What are the risks for energy suppliers taking on customers via SoLR?
EDF has said that will no longer apply to be the supplier of last resort for any more failed energy suppliers citing concerns over its ability to provide solid customer service and costs. We look at what the risks are for energy suppliers taking on customers via the SoLR process.
No more customers for EDF via SoLR (at least for now)
Three weeks ago, EDF was selected by the energy regulator Ofgem to take on over 220,000 customers of the failed supplier Utility Point.
Such a high number of customers has come at a considerable cost to EDF, with some industry experts saying that under the current circumstances it is costing suppliers as much as £600 per customer to onboard.
“What we are seeing is that the supplier of last resort has worked really well until now and we can be very proud that industry has stepped in in order to help the customers who were in distress.
‘The question is whether or not we will be able to take that any further and I think that for ourselves our top priority is obviously to maintain the quality of service for customers, not to create any detriment to customers.
‘As you can imagine, onboarding tens of thousands of customers is a challenge for the operations. I won’t apply to be the supplier of last resort for any further customers before we have ended with the onboarding of the Utility Point customers,” said Philippe Commaret, EDF’s Director for Customers in an interview with BBC Radio 4’s Today show.
During the ongoing crisis in the sector, EDF has taken on more customers via the SoLR process than any other energy supplier. Taking on hundreds of thousands of new customers creates huge challenges and costs for companies.
With more energy suppliers forecast to go bust in the coming weeks the SoLR process could buckle under the pressure.
With EDF ruling themselves out of taking on any more customers (at least until they’ve dealt with the Utility Point ones) other larger suppliers are likely asking themselves whether they can afford to take on so many new customers. It’s not just the smaller suppliers that are under threat. They too are under immense financial pressure.
Also read: What Is A Supplier Of Last Resort? (SoLR)
What are the risks for energy suppliers taking on customers via SoLR?
Despite what the media often portrays, the SoLR process is no simple task for most energy suppliers.
In the case where a large number of customers are transferred scaling systems at pace can often prove troublesome.
The supplier taking on the customers needs to ensure that the data it receives is correct. Bad data in just results in bad data coming out, complete with a whole range of issues as a result.
Bad data means that the new supplier will struggle to accurately bill the new customers, and errors built in from the start will only get worse over time.
Some of the successful SoLR applicants in the last 12 months have had to take on up to 300,000 new customers in a very short space of time, which can put systems under pressure. Many suppliers have issues acquiring accounts at pace, at nowhere near this scale.
The new suppliers need to assess whether its systems can handle such an influx on new customers within a short time frame. Any delays or inaccuracies will just result in negative press and customers complaining. If things get really bad, then they’ll likely feel the ire of the regulator.
What a SoLR supplier needs to consider
The new supplier needs to ask itself these questions:
- Can they offer quick and accurate support to their new customers?
- Can their systems supplier assist them?
- Can their systems supplier offer the resources and skills needed to manage the process?
- Does the systems supplier have a proven record with handling such a large volume of data?
- How do you ensure data quality throughout the process?
Dyball Associates will keep you informed of the latest changes and our team of energy market consultants can guide you through the steps to enter the UK energy market. Whether you’re looking for electricity and gas systems or support on starting an energy supply company, Dyball Associates can help.
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