London Power Annual Review 2020-2021

Always fair – We guarantee fair prices now and for the future, and don’t force renewing customers onto a high-priced variable rate.

Always affordable – London Power offers a range of affordable price plans below Ofgem’s energy price cap. Our pre-payment and variable tariffs are competitive and offer excellent value.

Always green – We believe that all energy should be green, as we move to a zerocarbon future. With London Power, all the electricity you use is matched with power generated from renewable sources like the sun and wind. Our standard offer also includes carbon offsetting for all the gas you use for an even greener footprint. Customers can even opt to pay a little extra to support tree planting in London to speed up the transition to net zero.

Exceptional customer service – We combine the GLA’s knowledge of Londoners with the award-winning customer service of Octopus Energy.

Founded by the Mayor of London – Londoners can trust that we’ll look out for their best interests for the long term. London Power is not for profit. Any surplus we make will be reinvested into programmes to achieve the Mayor's social and environmental goals for the city.

We had 5,521 customers (London households) on supply at the end of March 2021. After launching in January 2020, the number of customers rose most sharply for the first two months of operation. This was supported by a London-wide multichannel marketing campaign which included ‘out of home’ advertising to raise awareness of the London Power brand.

Several external factors have impacted on London Power’s growth since. Most notably, the COVID-19 pandemic from March 2020 onwards impacted Londoners who had to stay at home. Our marketing campaign was put on hold, with all Mayoral/GLA communications focused on the Covid-19 pandemic. This meant we were unable to maintain building brand awareness and attract new customers.

Overall energy market switching levels were also lower in 2020 than 2019 due to the pandemic, which has had a negative impact on London Power’s acquisition rate.

A major objective of London Power is to save Londoners money on their energy bills. We offer fairer prices for the long term, through a customer’s initial contract and via our ‘rate rollover guarantee’. The latter ensures that customers remain on the cheapest similar tariff available which contrasts with the ‘tease and squeeze’ tactics of many competitors offering an attractive low-priced initial contract rate, only to hit renewing customers with a high variable rate.

We’ve helped our customers make big savings since we launched. Our average customer has saved £175³ per year, while customers on our cheapest plan have saved an average of £207⁴. This is a huge saving considering energy use and bills increased in the pandemic as more Londoners worked from home. In total, our customers have now saved an estimated £688,000⁵ by switching from their previous energy supplier.

³ Compared to the energy price caps. Based on a medium usage dual fuel household, as defined by Ofgem’s Typical Domestic Consumption Values. Average annualised savings for dual fuel customers on supply between 13th January 2020 – 31st March 2021.

⁴ Compared to the energy price caps. Based on a medium usage dual fuel household, as defined by Ofgem’s Typical Domestic Consumption Values. Average annualised savings for dual fuel customers on my london fixed yearly plan between 13th January – 31st March 2021.

⁵ Compared to the energy price caps. Based on medium usage, as defined by Ofgem’s Typical Domestic Consumption Values. Average savings for customers between 13th January – 31st March 2021.

London Power is founded on the principles of providing greener energy and reducing London’s carbon footprint. We provided 100% renewable electricity as standard on all our tariffs right from the start and in summer 2020, we deepened our green offering with my london carbon neutral plan. This provides gas carbon offsetting in addition to 100% electricity for customers who want carbon neutral energy. As a result, our customers have each saved 1,120⁶ kg of CO2 per year on average by joining London Power. That’s equivalent to planting 560⁷ trees for each household. In total, we’ve saved the environment 3,390⁸ tons of CO2. That’s equivalent to taking 1,700 cars off the road for a whole year.

⁶ Compared to the standard UK grid mix, as calculated from the 2020 Greenhouse Gas Conversion Factors. Based on a medium usage dual fuel household, as defined by Ofgem’s Typical Domestic Consumption Values. Average annualised savings for dual fuel customers on supply between 13th January 2020 – 31st March 2021.

⁷ According to the Forestry Commission each tree locks up the equivalent of 2kg of CO2 per year.

⁸ Compared to the standard UK grid mix. Based on medium usage, as defined by Ofgem’s Typical Domestic Consumption Values. Average savings for customers between 13th January – 31st March 2021.

We created London Power to better meet Londoners’ energy needs in comparison to the traditional, large energy suppliers. Since launch, our customers have told us they are very happy with our services. Some 44% reported being very satisfied (scoring 10/10) and 95% gave a positive overall satisfaction score of 7-10. This is a much higher level of satisfaction than in the wider energy supply market, where only 76% of customers are satisfied with their supplier⁹.

Transcript of table results

• 44% of people scored the service 10 out of 10
• 26% of people scored the service 9 out of 10
• 19% of people scored the service 8 out of 10
• 7% of people scored the service 7 out of 10
• 1% of people scored the service 6 out of 10
• 2% of people scored the service 5 out of 10
• 1% of people scored the service 4 out of 10
• 0% of people scored the service 3 out of 10
• 0% of people scored the service 2 out of 10
• 0% of people scored the service 1 out of 10

We’ve also been good at keeping our customers. In fact, 98% of our customers up for renewal in the first quarter of 2021 decided to stay with London Power.

