Power to the people officer | How Chris Norbury’s unconventional rise shaped him as Eon CEO

Published 27 February 2024

Bookmark

Standard content for Members only

To continue reading this article, please login to your Utility Week account, Start 14 day trial or Become a member.

If your organisation already has a corporate membership and you haven’t activated it simply follow the register link below. Check here.

Become a member

Start 14 day trial

Power to the people officer | How Chris Norbury’s unconventional rise shaped him as Eon CEO

The chief people officer turned CEO reflects on why the energy transition is a “human challenge”, how Eon UK’s new business model in Coventry could be replicated across the country, the unintended consequences of standing charge reform and how utilities can defend their right to make a profit.

There is a stereotype of energy company CEOs that they tend to be either engineers or accountants by training. While that may be a bit of a generalisation, I think I’m on safe ground saying they rarely come from an HR background.

However, this is the lesser trodden path that took Chris Norbury to the helm at Eon UK last June, after a decade in the business, latterly as chief people officer.

So, has this unconventional route to the top of one of the country’s biggest energy retailers impacted how he approaches the role?

I’m not sure it’s a question he relishes answering, stressing first that there are similar career paths in other sectors and then pointing out that he has been on the board since 2018, giving him wider exposure to all areas of the organisation. However, he goes on to tie his experience to what is clearly a driving theme for him and one that comes up frequently in our interview. This is the subject of a just transition and the responsibility on energy retailers to ensure all areas of society feel the benefit of decarbonisation.

“Many businesses spend a lot of time searching for purpose, for a way to articulate their relevance to society,” he reflects. “The energy sector doesn’t need to do that. What we do is central to people’s lives and to whether we will meet the challenge of decarbonisation. Given that’s going to be the biggest theme in our society for some time to come, that puts us in a very privileged position.

“That transition will only work if no segment of society is left behind, we have to bring people with us in a meaningful and material way.

“That’s where my background plays into my current role because what I’m articulating here is a human challenge. It’s about how we deliver an energy transition where we bring all of society with us.”

As a mission statement it certainly doesn’t lack ambition. But beyond the laudable sentiment, what is Eon actually doing to further this and how can the energy retail sector as a whole convince a sceptical public it has their best interests at heart?

Norbury’s answer starts in his own back yard.

An engine for social mobility

The Eon boss is a busy man and an in-person interview had to be postponed several times before we eventually agree to meet on Teams. However, he is keen to take me on a virtual tour of Eon UK’s home town of Coventry, where he believes they are building a partnership that can prove the social purpose behind energy retail.

The supplier has entered into what it calls the UK’s first “strategic energy partnership”, with Coventry City Council. Norbury seems to pick up on my involuntary facial response to such a buzzword-heavy description by hastily linking it to the wider debate about how communities benefit from the part they play in the energy transition – something we had been discussing in reference to Nick Winser’s review of transmission infrastructure build-out and his “pounds for pylons” recommendations.

The partnership in Coventry is essentially a 15-year framework contract that sees Eon lead the development of a wide variety of decarbonisation projects, from electric vehicle charging to solar developments and energy efficiency schemes.

It will also place the supplier in the middle of co-ordination between the council and energy networks, with the aim of ensuring all parties have a good line of sight of demand and supply of energy over the coming years.

Norbury explains: “Rather than going through individual procurement exercises, or a sliced and diced series of projects, these can all be initiated under the framework of the strategic energy partnership.

“That means we can sit down with the distribution network and the transmission operator and the council to discuss all the energy projects that are notionally being planned within the environs of the city. It allows us to look at what is actually likely to happen, what can be prioritized and where. That’s how we can make a real difference on the connections point.”

Norbury reels off the benefits to Coventry residents of this approach – cost efficiencies from the scale of the project plus the long-term impact on bills of greater renewables penetration and energy efficiency, as well as a major source of new employment. But is this really likely to turn the tide of public opinion around energy retailers?

Norbury says: “It’s a way of showing that this is a sector bringing value to a community and that people are directly benefitting as a result of this. It’s an engine for social mobility.”

If the scheme proves to be a success, Norbury is confident it could be replicated in other areas. “It’s absolutely scaleable. You only need to look at the proportion of carbon emissions that are emitted by cities or the opportunity that working at a city and community level gives you to engage the local community, the opportunity that exists to share data, to see how valuable this can be.”

Standing charges debate is too narrow

While the partnership in Coventry is a long-term approach to creating social value, energy retailers will rightly be judged on how they are responding to current affordability pressures. While energy bills look set to drop to a two-year low this April, they remain far above what most would consider normal levels. Norbury points out that while the number of customers in debt has reduced this winter compared to last, the total value owed by customers has increased.

Eon launched its winter affordability scheme last September, which offers up to 50% bill cuts and debt write-offs for customers on low incomes or with certain medical dependencies. While undoubtedly making a difference, the scope of the initiative is limited and Eon can only do so much in isolation. I want to understand Norbury’s views on more impactful interventions on affordability, including Ofgem’s consultation on reform of standing charges.

