Britons' confidence continues to suffer as inflation is expected to hit 5% later in the year. A new survey conducted by GfK NOP indicates that consumer confidence in the UK for April 2011 dropped to its lowest level since February 2009 reflecting people's low expectations for their own finances and also their outlook on the general economy, with increasing energy bills being a major contributing factor.
The increasing negativity in the utilities sector is reflected in Alva’s reputation analysis tool which showed a reputation score decrease for the industry from 6.54 in February to 6.43 and 6.41 in March and April respectively. It is expected that during May, the utilities sector will face a further drop in reputation as, once again, the Big Six suppliers face consumer anger over increased prices.
The industry received an additional hit when SSE brought doorstep selling into further disrepute after being found guilty of using misleading sales scripts. The company is expected to face legal consequences and even a Proceeds of Crime hearing and it is already being punished across social and mainstream media. Meanwhile, Columbia Utilities is being forced to pay nearly $3m to refund its New York customers over false promises for huge savings and other deceptive charges. Both companies face major reputational losses and are the biggest reputational fallers for this period in the EU and US by -0.29 and -0.23 points, respectively.
These recent cases have caused the chairman of a House of Commons committee to suggest that the Big Six should be forced to repay any profits made through mis-selling their products to consumers. This may also cause the Energy Retail Association (ERA) to rethink the decision it made last year to reject the Trading Standards Institute’s calls for a ban on doorstep selling – a move which would represent a terrible indictment of the irresponsible attitude of the sector.
At a time when consumer confidence is trending downwards, particularly in the utilities sector, the issue of transparency and trust is an ever-greater concern. The sector needs consumer trust and engagement in the coming years as it looks to roll out smart meters, secure local support for the construction of new energy sources and introduce higher charges for renewable tariffs. With every example of actual or perceived dishonest or underhand behaviour from utilities the effort and cost of rebuilding reputations and trust becomes ever more onerous, something which poses a real risk in the medium-term.
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