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Europeans Abandoning Large Utility Companies
Europeans Abandoning Large Utility Companies

Europeans Abandoning Large Utility Companies

Europeans Abandoning Large Utility Companies

Home energy use is finally exciting to people. Unfortunately for the traditional utilities, it is not because of them.
A combination of new technology and a push toward low-carbon energy has caused customers of Europe’s largest and most-established utilities to flee.
The average annual rate of leavers is nearly 12%, more than double the rate a decade ago, according to analysis by Bloomberg New Energy Finance published on Tuesday. The largest six utilities in the UK alone lost more than 2 million customers since 2010.
It is not for lack of trying. Companies such as Centrica Plc and EON SE have offered everything from rooftop solar panels to connected home devices to satisfy their customers. But new companies are promising lower prices, better customer services and a resolute commitment to renewables. They may have started a movement away from traditional utilities that will be impossible to reverse.
“In the face of growing competition, incumbents have struggled to retain their customer numbers,” said Meredith Annex, an analyst in London at BNEF. “So far, we’ve seen mixed success in making them stickier through new services.”
At the same time, the number of overall utility customers in the UK expanded by almost 1.5 million by last year from 2010.
The exodus is underpinned by the liberalization of Europe’s utility markets, which started in the 1990s and was cemented in 2007 with the European Union’s Third Energy Package. That freed customers to shop around for deals and switch utility providers.
According to data from the UK’s Office of Gas and Electricity Markets, the regulator, half of British customers, who abandoned a so-called “Big Six" energy suppliers last year, switched to startups offering lower prices or new billing methods.
For example, a company called Utility Warehouse Ltd. bundles power with broadband and mobile phone services, while London’s Octopus Energy Ltd. lets its customers pay the wholesale electricity price for the moment they are using the energy, plus a fixed monthly amount.
And about half of electricity customers at the largest six utilities are unhappy with the customer service provided, possibly leading to more switching, according to Ofgem.
That has been a boon for UK startups. When added together, independent power retailers have become the fourth largest provider of household electricity in Britain, the BNEF report showed. Less than a decade ago, hardly any of the companies existed.
Partly in response to the customer flight, every major utility in Europe now offers a “smart” device, which usually allows users to control heat and power on their phones or through voice commands. Nearly all also offer charging points for electric vehicles and rooftop solar panels.

 

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