Annual Review 2016

Br isto l a re a

4%

24% Dual Fuel The regional split of Electricity only our customers 42% Gas only

UK wide

4 DNO regions 58% 72%

Dual Fuel vs single meter. The majority of our customers are with us for both their gas and electricity. To date (June 2016) we have just under ten thousand customers.

Currently around 15% of our customers are from Bristol and the surrounding area.

42% from four of our closest DNO regions – which includes Bristol.

And 58% from the rest of 85% the UK.

We expect the Bristol number to change as we grow and we open a number of new channels. The DNO map of the UK What is a DNO? Distribution network operators (DNOs) own and operate the distribution network of towers and cables that bring electricity from the national network to homes and businesses. They don’t sell electricity to consumers, this is done by electricity suppliers. There are 14 licensed geographically defi ned DNOs in Britain, owned by six different groups.

Western Power Distribution looks after four of the DNOs closest to Bristol Energy, covering the South West (SWEB), South Wales (Swalec), Midlands and Southern regions.

Janet lives in a three bedroom terraced house with her husband just outside Bristol. She has recently switched both her electricity and gas to Bristol Energy:

“The switching process was really easy. The thing that most appealed to me was that it’s a new company. I also like their ethos – they’re going to put money into Bristol City. I also liked their prices, so I decided it was for me. And I’ve been saving money with Bristol Energy.”

9 Annual Review 2016

ENERGY AT A FAIR PRICE

How our energy prices compare to our competitors

“The six largest suppliers are As a new entrant to the market, By striving to offer the fairest still charging customers who Bristol Energy has the deal, we can help reduce bills have never switched far more opportunity to be a different for those who have traditionally than their new customers. sort of electricity and gas paid more than they should. company; one that works for its And we ask for meter readings “Two thirds of households in customers, rather than for itself. monthly, so our customers Great Britain remain on avoid paying more than they expensive standard variable When we price our tariffs there need to on estimated bills. tariffs, paying on average £325 are a number of factors to more a year than those consider: the costs of buying In our first months of switching to the cheapest deals. energy, which is set by international markets, the cost trading, we projected “People who don’t switch are of using the electricity and gas yearly savings for our more likely to be vulnerable, networks, and any national such as pensioners or those on customers of around policy changes. benefits. It seems hard to justify £830,000 per year on charging these customers over Using state of the art software their energy bills*. the odds.” and a highly experienced Dermot Nolan, Chief Executive trading team we can ensure This is something we’re very of Ofgem, May 2016. that our prices always reflect the proud of, but we know we can market, so our customers get do more. the very best deal possible.

Bristol Energy versus the rest of the market

Bristol Energy 1 Year Fix: £809 Bristol Energy Standard Variable Tariff: £943

Average ‘Big Six’ 1 Year Fix: £900 Average ‘Big Six’ Standard Variable Tariff: £1060

Lorem ipsum dolor sit amet dolum debite aut molo consecteurRest, quiat. Arum volupta spicien ditatio quas prenimi ncipist otatur, ut nsequae ped quaspelibus ea eatiumet iditiis alitium non quae de non comnistrum corporrume offictas non volupta sitiusanda simint. nemporume dolescius, quia sundam quos quia volor aris eaquodignias simust, solesserum cores quam quia custibus eum eaquam consequia vid qui nonsequi quam volest. inciunt aut ipsanda ndebitet pliquis iducimosThis chart vellam shows voloreptaqui how our fixed tariff and standard tariff compared to the rest of the market in March 2016. (Figures taken on 13th March 2016 and averaged across all 14 regions). *Projected yearly savings against a customer’s previous supplier, based on on annual Typical Domestic Consumption Values (TDCV) which are currently 3,100 kWh for electricity and 12,500 kWh for gas. 10 Annual Review 2016

AVERAGE CUSTOMER SAVING:

£184 for dual fuel £96 for single fuel

As of 31st March 2016. Projected yearly saving with Bristol Energy against their previous supplier, calculated using typical domestic consumption values.

Our tariffs We are currently developing a At Bristol Energy, we keep our wider range of more innovative standard variable rate as low as Up until 31st March 2016, we tariffs, launching later this year. we can. offered two tariffs: Because we keep our prices as The chart below shows where A One Year Fixed where prices low as we can, we have been our rates sit next to the six stay the same for 12 months. able to offer our customers biggest energy suppliers. savings on their electricity and And the Bristol Energy In March, our standard variable gas bills – see above. Standard, which is on a tariff was signifi cantly lower than variable rate. Standard variable tariffs the Big Six, and remains lower We now (June 2016) also offer a Customers on traditionally today (June 2016). tariff for pay as you go expensive standard variable customers, who have a pre- tariffs are spending more than payment meter in their homes. they should.

