Gas, Water & Multiutilities was the worst performing sector of the day on the FTSE 100 moving down by -2.29% on yesterday's opening. Centrica saw the biggest decrease when the group announced that the government's decision to land North Seal oil producers with a tax rise will result in a £300m decrease in profits and force the company to cut its UK investment.
British Gas was the biggest reputational loser of the day falling from its top position in Alva’s Reputation Index for the utilities sector with a -0.06 decrease in the company’s overall monthly average score – its biggest reputation score drop since it announced a price increase in November 2010.
British Gas said the wholesale price of gas and power for delivery next winter is 25% higher than last year, but the price paid by households has yet to reflect the higher price. This news affects a broad range of stakeholders including customers, the regulator, government, investors, financial analysts and consumer advocacy groups and it gained widespread coverage across mainstream, financial and social media, hence the significant decline in the company’s reputation score.
As British Gas faces a reputational decrease another company is enjoying positive sentiment across similar channels. The Co-operative Group couldn’t have chosen a more appropriate time to enter the gas and electricity market offering households a breath of fresh air through its promises of low carbon energy provided at fair prices.
Co-operative Energy, which aims to become part of the "Big Seven", believes it can provide a better service than currently on offer challenging the "bewildering and baffling" energy bills of the current big providers while promising to avoid sharp selling practices and complicated bills by offering a simple, single and easy-to-understand tariff with no contracts that "lock" consumers in and no exit penalties for switching supplier. The group’s new service has received positive feedback from consumers and customer watchdog Consumer Focus.
There are other smaller utilities which offer similar services so it remains to be seen how successful Co-operative Energy will be, but nevertheless it is a sign that the Big Six’s stranglehold on the UK energy market may slowly reducing, welcome news for the regulator and consumers. The idea of shaking up an energy market dominated by the big six utility companies, with a current market share of 90% is taking shape with welcome promises.
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.
—– By Nicholas Chrysanthou, energy consultant analyst at Alva