Bad to worse

Exclusive research by Alva for Utility Week shows any efforts the big six are making to regain respect are dismally failing. Karma Ockenden reports

A few months ago, we reported on the reputation of the energy supply industry in the last quarter of 2012. It was a pretty grim picture. The sector’s average sentiment score was just 5.53 out of a maximum 10, according to corporate reputation specialist Alva.

Well, in the first quarter of this year things went from bad to worse. Alva has once again scrutinised the big six for Utility Week, using its propriety reputation analysis system (see box). The sector average score fell 0.81 to 4.72, plunging energy suppliers below sectors such as banking (4.96) mining (5.08) and insurance (5.60) in reputational terms. This is worrying inherently, but particularly because in this period many suppliers have made much of their plans to restore customer and stakeholder trust. Clearly, whatever they are doing isn’t working.

There’s another danger here too: that the individual identities of these companies are being lost. Alva says: “The big six are increasingly undifferentiated in the way they are viewed by their stakeholders, meaning that one company’s perceived poor or unethical behaviour negatively impacts the perception of its competitors. Media reporting of the big six as an undifferentiated group perpetuates the notion that these companies are ‘all the same’, making it harder for any one company to break free from the pack.” Listen closely and you will hear the sound of years’ worth of marketing and branding money whooshing down the drain.

Behind the black and white tabloid story, individual companies have had slightly differing fates (see table). EDF Energy did significantly better than its peers, attaining the highest sentiment score (5.14) and retaining the top spot from last quarter. Scottish Power hung on to its second place too. Last quarter’s bottom two scorers – SSE and Npower – did relatively much better in Q1 2013, climbing to third and fourth positions, respectively. Inevitably that means Q4 2012’s middling performers have hit rock bottom. British Gas plunges to fifth. Eon comes in last, also registering the biggest quarter-on-quarter score deterioration (-1.16).

The biggest single boost to EDF Energy’s relative success was the achievement of planning permission for its proposed new nuclear plant at Hinkley Point C (see graph, point I). Its Safe Warm and Well campaign also attracted praise (graph, point D). Offsetting this at company level was an internet campaign against EDF Energy following its threat to sue environmental protesters and an Ofgem report citing the company as the most complained about supplier of 2012.

Eon’s pitiful score of 4.31 is attributable mostly to the fact that it was the last of the big six to announce a winter price hike and consequently became the company most directly associated with wider condemnation of big six charges. Notable here was fierce criticism from charity Energy Action Scotland and Macmillan Cancer Support (see graph, points B and C), where coverage included reports on fuel poverty and cancer patients seeking help with soaring heating bills. On top of that, there was chief executive Tony Cocker’s refusal to rule out further price rises against the backdrop of group net profit to the tune of £2.6 billion.

All that said, there is an undeniable and significant downward trend across the board, with each and every company’s score lower than it was last quarter, and all underperforming Alva’s “neutral” score of 5.50. The main driver of this sector-wide cliff-edge drop? Savage criticism of price hikes (graph, points B, C, F and H). Alva comments: “Customer demonstrations, charity recriminations against the sector, appeals for government action and, increasingly, aid requests from struggling customers raised awareness of this issue, especially as utilities announced strong interim results” (graph, point H). Customer dissatisfaction in the form of Ofgem reporting an overwhelming increase in complaints compounded sentiment (graph, point E).

The limited relief there was came primarily from rising job prospects (graph, point G), investments and acquisitions, and assistance to businesses on green energy issues.

Alva and its methodology

Alva has developed a proprietary reputation analysis system, which can calculate a reputation score for a given company or sector (as a benchmark) at any given point in time, based on the daily analysis of over a million content sources. These include: print, online and broadcast media; expert opinion from the likes of financial and sector analysts; social media platforms, votes and blogs; measures of public perception such as polls and studies; and direct experience research – for example, from surveys. The scores are calculated using an algorithm incorporating a weighted average of sentiment and influence for all content sources. Scores are between 1 (poor perception) and 10 (excellent perception).

This article first appeared in Utility Week’s print edition of 14th June 2013.

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