In the customer survey, 56% of surveyed customers said they’d recommend London Power to a friend or family member (scoring this 10/10). An impressive 72% of London Power customers are ‘promoters’ of the brand (score 9-10) too. In an industry not known for positive brand affinity or hugely positive satisfaction, this is a great result in our first year. For instance, the proportion of London Power ‘promoters’ is over double the national average of 33%¹⁰ across all suppliers.

As of March 2021, London Power’s rating on Trust Pilot was 4.9 (Excellent). Some 96% of 167 reviews gave London Power a full rating of 5 out of 5 for overall satisfaction.

⁹ According to the ‘Consumer Perceptions of the Energy Market Survey’ for Q4 2020.

¹⁰ According to Ofgem’s energy supplier performance scorecard.

Transcript of testimonials

• "For over 30 years I dealt with a lot of Energy companies, London Power is the best, everything is simple and clear." Simon, Westminster
• "Very simple service that doesn't require lots of attention to manage." Arjun, Islington
• "We are very pleased to support a London based company who give back to Londoners." Dawn, Greenwich
• "I'm really happy with London Power and have been recommending it to friends and neighbours too." Rosana, Southwark
• "I love that it is a non-profit publicly owned supplier who offers options to offset my CO2 emissions." Tom, Camden

Longer term, we aim to do even more to reach our social environmental goals for London. In summer 2020, we launched the my london tree plan which provides a donation toward London tree planting schemes, as well as carbon neutral energy.

Additionally, London Power is a not-for-profit energy company. That means we’ll reinvest any surplus we make into programmes to boost the supply of clean energy and alleviate fuel poverty across London. As we grow in size and scale, and recoup our set up costs, we will track and quantify this reinvestment, as we want to make sure it has the most positive social impact possible.

We created London Power to give a broad cross-section of Londoners access to fairer, more affordably priced green energy. The map of our customers across boroughs shows we have customers across the capital. At the end of March 2021, the boroughs with the most London Power customers were Lambeth, Tower Hamlets and Southwark. Lewisham, Hackney, Wandsworth, Barnet and Islington followed closely behind. We will continue to work closely with boroughs to promote the benefits of London Power to their residents.

Historical supplier tactics mean that consumers must regularly compare energy prices and consider switching to continue getting a good deal. Londoners have usually been less likely to switch¹¹ than in other parts of the UK. Our aim is to increase switching across the board. We want to reach Londoners who’ve never or rarely switched suppliers and are thus likely to be on a high-cost standard variable tariff.

A recent survey of London Power customers revealed that 24% had not switched energy supplier in the past three years. A further 7% had never switched supplier before. This shows that we are reaching Londoners who weren’t frequent switchers and demonstrates that London Power’s offer is motivating Londoners to consider switching when they hadn’t before.

¹¹ A 2020 study from Compare the Market showed that only one in seven households switched, 64% below the national average.

London Power was launched to provide an alternative to the Big Six. The energy market is becoming less dominated by these energy suppliers, and it is moving toward smaller, more entrepreneurial, and customer-centric companies. The London Power customer profile supports this trend, with 50% of London Power’s customers having switched from a Big Six supplier (British Gas, E.on, EDF, npower, Scottish Power, SSE). Another 24% switched from other large suppliers such as Bulb and Ovo.

Transcript of graph

Before London Power, the energy market was split as follows:

• 50% big 6 suppliers
• 10% medium suppliers
• 16% small suppliers
• 24% other large suppliers

We launched London Power with the core principles of fair, affordable, green energy for all Londoners. These are reflected in the reasons our customers decided to switch to us. In our survey, the top three reasons given were:

• the excellent tariff costs (51%)
• our green credentials (37%)
• the fact that we reinvest profits back into London (25%).

The fact that London Power is linked to the Mayor of London, and our excellent service are also important.

Transcript of graph

List of reasons for switching to London Power and percentage of people per reason as follows:

• the cost of the tariff - 51%
• environmentally friendly supplier - 37%
• not for profit - 25%
• linked to the Mayor of London - 21%
• linked to Octopus Energy - 16%
• no exit fees - 9%
• London specific supplier - 9%
• easy to switch/set up - 8%
• reputation for strong customer service - 5%
• recommendation from friends or family - 4%
• the rate rollover guarantee - 4%
• it seemed secure - 2%
• liked the branding/marketing - 1%
• other - 0%

London Power was launched to help vulnerable Londoners and those living in fuel poverty. Working in partnership with Octopus Energy, London Power is committed to providing an excellent service and fair, affordable, green energy to lower income and vulnerable Londoners. As of March 2021, 242 of our customers were on the Priority Services Register. In addition, London Power offers the £140 Warm Home Discount (WHD) to help meet energy costs, and as of March 2021, the WHD was offered to 208 customers. Moreover, London Power refers customers who need more help to the Mayor’s Warm Homes Advice Service to help receive energy efficiency improvements, lower bills, and maximise their income . In the future, we aim to work even more closely with these schemes to improve our services to these customers.

