basis – so in total about 1.5m customers. We provide electricity, gas and home efficiency services to customers, and have the highest customer satisfaction rating in the all island market Fuel Poverty Conference 2014

3 A changing energy landscape
Sustainability Reliability Affordability Before talking specifically about the today’s topic, I want to give you a brief insight into what is happening more generally in the energy sector, because as an industry we are going through massive change, changes that ultimately are relevant to everyone in society. Traditionally, the biggest single policy challenge for the electricity sector was to balance energy affordability and security of supply. However, for about the last decade, climate change has reframed this dynamic, creating massive complexity and uncertainty about the energy landscape. This will bring about changes in the way that energy is produced, transported and consumed. We are already seeing this with new renewable forms of generation and the move towards electric vehicles, but it will manifest itself in may other ways, some of which we can’t even begin to imagine. The smart home of the future may have it’s own solar panel or wind turbine on the roof, an ecar outside, and a smart meter that will allow customers to see in real time how much energy they are using and how much it is costing at a particular point in time. It might even have a washing machine that will switch itself on when electricity falls to a certain price point. However, one of the questions that this audience needs to consider is this; if the majority of energy consumers are investing in technologies to generate their own electricity in the future, what will happen to people on low incomes who cannot afford the upfront costs of buying a solar panel or a wind turbine. Does this mean that the cost of ‘public’ energy infrastructure such as electricity networks will be shared among a smaller, less affluent portion of society. These are the types of issues that we need to start thinking about as a society. Although it is not yet clear what the energy system of the future will look like, it is obvious is that energy efficiency will have a massive role to play. So far, it’s the only solution that contributes towards meeting all three objectives of the so called energy trilemma, and it is also a key factor in helping to address fuel poverty. Fuel Poverty Conference 2014

4 From an Energy Supplier perspective
Not currently possible for Energy Supplier to identify / segment Energy Poor! No Industry Definition Energy Poor Indebted Customers Vulnerable Customer Energy Supplier focus So back to the present, and the focus of our discussion today. One of the challenges for energy suppliers in addressing the issue of fuel poverty, is that there is no exact science to identify who fits into this category. Within Electric Ireland, we have 6,900 customers who are registered as Vulnerable Customers in line with the CER definition; In addition we also classify 300,000 customers who are in receipt of the free electricity allowance as vulnerable to afford them additional protection; and then we have another large cohort of indebted customers who are in arrears. These groups overlap to some extent, but the same solutions aren’t necessarily appropriate for all three categories, and together they don’t take in the full population of people who are having problems meeting the costs of their energy needs. CER Definition Title of presentation and date

5 The number of people who are in arrears paying their bills gives us an indicator of what is happening across the board in relation to fuel poverty. Over the past two to three years, the number of people in the final category I’ve just mentioned, has stabilised– partly driven by the number of PAYG meters we’ve installed and partly mirroring the economic situation. Having said this, last year we agreed over 200,000 payment plans (for roughly 90,000 customers) – so there is still a significant group of people who are experiencing difficulty paying their bills. The positive message is that the introduction of PAYG meters in 2012 has helped reduce the number of payment plans from over 300K in the previous year

6 So what role to we have as a utility to address the issue?
As a commercial business, operating in a competitive market, the sustainability of our business depends on people paying for the electricity they use. However, as a responsible supplier, we are acutely aware of the fact that we sell a product that is critical to people’s lives. For us, early engagement is essential and we work hand in hand with MABS and SVP, to proactively communicate with customers who are having problems paying their bills. Title of presentation and date

7 Annual Disconnections per 10K Domestic Customers
Disconnection for non-payment is an absolutely last resort and only customers who don’t engage with us run the risk of disconnection. You can see from the chart here that the level of disconnections by Electric Ireland has fallen consistently since Over the past two years we have had the lowest level of disconnections per 10K customers. In 2013, our disconnection numbers dropped to 5k (or 40/10K customers) and YTD our disconnection levels are 600 lower than this time last year. We are forecasting our Disconnection rate for non payment of account to drop to 30/10K by year end. This means that 99.7% of customers that are engaging with us in trying to resolve their payment issues are not in danger of disconnection. Disconnections down to 5k in now down further 600 YTD Up to 40% of disconnections are vacant premises

8 Electricity PAYG Meters
PAYG meters have played a major role in helping customers avoid falling behind payments or in the worst case scenario, being disconnected. To date, we have installed 32k PAYG meters free of charge for customers who are in arrears (mention that we also do lifestyle PAYG meters for a fee) As well as getting the meter free of charge, customers with PAYG meters also get a 4 per cent discount. One of the huge additional benefits of PAYG meters is the discipline that it imposes on users to manage their electricity usage more efficiently. There is evidence that PAYG customers reduce their energy use by about 6 per cent annually, but our experience is that this figure is probably higher across our customer base.

