Scottish and Southern Energy plc - Doorstep Sales

RNS Number : 0440K

Scottish & Southern Energy PLC

08 July 2011

 



SCOTTISH AND SOUTHERN ENERGY PLC

DOORSTEP SALES

SSE (Scottish and Southern Energy plc) has decided to suspend all of its doorstep sales activity in Great Britain, with immediate effect.  Subject to consultation with affected employees, it expects to close permanently its existing doorstep sales operations.

Since the household gas and electricity supply markets in Great Britain opened up to competition in the1990s, doorstep, telephone, online, venue and partnership sales have been used by all leading energy companies to encourage customers to change their supplier of electricity and gas.  These approaches have helped to make the market one of the most competitive in Europe, with 15% of gas customers and 17% of electricity customers switching supplier in 2010.   During 2010/11, around 45% of SSE's total customer gains in Great Britain were derived from doorstep sales.  The remainder came from telephone, venue, online, direct mail and partnership sales. 

SSE believes, however, that commission-based doorstep selling is no longer an effective way to gain customers for the long term, for four main reasons:

·      confidence in the way companies sell energy on the doorstep, and the way in which salespeople are remunerated, is low;

·      energy is a significant purchase, and the sales process rightly requires increasingly significant customer safeguards;

·      customers have a growing need for objective information and help to enable them to use efficiently the energy they buy, especially in an environment of rising unit prices; and

·      the energy supply market is evolving from the simple retailing of electricity and gas to providing a bigger range of smarter energy products and services, and engagement with customers needs to reflect this.

Subject to consultation with potentially affected employees, SSE believes this could result in the loss of up to 900 jobs in Great Britain, although it will be consulting with those people who may be affected about ways of avoiding compulsory redundancies.  Its objective is to minimise the number of jobs lost, through the re-training and re-deployment elsewhere in SSE of as many employees as possible.

SSE plans to continue to undertake venue, telephone, online and direct mail sales and customer advice activities and extend its range of affinity partnerships, of which M&S Energy, established in October 2008, is one example.  It now has almost 400,000 customer accounts, gained through M&S' stores and online.

SSE is also developing a number of new activities to gain and retain customers, such as its recent agreement to sponsor Scotland's new national indoor venue.  It is also aiming to establish new and long-term links with local community energy groups. 

In addition, SSE intends to establish over the next year a nationwide network of community-based energy advisers.  The development of this network of advisers will draw on SSE's experience in the Energy Demand Research Project in North Leigh, Oxfordshire, carried out between 2007 and 2010, during which a locally-based energy adviser employed by SSE engaged with local people to secure a 10% reduction in household energy consumption.  According to the independent Project Final Analysis, published in June 2011, the adviser was 'able to work very well within the community and was very well received by them'.

The new advisers will be: specifically qualified to give customers soundly-based advice on all aspects of household electricity and gas, including energy efficiency; supported by state-of-the-art hand-held technology, giving advisers and customers access to real-time, authoritative and comparative information on all aspects of energy supply and use; and governed by a new code of conduct which SSE will issue for public consultation before implementing.  There will be no commission payments made to advisers.

SSE is currently appealing against two guilty verdicts that were reached at Guildford Crown Court in May 2011 in the case brought against it by Surrey County Council Trading Standards relating to the use of doorstep sales aids, and it intends to continue with the appeal.  It is also continuing to co-operate with Ofgem's ongoing investigation to 'establish whether' four suppliers, including SSE, are complying with new licence conditions introduced in 2009 to govern energy sales processes. 

Alistair Phillips-Davies, Generation and Supply Director of SSE, said:

"By encouraging customers to switch suppliers, commission-based doorstep sales have played an important and useful part in the development of Britain's competitive energy supply market.  Customers have been able to benefit from better value for money and improved standards of service. 

"The reality is, however, that the world has moved on.  We understand that fewer people are willing to engage with traditional doorstep sellers.  Changes in products, services and processes mean the energy market has matured to a stage where we believe that commission-based doorstep sales is no longer a sustainable way of securing energy customers for the long term.  Energy companies need to earn and retain trust.  That will be earned by teams of people in the community and in customer service centres who make customers' lives easier, not least by helping them to minimise their energy bills. 

"This is clearly an important change in our approach to the retail energy market. The potential consequences for individual employees are obviously serious and we will work with them to achieve the best possible outcome in the circumstances.

"We have been saying for some time that while the last decade was about rapid growth in customer numbers, the next decade will be about the transformation in energy supply, as patterns of electricity and gas consumption change and as companies offer customers a broader and deeper range of energy services.  So, although the steps we are taking may have some short-term impact on the number of customers we gain in the Great Britain market, we believe that this will be outweighed by the long-term benefit from deploying the right products and services in the right way."

 

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