As of March 2021, we had also offered the cheapest pre-payment tariff available on the market for six months in a row¹² since launch. This has allowed our prepayment customers to save an average of £132¹³ per year. Finally, we will reinvest any surplus profits into community schemes, deepening our commitment to serving fuel poor and lower income Londoners.

¹² Based on data from Citizens Advice between October 2020 and March 2021.

¹³ Compared to the energy price caps. Based on a medium usage dual fuel household, as defined by Ofgem’s Typical Domestic Consumption Values. Average annualised savings for dual fuel customers on my london top-up plan between 13th January 2020 – 31st March 2021.

As part of our aim to provide the very best customer service, our provider Octopus Energy, has agreed to meet various challenging service metrics under our service level agreement (SLA). These are monitored and checked every month. So far, our provider has performed very well against the SLAs, giving London Power customers a high level of service.

Our SLAs cover a range of areas, including operation of back-end systems, meter readings and billing, and customer service. The customer service SLAs are our highest priority, as the overall customer experience provides a reflection on whether underlying processes are operating smoothly (and if not, what impact this is having on customers). Our customer service SLAs are in three broad categories: complaints, response times, and overriding experience.

We track complaints in several ways:

• overall number of complaints
• complaints referred to the Energy Ombudsman
• upheld complaints which lead to compensation

Number of complaints

Any customer who reports dissatisfaction with the service they have received is logged as a complaint – this does not need to be a formal complaint lodged by a customer. To allow for standardised measurement each month, we track this as ‘Complaints per 100,000 customers’. Our SLA is to not exceed 1,000 complaints per 100,000 customers – i.e. no more than 1% of customers complain each month. Our service provider has met this SLA for all 15 months since launch.

Complaints referred to the Energy Ombudsman

As of March 2021, London Power has had no complaints handled by the Energy Ombudsman. If a customer has a complaint open for over 8 weeks, they can refer this complaint to the independent Energy Ombudsman. We notify customers that they can escalate the complaint at this point if they wish.

Upheld complaints which lead to compensation

As of March 2021, no complaints have led to compensation via formal routes. Our customer service team does have the discretion to offer goodwill payments where a customer has been inconvenienced, however these are offered to maintain a positive customer experience, not as a result of formal compensation and are rarely required.

Prompt response to customer enquiries is key to maintaining customer satisfaction. We monitor both email response times and speed to answer calls.

Email response times

Our service provider has consistently met our SLA on email response times, with 97% of emails since launch responded to by the end of the next business day.

Speed to answer calls

Performance on speed to answer calls has been strong, with calls answered on average within 34 seconds. This is even better than the best scoring telephone waiting time of 51 seconds according to the latest Which? energy survey (achieved by Together Energy).

Overriding experience is monitored by our score in the Which? customer satisfaction survey and through our customer happiness index.

Which? customer satisfaction survey

The Which? energy customer satisfaction survey is run annually, capturing the experiences of more than 7,000 customers. London Power is not yet captured in this survey, but our licensed supplier Octopus Energy scored 80% in the latest Which? Survey, comfortably above the SLA level. They continue to be a Which? Recommended supplier for the fourth year in a row.

Customer happiness index

After every customer interaction with London Power, customers are asked if they were satisfied by our response. Overall, 83% of surveyed customers said they were satisfied, well above our SLA levels.

Our income is based on the number of customers on supply, and we use these funds to support our running costs. Like many start-ups, our income is currently below our monthly running costs, pending growth, so further expenditure is funded by a loan. As we expand, we expect our income to exceed our monthly running costs, allowing us to start repaying this loan. Once it’s been repaid, we will reinvest any surplus into social and environmental programmes in London. Our running costs from launch in January 2020 to the end of March 2021 were £438,000. Over the same period, our total income was £144,000. This is growing every month as we gain more customers, while our running costs remain relatively stable.

The benefit to customers, in terms of bill savings, over this period was £688,000, considerably greater than GLA costs, giving an overall net benefit. This customer benefit will continue to grow year on year as customers renew and new customers join, increasing the overall benefit to Londoners.

In addition to our ongoing running costs, in the first year of operation London Power incurred some one-off costs related to the set-up and launch of the company. These costs cover our procurement and legal costs, staff time throughout the company set-up, the costs of developing the London Power brand and the costs of our launch marketing campaign. In total, from the project’s inception in 2017 to March 2021, these costs come to £2.3m¹⁴ . These costs are much lower in our partnership model than if a fully licensed supplier model had been pursued.

¹⁴ Of this, £1.1m were incurred following the incorporation of London Power Co. Limited and so sit on the company accounts. The remainder was incurred during procurement (including early feasibility studies), prior to the existence of London Power Co. as a limited company, so were paid by GLA budget.