The Bristol Energy Standard Variable versus the Big 6 Standard Variable

1150

1100

1050

1000

950 £

900

850

800

750 Bristol Energy Eon British Gas SSE EDF *Prices based on Average Consumption (TDCV) on 13th March 2016, averaged across all 14 regions. Typical Domestic Consumption Values (TDCV) are 3,100 kWh pa for electricity and 12,500 kWh pa for gas. These values are set by the regulator Ofgem every year and are industry wide.

Who are the Big Six? The Big Six energy companies are the UK’s biggest and oldest private energy suppliers. The 1989 Electricity Act paved the way for privatisation of the electricity supply in Great Britain. This led to the creation of six major energy companies, all of which also began to supply gas. They are British Gas, E.ON, EDF, npower, Scottish Power and SSE. Today these companies are referred to as the ‘Big Six energy suppliers’, and they still provide energy to over 82% of dual fuel customers homes in the UK (source: Cornwall Energy, June 2016.)

11 Annual Review 2016 OUR MARKET

The energy market has seen One in six dual fuel customers For Bristol Energy this gives us monumental change in the last now get their energy from an momentum to build on. And decade. From ten electricity independent supplier*, that’s a because we have a different and gas suppliers in 2006, there fi gure that has doubled in the business model, and a unique are now 44 licenced suppliers in last two years. Recent data from social message, we can provide the market, all gradually Ofgem shows that 40% of all a real alternative for people in winning customers from the switches in 2015 were to Bristol and nationwide – not just ‘big six’ companies – giving the independent suppliers. to the big six, but to the other consumerNumber of active dmoreomestic s uchoice,ppliers by fue l andtype (G B) independent energy companies lower50 energy bills. in the sector.

40

30 e d o m s t i c u p l r

20 This graph shows the increase N u m b e r o f a c t i v 10 in the number of gas and electricity supply companies 0 over the last decade.

Dec 2004 Dec 2005 Dec 2006 Dec 2007 Dec2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Jun 2014 Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015

Gas Electricity Gas and electricity

And if you work outside the energy sector, what you don’t see are all the costs that make up an energy bill. The regulator Ofgem produced this graphic in June 2016 to show exactly what is included.

For Bristol Energy the breakdown will be very similar. We can keep a customer’s energy bill down by ensuring our wholesale costs are as low as possible, by foward-buying our energy at the right time – a process known as hedging (more on page 14).

Lorem ipsum dolor sit amet consecteurRest, eatiumet iditiis alitium non corporrume offi ctas quiat. Arum quas prenimi ncipist otatur, ut ea non nemporume dolescius, quia sundam quos

Source: Ofgem.ion

* Cornwall Energy: http://www.cornwallenergy.com/News/Monday-13-June

12 Annual Review 2016

OUR SERVICE

Setting up a new energy The Industry Operations team These will be installed from the company takes a huge amount deal with these processes, one SummerSigning 2016. up customers: of work behind the scenes. key example is informing the We do all the hard work so the customer’s existing supplier Before we opened for business, customer doesn’t have to: that they will be switching to the operations team ensured Bristol Energy. our systems and processes were 1. We take a customer’s details and add them to our systems tested and ready for business, For a customer, switching to in particular passing the Bristol Energy is easy and usually ------Controlled Market Entry takes just a few weeks. For our 2. We apply to the central process, allowing Bristol Energy team, there are a number of supplier registration agent to to officially open for business in processes to get right to make it take on the customer’s gas, February 2016. as smooth as possible. See the electricity or both box on the right. ------The operations team handles all 3. We send requests to the stages of the customer process, We have also been preparing to necessary metering agents from switching people to Bristol enter the business market, to appoint them for the site: Energy, to capturing meter which required an independent - The meter operator readings and sending bills. audit of our system and (for maintenance/repairs) processes by industry – The data collector Customer Care governance bodies, and a (to read the meters) We are committed to providing further Controlled Market Entry - The data aggregator high quality customer service, for larger customers. (to settle the energy from any previous energy supplier) so it is important that we grow Billing and Collections at the right pace. Our ------Much of the initial work has expanding Customer Care team 4. We send information to each been focussed on our billing is responsible for dealing with of the metering agents to policies and invoices. calls, emails, post and face to ‘introduce’ them to each other face queries and requests from To avoid our customers paying ------our customers. for energy that they haven’t 5. We pass the customer’s used by estimating their meter information on to all the agents The team has recently relocated readings, we ask for monthly ------to our customer Hub on Bristol’s readings, and we bill our 6. We ask previous / current agents waterfront to offer a face-to-face customers monthly too. option for our customers who to share any historical information from the site (eg meter readings wish to come and talk to us. Smart Meters The team is also managing a and technical meter detail) Industry Operations smart meter trial starting this ------summer, which will see 1,000 One of the features of the 7. We ask the customer to supply customers given access to some a ‘start read’ Energy Market is the of the newest technology. Smart interaction between different ------meters show you exactly how industry parties. 8. We close the registration process much gas and electricity you’re ------using and what you’re spending in pounds and pence, in near 9. A customer is on supply real time. with Bristol Energy 13 Annual Review 2016