9 The voice of the customer
I am I hated opening the bills and dreading the amount I would have to pay in one lump sum One less bill to pay. They won’t cut you off after 5pm if your credit runs out. Plus they let you run over a little. More control over UR bills. Can be used to save up credit so u can have more money leading up to Christmas because of upfront credit You have to pay first and then you can use it. It sets of an alarm when it’s running low. Wanted to budget and see how much I was using. It was recommended by many people. No bills and easier to manage my money – no stress! I can’t stress enough how much PAYG meters can help people to avoid letting their bills get out of control, yet at the same time affording protection to vulnerable customers. Here is some of the feedback that we got from customers when we asked them about their reasons for moving to PAYG For cheaper rates. No bills coming in the door. Title of presentation and date

10 Pay as You Go 32k installed to date
Customer in arrears makes contact Electric Ireland contacts ESB Networks < 1 hour installation time on site Network Technician explains how it works Special Help Line 32k installed to date The process for getting a PAYG is very straight forward and they are very simple to use (reference slide) We have a video explaining the operation of a PAYG meter on our stand so that you can see what it looks like and how it works, so I’d encourage you to pop over if you haven’t seen one already. We can answer any questions you may have and provide literature Title of presentation and date

11 Mitchels Estate, Tralee
Energy Efficiency Projects 2 key projects in 2014: SEAI Community Projects: Support for 19 Residential and 12 Community Projects Energy efficiency measures installed in c.1,000 homes Department Environment, Community and Local Government: Energy efficiency measures completed in > 5,000 homes Mitchels Estate, Tralee Another area where utilities can help to address poverty is in the area of energy efficiency, both by promoting energy efficiency and undertaking energy efficiency projects. In Electric Ireland, we are working on two major projects this year in collaboration with the SEAI and the Department of Environment, Community and Local Government and by the end of this year, we will have completed energy efficiency projects in over 6,000 homes, involving the installation of loft insulation; wall insulation; efficient boilers; heating controls, etc. Before After Title of presentation and date

12 Promoting Energy Efficiency
€15k /r Obviously there is a limited reach to the extent that we can undertake energy efficiency projects, so we also we also promote energy efficiency for all our customers through initiatives such as our appliance calculator, which can help customers to save substantially on their energy bills; You can access this on our website or download it as an app to a smart phone. We also have a free room temperature guide and we promote energy efficient products and devices such as the Climote remote temperature controller.

13 Our approach to tackling fuel poverty
Payment plans for customers who engage No-one who engages is disconnected Free installation No bill shocks 4% discount PAYG meters Energy Efficiency Initiatives & Education Collaboration with MABS and SVP Lowest rate of disconnections in the Irish Market Disconnections code / Moratorium So in summary, for many years Electric Ireland and before that ESB has taken a proactive approach in tackling fuel poverty, using a number of measures to protect vulnerable people and help customers to manage their electricity bills. The biggest focus of our efforts has been finding ways to engage with people who are finding it difficult to pay their bills and arranging payment plans. We work closely with SVP and MABS who offer assistance and advice to customers in financial difficulty Through our CSR programme, we make a substantial financial contribution to SVP each year to help them pay customer’s energy bills We have signed up to the disconnections code / disconnections moratorium Installing PAYG meters for people in arrears Energy efficiency initiatives (e.g. SEAI Warmer Homes Scheme) and Promoting energy efficiency (e.g. appliance calculator, room thermostat) We have developed this approach over time, so when the opportunity came up to work with other suppliers to develop a voluntary code of practice, we felt we had a lot to contribute based on our existing practice. Title of presentation and date

14 The Energy Engage Code I know Fiona Hannon from SSE is going to talk more about the Energy Engage Code, but I just want to touch on it briefly to say how much we welcome its publication earlier this year and give it our full support and commitment. We are very proud to have played a key role in its development, alongside the EAI and other energy suppliers. The code focuses on customers in arrears and establishes the principle to never disconnect an Engaging customer. In reconfirms protections offered to Vulnerable customers and emphasises the commitment of Suppliers to early engagement, as well as highlighting the need for effective communication with customers The role of the PAYG meter in helping people to get their energy bills under control is also covered. PAYG meters are installed free of charge, and only 25% of every payment goes towards paying off arrears. The rest goes towards current energy use. The code provides for the Electricity Association of Ireland to complete an independent audit of members’ compliance, and I’m pleased to report that following a recent review conducted by EAI, Electric Ireland is fully compliant.

15 Visit our stand to find out more
€15k /r We have lots more information on our stand outside, including practical advice on energy efficiency, how to apply for a PAYG meter and copies of the Energy Engage Code, so please make sure you take time to visit later.

16 Thank You

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