Energy firms’ relationship with consumers poor, advised to use smart technology to compete – Ernst & Young

A new report from Ernst & Young (E&Y) has warned that the introduction of smart technology in the energy market means that utility companies around the world need to fundamentally reinvent their relationship with their customers if they are to see off competition from potential new entrants such as retailers, technology companies and banks.

The report suggested that power and utility suppliers across the globe have a poor relationship with their consumers.

“This poor relationship contrasts with companies in the technology and telecoms industry who have built a strong rapport with their customer base,” said the report released this October 2011.

It adds “Consumers are used to receiving innovative lifestyle technologies from these companies and therefore are more willing to receive new smart technologies from them than power and utility companies. This difference in trust levels means that as smart technologies and meters become routine features of consumer lifestyles, power and utility companies will face a growing threat from new market entrants to provide the services that can maximize the opportunities of smart metering.”

According to the UK-based accounting firm with operations in Ghana, technology companies, retailers and mobile phone operators are set to benefit from consumers’ lack of trust for energy suppliers.

It noted that smart technology means that energy companies will need to evolve into providing innovative services which enable consumers to manage their energy consumption.

According to E&Y, to know the gap between consumer views and perceptions held in power and utility board rooms, it interviewed executives at 75 power and utility companies across the globe.

It found out that “energy executives believe they have a healthy relationship with their consumers, and that consumers will be happy to receive services from them whilst they can purchase cheap energy.”

“Only 4% of power and utility companies believe that other smart technologies will significantly change the relationship between them and their customers.”

“8% believe that smart metering will change customers from passive to active consumers.”

“Just 16% of power and utility companies believe that consumers expect products and services to be provided digitally.”

However, despite the gloomy outlook, Ernst & Young says it believes that there are still opportunities for power and utility companies to expand their business and utilize opportunities from the explosion in smart technologies, with power and utility companies needing to focus on developing a two way relationship with their customers.

Commenting, Helmut Edelmann, Ernst & Young Director, Global Power & Utilities said “Smart technology puts unprecedented power in the hands of consumers to manage and control their energy use. In time, this will fundamentally shift the balance of utility customer relations. It seems the era of a one-way relationship — where a utility delivers energy to domestic consumers, end of story — is over, power and utility companies need to adapt and now”.

By Ekow Quandzie

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