The Covid-19 disaster is a lot greater than a pandemic. It’s a large financial shock to the system, and as an organization on the coronary heart of a crucial industrial sector, Octopus Power has been working very onerous to deal with the affect.
I’ve at all times aimed to be candid and clear with clients. Significantly in unsure instances like these, readability is so essential. That is why, for anybody that is , I’ve written up precisely how Octopus is adapting to the coronavirus disaster, and included all of the concerns and reasoning which have gone into our choices. Not solely by way of how we’re taking care of our workers, however how we’re defending groups who work within the area, and what we’re doing to assist clients who’ll face a dramatic lack of revenue over the approaching months. There have been some powerful calls right here – the form of factor that can be utilized to create sensationalist headlines and social media posts – however Octopus at all times believes in being straight about stuff, and that is by no means been extra necessary than instances like this.
We’ve first labored out what we will do for our staff. Some say “the client at all times comes first” – however with out an unbelievable staff we will’t take care of clients in any respect. That staff put clients on the coronary heart of all they do –in order leaders, we now have to do all we will to assist them to allow them to proceed to assist clients in one of the simplest ways doable.
After which collectively, lots of of us work extraordinarily onerous on how we will ship the very best service to clients.
Our staff
We’ve centered on fast and pressing motion (however by no means panicking) and have adopted authorities recommendation at each stage. Since Monday twenty third March, our office-based staff has moved solely to working from residence. Luckily, investments we’d made in cloud-based expertise and our tradition of “freedom and duty” meant this was fairly seamless. The tech has tailored, and admittedly, so have our groups – as a substitute of ready to be informed what to do, they had been capable of make fast adjustments and simply get on with enterprise as normal.
Since then, we’ve established OctoKids and OctoTV to assist mother and father steadiness work with taking care of their children. Some groups have arrange buddy techniques, ensuring nobody working from residence ever feels remoted or lonely. (In fact, lots of of individuals in buyer operations are nonetheless speaking to clients day by day, which helps forestall loneliness too!)
One among our current full-team conferences – with 200+ Octopus folks dialling right into a shared name
Past our office-based groups, we make use of folks in face-to-face roles similar to metering engineers and installers, model ambassadors in M&S shops, and lots of of individuals working by way of companies in area gross sales and telesales. We’ve needed to cut back issues like meter installations (we’ll be specializing in emergencies and priorities solely), and all door-to-door gross sales have been placed on maintain. Telesales reps will solely be capable to function the place they will accomplish that with out utilizing workplaces.
We’ve made the choice to take care of full pay for everybody we make use of immediately. The place folks can’t work, we could use the federal government’s furlough scheme and high salaries as much as 100% – and we’ll additionally proceed to offer entry to firm sources (like vans and computer systems) to allow them to help in NHS and different volunteering programmes.
The place folks work for us by way of companies and contractors, we now have labored onerous to create honest assist. It’s onerous to offer a blanket assertion as a result of the conditions are totally different in every case. First, we count on companies and contractors to shoulder their share of the price of taking care of folks and we’re delighted that the majority have actually risen to the problem on this however every in numerous methods. Second, in some circumstances there are actual dilemmas. For instance, a few of the roles have a really excessive early dropout charge as a result of the job simply isn’t proper for many individuals (e.g. only a few folks have the stamina and motivation for some gross sales roles). In consequence, there are sometimes extra folks within the coaching course of than there are doing the job, and it’s not viable to pay all of them full pay for all the interval of coronavirus. So as a substitute, we’ve labored with the companies to attempt to ship honest options similar to providing vital lump sums – matched by companies to maximise the quantity; help find different work; and guarantees that companies will maintain jobs open as soon as that is over. There are different problems to do with enterprise insurance coverage insurance policies, and a few of the authorities schemes are very useful for many individuals and companies and we have to allow companies to entry these too.