He approaches the question with caution: “The debate around standing charges is a subset of a debate around affordability. You have to be very mindful that the argument that standing charges should be abolished and those costs reflected in the unit rate has pros and cons to it. If you are somebody who has medical care at home or if you live in a badly insulated property that is leaking heat then energy consumption can be in relative terms disproportionately high. And the application of those costs to the unit rate could actually have the opposite effect of that which you’re trying to achieve.”

He appeals for a more holistic approach to affordability, for example linking standing charge reform to a social tariff. While Eon has been one of many retailers making the case for targeted energy bill support over the years, Norbury admits there is little consensus on what form this should take.

His view is that “mechanisms and entities” should be created to identify and support vulnerable customers “in such a way that you bring them back into a place where they can afford to participate in the energy market”.

“There is a model in the Dutch market where a social tariff is co-funded between the public and private sector,” he explains. “Customers for whom affordability is a challenge are able to access a discounted tariff. The administration of the scheme sits with a third party, which is the Dutch equivalent of the role Citizens Advice plays here. That is there to bring a degree of impartiality but also to improve the reach of that support, perhaps to customers who would not otherwise trust the state or trust the energy company.”

He adds: “That third party also has the capability to not only provide a discounted tariff but to support those customers and to bring them back into a place where they can afford to participate. Whilst there’s an awful lot we (energy retailers) can do, that is a capability that inherently is not core to our business.”

Norbury says he could envisage Citizens Advice playing a similar role in the UK.

However, he cautions: “If that imperative to support those customers struggling with affordability, to bring them back into a place where they can participate, doesn’t exist in a [social tariff] model then the risk is that you create a degree of energy apartheid. Because those customers who are in receipt of support become ultimately segregated from the mainstream energy market.

“What we need to ensure is that the targeted support that exists or the energy efficiency schemes that are in place are directed towards those customers who need it most, to enable them to reintegrate with the market.”

We invested even when we were making a loss

Norbury’s vision of a social tariff seems to accept my earlier assertion that there is a trust deficit between energy suppliers and customers. This has played out in press coverage over recent months as retailers have reported bumper profits, some of them for the first time ever.

Eon has yet to publish its full-year results but it did release headline information about its UK division in November. This showed sales up c35% for January to September 2023 compared to the same period in 2022, to €25.9 billion (£22.2 billion) with EBITDA almost doubling to €971 million (£832 million).

While Eon’s UK results somewhat fly under the radar, buried as they are in a spreadsheet attached to the groupwide accounts, profit hikes at peers such as British Gas have been greeted with inevitable outrage in the press.

Given the cost of living pressures we have just been discussing, how can energy retailers justify such huge profits?

“You can see from the Q3 results that we’ve had a relatively strong performance in 2023. But we remain a low margin business, with the margins that we can make through the supply of the commodity in the residential market inherently capped by the mechanism that exists within the price cap.

“Is it philosophically ok for utilities to make a profit? Ultimately, that’s a political choice, isn’t it. What I would say is that, not only are we a low-margin business but we have consistently invested hundreds of millions of pounds in the UK energy system including the years when we were loss-making.”

Here Norbury gives an intriguing hint at developments ahead for Eon in the UK, saying the company will have invested over £200 million pounds this year and that “depending on a few choices we have in front of us, that could be significantly more”.

When I ask him to elaborate on this, he simply replies “we can pick up on that in a couple of months”.

The point around investment is an absolutely fair one and something that doesn’t get the cut-through in the national debate about utilities companies more broadly that it should. But critics would retort that if Eon and other energy companies really want to rebuild trust, they will need to dig deeper and show that they have the interests of customers, not just shareholders, at heart.

Norbury says: “The challenge we’ve got ahead of us around decarbonisation of heat and transport and around flexibility, in giving customers a much greater degree of agency and control, that is the role of an energy supplier. The innovation a commercial supplier can bring into that space and the investment we can bring shouldn’t be underestimated. To make that investment and innovation requires us to have an appropriate level of profitability.”

I end the interview by suggesting that most CEOs in the energy space seem to have one particularly burning ask of government or Ofgem – the problem being that they rarely seem to share the same one. I venture that his predecessor, Michael Lewis, never missed an opportunity to promote energy efficiency as a glaringly obvious area for state support.

Norbury insists this is very much an Eon obsession and goes on to make the case for a Great British insulation drive in the context of what appears to be his own hill to die on.

“Investing in energy efficiency has a multitude of social benefits and it is something that absolutely everyone can see the benefit of but particularly the most vulnerable. It’s delivering the energy transition in such a way that creates social value.

“Yes, it’s decarbonizing. Yes, it’s creating good jobs. But we’re also bringing their bills down sustainably and making energy more affordable.

“We have to share that message that the energy transition is ultimately the way to tackle the challenge of affordability over the long term. That’s what I always come back to.”

This article first appeared in Utility Week’s Digital Weekly issue – to read the issue in full, click here.