Retail – transitioning to a network-only business

Retail

Integral Energy, as our organisation was previously known, managed an integrated retail and network business for 53 years. During this time, Integral Energy’s retail division managed sales and marketing for over 850,000 homes and businesses across rural and metropolitan New South Wales and South East Queensland. Our customer base also included some large corporate clients in Victoria and the Australian Capital Territory.

On 14 December 2010, the NSW Government announced it had entered into a contract for the sale of the retail business assets of Integral Energy to Origin Energy. This sale included the ownership of the Integral Energy customers, brand and wholesale agreements.

The completion of the sale on 1 March 2011 represented the start of a transition to a state-owned electricity network business under the new brand of Endeavour Energy, and the implementation of a Transition Services Agreement with Origin Energy.

Transition services agreement

As part of the sale process, Endeavour Energy entered into a Transition Services Agreement (TSA) to provide retail services to Origin Energy. The agreement covered both short-term services (such as sales and marketing and forecasting) and longer-term functions (such as billing and call centre). Each function is defined in a service schedule, which includes agreed key performance indicator targets.

While the sale of the Integral Energy retail business assets and brand is a catalyst for shaping future network-only business structures within the NSW distribution sector, there remain a number of important transition arrangements related to the sale that Endeavour Energy must manage well over the current planning cycle.

These include people issues, effective management of the TSA with Origin Energy, the IT transition and rebranding efforts. The effective management of these issues, in parallel with the proposed integration of the state’s distribution businesses, is critical to the successful transfer of the retail operation – and to the establishment of a sustainable network-only business model.

For these reasons, managing risk in transitioning the retail business to Origin Energy has been identified as a breakthrough priority action in 2011–12. (See business risk section on page 16.)

Ty Christopher, General Manager Network Development unveils our new brand in Wollongong.

OUR NEW BRAND

The Endeavour Energy brand, launched on 1 March 2011 as the new name for the poles and wires business of the former Integral Energy, reflects the serious and sincere effort we make every day to deliver power to some of Australia’s largest regional economies.

At the same time, ownership of Integral Energy’s brand transferred to Origin as part of the sale.

Since the launch of the new network brand we have focused on the staged rebranding of signage, fleet vehicles, stationery, uniforms, and publications across all parts of the organisation.

The bulk of the rebranding process is due to be completed by the end of December 2011.

Essential customer service

Endeavour Energy operates two customer interaction centres (CIC) at Huntingwood and Coniston. These centres manage retail and network related customer calls.

In September 2010, retail service hours were changed to align with customer demand, with operating hours from 8.00am to 8.00pm weekdays and Saturday mornings. From 1 March 2011, the CIC continued to manage retail customer calls on behalf of Origin Energy as part of our Transition Services Agreement.

This year our call centres received a total of 1,333,027 calls, of which 413,225 retail calls were received on behalf of Origin Energy.

The number of retail complaints we received increased this year from 8,568 in 2009–10 to 9,964 for 2010–11. The top issues for customers related to concerns about high bills and doorknocking activities in New South Wales and Queensland. In response to customers’ concerns about consumption, our Customer Care group conducted 1,324 home-energy audits and 138 phone-energy audits to help them reduce their energy use.

Network-related calls increased from 114,043 to 144,534. This 27% increase was largely the result of the Fathers’ Day windstorm in September 2010.

Network complaints also increased, from 2,598 the previous year to 3,298. This increase is attributable to the introduction and management of customer network connections to the Solar Bonus Scheme and changes to the feed-in tariff (see page 24 for details). The 2010 September windstorm also had an impact on this result.

This year also saw a slight increase in the number of compliments received – from 245 in 2009–10 to 287 in 2010–11. Compliments were predominantly received from customers who were appreciative of employee efforts to restore power during storm conditions or for exceptional customer service.

Supporting customers in hardship

Management of cases involving customers in financial hardship continued throughout the year, with the number of customers enrolled on the INpower program peaking during December 2010 at almost 8,000.

In March 2010, we began a small trial with a sample group of INpower customers to use an in-home energy monitoring device, providing them with information on their usage in real dollar terms.

The trial, which concluded in September 2010, showed positive results. Overall total electricity consumption of the trial group dropped by 13%. A survey of the participants indicated that 96% of respondents found the tool useful in understanding their electricity usage and that they would continue to use it to cut their consumption.

The INpower program has been incorporated into the Transition Services Agreement from 1 March 2011. Origin has also endorsed the continuation of our home energy audits and presentations to community groups.

During the year, Customer Care presented to 26 community groups, including associations representing the aged, disability services and a variety of ethnic groups. The topics of the talks included energy-saving tips and other assistance available, such as free energy audits and government programs including EAPA and energy rebates. The talks were well received and usually resulted in further requests for presentations from other organisations through recommendations.

Resulting from the introduction of the INpower hardship program, customer disconnections since 2006 has declined. During 2010–11, 3,181 customers (2842 residential and 339 small commercial), were disconnected only as an act of last resort.

Network

Retail