There are lots of different situations – and there’ll be some I’m not even conscious of. As per my opening paragraph – I’m making an attempt to be open right here concerning the dilemmas, and I do know that for anybody personally affected, a few of this will appear inadequate – dropping your job, or your revenue, particularly at a time like that is brutal. If you wish to draw our consideration to something we’ve missed please e mail covid-affected@octopus.power and a Director will take a look at the problem.
For groups who proceed to work within the area… a particular point out is required for our metering engineers, who’re volunteering to take care of any buyer with a metering emergency – even the place the family has identified circumstances of Covid-19. Our engineers are absolutely skilled on tips on how to do jobs in houses with susceptible folks and we’re offering particular coaching and tools within the wake of Coronavirus as effectively. We count on to improve from protecting coveralls and face masks to full Hazmat fits as of March thirtieth the place they’re essential.
Our metering engineer Jez in protecting coveralls and masks
Our clients
Since transferring to a totally distant operation, we’ve been capable of keep service on the normal ranges. Certainly we’ve really improved our cellphone reply instances, and e mail response instances have been pretty good too. Total service ranges have been about the identical as pre Covid-19 and are anticipated to maintain enhancing. We’ll preserve you updated with any adjustments that would have an effect on clients by way of our common Coronavirus weblog.
We do face some challenges now as different power firms’ techniques and groups are much less adaptable and so they’re not capable of assist us as effectively with switching, knowledge and metering queries. We’ll work onerous to minimise the affect of this on clients.
For some clients, power payments have develop into a lot more durable to pay because of the Coronavirus disaster. This is without doubt one of the greatest challenges going through power clients throughout this time and I’d like to handle this candidly too. I hope that by being frank, relatively than issuing blithe and deceptive statements, we will cope with this higher.
There are two causes clients could now battle with power payments (past any which existed pre-Covid 19).
With the UK’s social distancing, many purchasers are actually seeing greater payments as a result of they’re working from residence. And, after all, there are a lot of households which have seen a dramatic drop in revenue by way of redundancy, companies closing, shorter/zero hours, and many others.
How working from residence impacts buyer payments
Our knowledge scientists have carried out some preliminary evaluation utilizing sensible meter knowledge and located {that a} typical family transferring from understanding of residence to working at residence will use round £3-£5 per week extra power on the degree of the federal government’s power worth cap (learn the evaluation in full right here). There’s two issues to notice about that – an Octopus buyer pays lower than the value cap, and we additionally count on this £3-5 weekly determine to return down with discount in gasoline utilization as we begin to hit hotter months.
I’m aware that for every little thing I write, there can be exceptions – and a few very severe ones – however for most households, this further power consumption just isn’t more likely to be the massive driver of hardship. Certainly, for households with the identical revenue as earlier than, the elevated power value of £3-£5 per week is so much lower than the standard value of commuting (about £66/month). In fact, in a family the place one particular person has misplaced their job, and one other is working from residence, they’ll see drop in revenue and better power prices – and equally for folks with fee and different variable earnings. We recognise these variations. Equally, we additionally know that for a lot of households lockdown has led to decrease outgoings. Everybody’s circumstances are totally different, however on the entire, drops in revenue are extra instrumental in making it troublesome to pay power payments than the truth that individuals are utilizing extra power at residence.
So, what are we doing to assist when folks have had huge drops in revenue because of Covid-19?
First – we signed as much as a authorities constitution which outlines the assist power firms are voluntarily giving to clients.
This has been coated by the media “power firms to waive payments” or comparable, however while you learn the constitution it’s rather more nuanced. For instance, this is the part on serving to folks whose funds have been impacted:
‘Primarily based on particular person circumstances, this might embody:
– Contemplating reassessing, lowering or pausing debt compensation and invoice funds for home clients in monetary misery.
– Contemplating referring clients who’re struggling to pay to 3rd celebration debt advisers similar to StepChange and Residents Recommendation.’
This pretty low degree dedication is the present actuality not only for Octopus clients, however we imagine for patrons of different firms as effectively.
