What have been the biggest challenges for your business over the past year, and what role did finance play in addressing them?
The energy industry as a whole has really had to tackle customer trust, and at npower, we’ve had to put significant effort into improving our customer experience, made worse by problems with a new billing system. I believe we’ve turned a corner now and laid the foundation for npower to move forward. The finance team has been a key part of balancing the need for short-term financial pain against the long-term health of the business, as well as being willing to provide the transparency required by our stakeholders on profits and investment.
What are the key political and economic risks/opportunities you face in the year ahead?
Energy remains a political hot potato, and with the general election in May and a market investigation due to conclude at the end of 2015, it’s clear that the big energy suppliers will remain in the public eye. The costs associated with supplying energy will continue to rise as well-intentioned but expensive energy and environmental policy continues to be paid for via energy bills.
Along with increasing competition by new entrants, the policy costs that the larger suppliers have to pass on to customers, as well as the rapidly changing expectations of energy customers, 2015 will almost certainly remain very challenging.
Which capex projects will you be focusing on in 2015, and how will these be financed?
Our two big capital project areas relate to rolling out smart meters to our customers and providing the kind of digital experience our customers would like to see. Both of these will allow the relationship we have with our domestic customers to become more like the deeper, more engaged relationship we already enjoy with our large business customers – one focused on providing energy management expertise and solutions, rather than simply supplying a commodity.
What business-friendly policies do we want the next government to undertake to improve the environment for UK corporates?
RWE npower has long been a champion for businesses and business energy policy. We have previously undertaken a number of campaigns aimed at giving our business customers a voice to government on the impacts of energy policy on British business. There’s still a need to reduce the administrative burden to business of regulation in general and the impact of energy policy on bills in particular. There are so many policies that affect business now, so there needs to be some way to relieve not only the overall burden, but also the complexity and management burden.
Advice for other FDs for the coming year?
The only thing I would ever presume to tell my peers is: Make energy management a boardroom issue. I always challenge my business to walk the walk as well as talk the talk by using our own products and services to manage and reduce our own energy use across all of our sites countrywide.
So far, we’ve been very successful – cutting almost a million from our own energy bills over the past few years. There aren’t many actions an FD or CFO can take that can instantly put money on your bottom line, but taking energy management seriously is one of them. I challenge you to challenge us to make your company more competitive.
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