OUR ENERGY

Energy is a global commodity. available at any given time, amount of generation from It is bought and sold international confl icts, windfarms would increase the internationally, although the international markets, and other overall supply, widening the relatively small UK market external factors – for example supply-demand gap and means that electricity in the recent fi res in Canada that bringing market prices down. particular is much more volatile. affected oil prices, or any current We have strategies in place or anticipated government Energy is complex because it to mitigate the key risks of policy interventions. behaves far more like a energy market volatility, perishable good than a static At Bristol Energy we aim to whether that’s caused by one. This is especially true of give our customers the fairest weather, or by other external electricity, which cannot deal, so we need to be smart factors mentioned above. currently be stored in large about how we set our prices, By forward-buying energy volumes. This makes it more how we buy and sell our energy, for customers that have susceptible to fundamental and how we manage the myriad signed up, based on the type drivers in the market based on of risks we are exposed to. the relative difference between of deal they’ve signed up to, supply and demand. Risks and business impact we can minimise our business risk, protecting us Without proper appreciation, Put simply, the more supply – and our customers – from measurement and mitigation of there is for a given level of market volatility. risks, no energy company – big demand, then the cheaper the or small – could stay in business. price, and vice versa. For customers that sign up to a fi xed tariff, we buy most of their One example is the weather: Energy doesn’t stand still, it’s future energy requirement at cold weather typically increases hugely susceptible to external the point that we start to supply the amount of energy that factors, and pricing is volatile. them. This process is known as customers use, which as a result ‘hedging’, something that our There is much uncertainty in the increases the price in the trading team is expert at – energy markets, both about how markets (as the gap between buying at the right time, and at much supply is needed and how supply and demand shrinks). the right price, to mitigate risk. much demand there will be. However, if the wind speed This can be affected by weather across the country were to pick conditions, how much power is up at the same time, then the

This chart shows the volatility of electricity prices on the wholesale market across a 12 month period – dropping from £67 per megawatt hour to £21 per megawatt hour over just a few weeks in March.

14 Annual Review 2016

OUR ENERGY

Other 2% Renewable Natural 19% Gas 30%

The UK Fuel Mix

WHAT BRISTOL TOLD US:

“[Bristol Energy] just has a Nuclear positive energy to it. I don’t Coal 27% 22% feel positive energy when I go to other places.”

“Yes, I think I’d like to be Where our energy That said, setting up an energy giving my money to Bristol, comes from supply business is complex and rather than to any company” costly. And our fi rst priority was Currently, we purchase our to offer fairly priced electricity energy directly from other and gas to our customer. “It’s a local energy company suppliers and through the so they’ve got face-to-face Sourcing, trading and supplying National Grid, so it is made up contact, in Bristol…. more is of the average for the UK fuel In general, I think it’s a very, mix – see chart above. complicated, which is why we’re very good idea” taking our time to get it right. Renewable energy We are currently building We are working hard to bring partnerships with people who “It’s creating local jobs for more renewable energy into our produce renewable energy, so local people. It’s a local energy supply in the near we can buy this energy from energy company.” future. We know that our them to sell our customers. customers want it, our shareholder believes in it, and We expect to be supplying “The fact that they’re that it is right to invest in a much greener energy by the retaining profi ts to help those sustainable energy supply for fourth quarter of 2016. disadvantaged - that’s a real future generations. win. Everyone’s winning then.”

Quotes taken from national focus groups conducted by Shed Research Consultancy in April 2015.

15 Annual Review 2016

OUR FUTURE

The next 6 months

Switching thousands more people, and help them out Bristol customers of fuel poverty. Almost ten thousand customers have signed up to our gas and Powering local businesses SWITCH BRISTOL electricity tariffs, both in Bristol We will launch a tariff for and across the UK, but there is business customers. This will still much work to do to engage initially focus on selected GET SMART people in the benefi ts of segments within the micro/small switching to Bristol Energy – business sectors, both within the South West and nationally. both in Bristol and beyond. HELP TACKLE FUEL POVERTY As part of the testing process, Getting Smart we had seven contracts in This summer, our Smart meter Bristol. POWER LOCAL BUSINESSES trial will see 1000 homes given free access to some of the latest Renewable Energy technology, to help them save We will support and invest in GREENER ENERGY energy and spend less. local renewable generators, to boost the local economy Helping to tackle fuel and give our customers the INSPIRING OTHERS poverty in the city chance to choose a greener By working with expert partners, energy supply. community groups and local charities, we will reach some of the city’s most vulnerable

HELPING OTHERS TO FOLLOW OUR LEAD

Bristol Energy is exploring This aims to support local working in partnership with authorities that are other like-minded local exploring their own options authorities and housing for entering the energy associations that share our market, but who want to values, in order for them to balance risk, cost and control. offer gas and electricity under their own brand. This also supports our goal of reaching out to as This will take the form of a many customers as possible, number of packages to choose and helping them to make from, with a range of proven better choices about their services on offer from domestic energy use. tariffs, to business offerings and marketing programmes.