We’d like to do extra – and our staff and I’ve been working evening and day with different power firms, EnergyUK (our commerce affiliation), Ofgem and Authorities departments (BEIS, Treasury) to attempt to discover a resolution for individuals who want it.
I’ve been requested why Octopus aren’t, for instance, simply giving all clients a blanket cost vacation – and even writing off payments. I heard somebody on the radio saying “these power firms make a lot cash, why can’t they assist?”
I’d like to indicate respect to clients and all readers by responding to this candidly – even when it might imply my phrases are misrepresented – however I’d relatively be open and clear than opaque and evasive.
Power firms – not less than most – don’t make shedloads of cash. Octopus misplaced £29m final yr. Our rivals, Bulb, misplaced £129m. And right here’s Centrica’s share worth over the past 5 years:
In fact – there’s a cause for all these. In our case, and maybe Bulb’s, we’ve been investing in development – funds to comparability websites, for instance, should not low cost. Within the case of the incumbents, their inefficiency has made it onerous to deal with worth competitors from firms like ours.
However underlying it’s a reality of the trendy power market: margins are wafer skinny. The CMA (authorities authority) reckons power firms ought to make 1.25% margin. We’re very environment friendly and goal 3% – and anticipated to hit one thing like that subsequent yr. This yr was roughly breakeven at what’s known as the EBITDA degree. I can’t converse for different firms – however that is the way in which power must be – tremendous low margins that means that clients get higher worth. That’s precisely what we’ve been preventing for since we had been based – higher worth for patrons.
In order a typical instance from the numbers above – If an organization makes a 3% margin, then for each buyer spending £1000 (roughly the typical annual power invoice), it makes £30 revenue. If a single buyer doesn’t pay, it loses £1000. So a single buyer not paying wipes out the earnings from 33 others. So if simply 1 in 33 clients doesn’t pay, the corporate goes from revenue to loss. On the CMA’s 1.25% determine, it’s worse – 1 buyer not paying wipes out the earnings from 80 different clients.
At Octopus, we take a long run view of every little thing – it’s why we’ve invested within the techniques and other people to make power cheaper and greener, relatively than specializing in brief time period revenue.
So we’re massively conscious {that a} time like now could be a time to concentrate on doing the precise factor – and I’m very pleased to take a monetary hit all through this era to assist clients affected by Covid-19.
However from the numbers above, you’ll be able to see that we will’t take a large hit. Serving to 3% of consumers is sufficient to ship an organization like ours into losses – and the numbers in power are big.
Our estimates are that 10-20% of UK households might see vital drops in revenue from Covid-19, so let’s take the center of that – 15%. If we assist 15% of consumers by waiving their payments, the primary 3% wipe out any revenue. The following 12% are pure losses. Utilizing Octopus for instance – we now have 1.5m clients – so our income is about £120m a month. 12% of that is £14m.
So Octopus can be dropping £14m a month. If the Covid-19 disaster lasts 3 months, it’d be £42m; 6 months, £84m. That simply wouldn’t be sustainable. And naturally, the financial affect might hit funds for longer than the fast well being disaster.
And that leaves us within the troublesome place that we can not assist everybody we might ideally wish to.
As an alternative, we’ll be working onerous to make sure that clients who can afford to pay preserve doing so, and that we do every little thing we will to assist those that’ve been affected on a case by case foundation – however we’ll should be selective and that’s onerous. Actually onerous.
Which is why we’re working tirelessly with different power firms and the federal government to see if there may very well be a uniform method throughout all firms to offer standardised ranges of assist – and imply that it’s not all the way down to the fortunate dip of which power firm you’re with, however your circumstances, which outline the end result.
And it’s why we ask folks to be understanding – we’re working onerous to make sure we push our personal funds to the max to assist everybody with service, and people who want it most financially. And we all know that our clients will do the identical.
With everybody doing their bit, we will all emerge from this disaster collectively. We’re simply in the beginning and we’ll push in each means we will to attempt to make issues work for everybody.
