The COVID-19 pandemic has created a time of uncertainty unlike any of us have known before. Much of our traditional modelling (in the energy market as well as other aspects of economy, society and life) has become unfeasible as it relies on behaviours being predictable. Yet, we are, as one of the most overused sentiments of 2020 states, living in unprecedented times.This has definitely proved true for energy consumption. Lockdowns have impacted consumption dramatically, especially within the I&C markets. Unpredictability has hit many energy market businesses hard, particularly Third Party Intermediaries (TPIs) who have ‘clawback’ clauses in their contracts.
What is clawback?
Clawback clauses allow energy suppliers to claw or demand back part of the commission a TPI charged for energy usage should the usage of the end customer fall below what was expected. As lockdowns turned off the lights in businesses nationwide, energy usage fell significantly below expected levels, and clawback clauses were triggered immediately. This has been devastating for many TPIs, in some cases heralding their demise.
So, what should you do if you operate with a similar contract? The answer is simple: move away from relying solely on traditional forecasting models and instead make use of data that will allow you to know exactly what is happening with an electricity meter in real time.
How data helps
The best way to avoid bill shock is to know exactly what your customers’ usage is. If something unexpected happens, you need the data to show what your customers usage would be under normal working conditions and reduce the severity of the clawback clause over the contract length.
Through ElectraLink’s Energy Market Data Hub, the Energy Market Insights team has created several other services that grant access to industry-held electricity meter data via API. These services can be easily integrated with front and back-end systems and can become the linchpin for all your business operations, including quoting, customer onboarding, contracting, billing, invoicing, accounting and forecasting.
The data you can access includes I&C, half hourly settled meter reads (up to 14 months if needed), supplier information, estimated annual consumption and pre-Covid comparisons against the last 12 months’ usage.
Some more established, larger companies are making the switch to a data-driven model and we are helping them on that journey. But there are still some who see it as a ‘nice-to-have’ and would sooner hire more sales personnel before investing in data services. The best way forward to achieve an ROI from your staff is to give them the tools they need to succeed.
Looking to the future
Although technology surrounds us in our day-to-day lives, I still believe a vast majority of UK businesses are in the early stages of digitalisation. The forward-thinking companies that ElectraLink works with identify the need for accurate data from the outset, make the investment early on and build a business around the data.
I am sure I will continue to hear the arguments about cost and ROI around data services, but the days of using back-office resources to contact previous suppliers and use paper bills for usage values should be consigned to history.
Depriving salespeople of the tools they need is a clear oversight. The only prediction I would be willing to make on the future is that it will be unpredictable, and businesses without data to guard against clawback will be deprived of the insight they need to survive.
If you would like to discuss further and find out more about ElectraLink’s data solutions for TPIs, get in touch at [email protected] or message me on LinkedIn.