16 Annual Review 2016

OUR PEOPLE

Bristol Energy’s executive team

PETER HAIGH ELAINE WARWICKER NICK HAINES Managing Director Sales and Communications Commercial and Trading Peter has worked at the heart of Elaine has overall responsibility Previously Head of Trading at the UK energy market for over for brand, marketing and the for over 10 years, twenty fi ve years. Once customer journey as well as Nick was responsible for the responsible for all of E.ON UK’s customer acquisition. Previously, trading positions for electricity, trading activity, and CEO of Elaine was Retail Director at gas, and renewable certifi cates Elexon, the Balancing and for 5 years, and before worth over £30m/yr. Nick also Settlement Company for UK that held a number of senior sits on Ofgem’s Future Trading electricity, Peter is now using his marketing and business strategy Arrangements (FTA) forum. trading, B2B and B2C experience roles in a variety of fi nancial to head up Bristol Energy. services organisations.

THE BRISTOL ENERGY TEAM

Bristol Energy has a growing team. At time of writing, we have 70 permanent team members, some of which are based in our offi ces at Temple DAVE FORD GARRY PEAGAM Quay, others at the Bristol Operations Finance Energy Hub on the waterfront. Dave is responsible for Garry has been an independent overseeing Bristol Energy’s advisor to the Bristol Energy Our staff bring expertise from a customer service, change and team since March 2015 and has variety of energy companies IT activities. Before joining extensive experience in the across the country, and all have a Bristol Energy, Dave held the energy sector. Previous roles passion for making Bristol Energy role of Chief Operating Offi cer include Group Finance Director a success. Our staff are proud to at Good Energy. He has also of Good Energy plc, Head of work at an organisation that is worked as a contractor at all of Customer Service and Head of determined to make a diff erence, the ‘Big Six’ energy companies. Finance at SWEB, now part of and long may that continue. EDF. Garry is a chartered accountant. 17 Annual Review 2016

OUR GOVERNANCE

Bristol Energy’s performance is The Bristol Energy Board Regulation monitored by the Executive The Board is chaired by Nicola As a licensed energy company, Team, who work together daily, Yates, also City Director of we are regulated by Ofgem and but meet formally on a weekly Bristol City Council. It is operate under their industry basis. Progress is fed back to comprised of Peter Haigh, MD codes and standards. the Bristol Energy Board, which and Elaine Warwicker, Director meets monthly. of Sales and Communications. Senior members of staff manage An independent chair and two Bristol Energy’s compliance and independent, non-executive Feedback then goes to the regulation, and work closely directors are due to be Holding Company board for with Ofgem to ensure we appointed in July 2016, one review, and onto the comply with current rules of with a specialism in fi nance, the shareholder - Bristol City service, whilst offering the best other with energy expertise. Council. experience for our customers.

OUR FINANCES SETTING UP A BRAND NEW ENERGY COMPANY

In order to launch a brand new customers had signed up to us, Over the coming years we will energy company to customers and we were already supplying see a signifi cant increase in our across the UK, the Bristol 3,415 meter points – that’s a revenues, as our customer base Energy team had been person’s gas or electricity. These grows, and therefore a preparing the company for meter points had only come on reduction in the overall net trading since July 2015. supply a small number of days operating losses. before the year end, following This included building the IT our launch in February 2016. Establishing a new energy infrastructure needed to support company is not without its an energy supply company. As a result of these up-front challenges but, with systems business set-up costs, we and expert staff in place, we Therefore for the year to 31st reported an operating loss of can build a company that March 2016, the company £3.2m on revenues of £104k; will support the city in its incurred signifi cant set-up costs however, this loss was broadly social, environmental and but little revenue. As at 31st in line with our approved economic goals. March, more than 5,000 Business Plan.

18 Annual Review 2016

LO-RES

KEEP IN TOUCH www.bristol-energy.co.uk

Peter Haigh, MD: [email protected]

@BristolEnergy

To fi nd out more, or switch to Bristol Energy, call: 0808 281 2222

Visit the Bristol Energy Hub Currently open 9am - 5pm Monday - Friday

Unit 5-6, 1 Canon’s Road, Bristol BS1 5UH On the Waterfront, just a few doors down from the Watershed.