In addition to increasing inflation rates, price comparison sites, such as uSwitch, warn that household energy bills could see a further increase as floor prices are put in place for carbon emissions. The government announced plans to raise £3.2bn by 2016 from a new carbon tax which will be funded by higher electricity bills. As the chancellor announced a floor price for carbon under Europe’s emissions trading scheme, electricity costs are calculated to rise by almost 10% by 2016, putting an estimate 110,000 more households into fuel poverty.

Indeed, this is terrible news for struggling consumers. Research commissioned by the BBC from the Institute for Fiscal Studies revealed that households are 6% worse off than they might have expected under "normal" circumstances of stable income rises and recession-free economy. Additionally, based on figures from MGM Advantage, UK households will need £33bn to maintain the same standard of living they were enjoying a year ago, equivalent to an additional £528.96 per person based on a UK population of 61,792,000. In contrast to this, based on Redpoint’s calculations, UK nuclear reactors mostly owned by EDF will enjoy up to £1.3bn of profits by 2020.

From a reputation perspective, Alva expects that the utility sector will face further criticism from consumers and consumer advocates if the above economic predictions come to fruition. Alva’s reputation analysis for February showed that 30% of the sector’s entire coverage was negative, 27% positive and 43% neutral. A substantial 58.7% share of the sector’s negative coverage resulted from customer complaints about problematic products, increased tariffs, confusing bills, and criticism of utilities’ increased profits following the recent price hikes. The long-term inability of utilities to meet customer expectations is further evidenced by the sector’s decreasing average reputation score with its average score decreasing from 6.96 to 6.82 in a three-month period.

All this means that there will be greater scrutiny of utilities’ pricing structure and their financial reporting by consumers, consumer groups, regulators and the government. Those that demonstrate transparency will benefit from an enhanced reputation, a substantial source of competitive differentiation in what looks likely to be a tough economic climate.

Alva’s methodology

Alva calculates its reputation scores on a 1 to 10 fractional value basis, which represents the perception of various stakeholders and market segments at any given point in time. The scores are based on the daily analysis of over half a million news and financial announcements, trading and analyst reports and social media comments.

 

— Nicholas Chrysanthou, Energy Consultant Analyst at Alva