Table of Contents
- DATAMONITOR VIEW
- ANALYSIS
- Tariffing can be a creator of value for energy retailers
- Tariffing is likely to be increasingly used buy energy companies as a
means of increasing value
- Different markets have evolved at different speeds, but their
tariffing innovations are based on common drivers
- An inventory of current and potential tariffing innovation provides a
useful tariff design palette
- The development of tariff innovation varies greatly by market
- Banded tariffs have been developed in order to respond to some
consumers' dislike of standing orders
- Banded tariffs are used to manage customer preference and size of
household economics
- In the UK, British Gas has a three-tier pricing structure
- In the Netherlands, Essent has developed a tariff structure based on
household size
- In Italy, AGSM of Verona has six bands in its pricing structure
- In Spain, banded tariffs vary by maximum offtake capacity rather
than total consumption
- Geographical tariffs are used for competitive positioning, taking into
account costs, competitive strengths, and levels of competition
- The use of geographical tariff structures differs significantly
between the four markets covered
- In the UK, factors other than distribution cost are impacting upon
pricing
- Postalized pricing is the norm for electricity in the Netherlands
- Due to the consumer protection tariff, there are hundreds of
regional tariffs in Italy
- In Spain, the regulated price is postalized, varying by power rather
than by geography
- Dual fuel tariffs are the established norm in the UK but are absent in
the Netherlands, Italy and Spain
- In the UK, the norm is for discounts to be offered to customers who
opt to buy both fuels from one supplier
- In the Netherlands, bundled gas and electricity exists as a product,
but dual fuel discounts are not a feature of the market
- In Italy, although dual fuel price competition is emerging,
offerings are contingent on both fuels being purchased
- In Spain, although dual fuel competition is emerging, dual fuel
tariffs are not yet a feature of the market
- Dual rate tariffs exploit profile differences of evening use
- In the UK, dual rate tariffs are an option within a tariff class
- In the Netherlands, dual rate tariffs are simply an alternative
offering within a tariff class
- In Italy, dual rate tariffs are profiled as an innovation for
marketing purposes
- In Spain, dual rate tariffs are established by the regulator
- Affinity and loyalty tariffs can provide greater customer acquisition
and retention
- In the UK, loyalty and affinity tariffs lock into popular or
specific appeal programs outside those of the energy supplier
- In the Netherlands, loyalty and affinity tariffs are not a feature
of the market
- In Spain, loyalty and affinity tariffs are managed in-house schemes
- While budget plans exist in all geographies their penetration varies
significantly
- In the UK, budget plan tariffs account for 50% of the market
- In the Netherlands, budget plan tariffs are the industry standard
- In Italy, budget plan tariffs are marketed as new innovations of the
liberalized market
- In Spain, the incentives to develop budget plan tariffs have been
limited
- Fixed and capped tariffs are a significant new feature of all
markets with the exception of Spain
- In the UK, fixed and capped tariffs have captured a significant
share of the new contract market
- In the Netherlands, consumers can opt for fixed and capped tariffs
- In Italy, fixed and capped tariffs are appearing as an alternative
to the traditional state-controlled tariffs
- Green tariffs offer ' conscience satisfaction' and will increasingly
offer routes to satisfy mandatory regulatory requirements
- In the UK, green tariffs were originally positioned at a price
premium but are becoming more and more mainstream
- Green tariffs have become the mainstream in the Netherlands
- In Italy, green tariffs are being used in combined offerings in the
competitive market
- In Spain, green tariffs are offered as an alternative to the
state-controlled tariff
- Internet-based tariffs offer suppliers lower cost to serve, and to
acquire, and offer customers convenience and easy access
- In the UK, internet-based tariffs are a source of consumer
discounts, as suppliers share the cost savings with customers
- In the Netherlands, internet dealing is promoted as an additional
service to customers
- Similarly, in Italy, internet facilities are an additional customer
service rather than a source of discounts
- All of the major providers in Spain enable customers to pay their
bill over the internet
- Looking to the future, the industry expects smart metering to bring in
additional tariffing innovation
- Looking to the future, the industry expects smart metering to bring in
additional tariffing innovation
- The Oxxio program is Europe' s leading example of where smart metering
may take tariffs
- The Energy Service company may provide a view of the future
- While the building blocks of tariffs are similar across all of the
geographies studied, some significant differences are evident
- APPENDIX
- Methodology
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Tables
- Table 1: British Gas uses its three-tier pricing structure to ensure
price competitiveness with high offtake households
- Table 2: The differences in cost between the ' budget' and ' standaard'
tariffs are significant
- Table 3: AGSM has six variable price bands
- Table 4: Electricity costs per kWh can be almost a third higher for
the biggest users
- Table 5: All of the UK' s major suppliers offer a discount for dual fuel
- Table 6: All of the large suppliers offer reductions for budget plan
tariffs
- Table 7: npower and SSE offer green energy without charging a premium
tariff
- List of Figures
- Figure 1: The UK is currently the most innovative market with regards
to tariffing
- Figure 2: UK gross margins vary greatly by region
- Figure 3: In the Netherlands, distribution costs are billed separately
from electricity costs
- Figure 4: Iberdrola' s tariff structure
- Figure 5: Nuon does not offer any discount for dual fuel
- Figure 6: Eni offers dual fuel customers the equivalent of one free
day per month
- Figure 7: Endesa is offering dual fuel customers a 5% discount
- Figure 8: npower' s dual rate tariff is available to consumers using up
to 728kWh per annum
- Figure 9: British Gas offers both a ' Single Rate' tariff and an
' Economy 7' tariff
- Figure 10: DONG' s tariff listings
- Figure 11: Enel' s tariff listing
- Figure 12: Iberdrola offers different prices depending on the time of
day consumption takes place
- Figure 13: EDF links into the Nectar points scheme
- Figure 14: Enel' s scheme offers points for servicing the account online
- Figure 15: Eni' s loyalty scheme was originally put in place for its
petrol stations
- Figure 16: The Union Fenosa scheme is the most developed of the
schemes in Spain
- Figure 17: Enel offers a budget plan option
- Figure 18: Italcogim offers customers monthly or bi-monthly billing
options
- Figure 19: Price-capping has become a core part of E.ON' s marketing
strategy
- Figure 20: DONG in the Netherlands offers both fixed and capped prices
- Figure 21: Enel in Italy offers fixed electricity and gas prices for
two years
- Figure 22: Essent offers customers its ' green' option at the same
price as its ' grey' option
- Figure 23: Enel' s ' green' tariff offers a fixed price for two years
- Figure 24: ABM' s fixed and green prices are combined into a single
offering
- Figure 25: British Gas claims average savings of up to £222 for
customers on its Click Energy 4 tariff
- Figure 26: Asmea is one example of an electricity provider that allows
customers to manage their accounts online
- Figure 27: Endesa has launched the ' e-bill' , whereby customers receive
their bill via email
- Figure 28: Enel has been a leader in the use of technology
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