Energy Guides

First Utility: ‘The main appeal is to save money’

Wednesday, 10 March 2010

By Daniel Barnes daniel@consumerchoices.co.uk

First Utility may only have 40,000 customers, but it has plans to be a serious challenger to the ‘big six’ energy firms.

First Utility, a start-up which launched last September, has already made its mark on the domestic energy market. It has challenged the big six energy firms with headline-grabbing price cuts. And it is the first energy company to install smart meters as standard.

Darren Braham, First Utility’s chief financial officer, says: “The main appeal is not technology, but to save money,”

“We have a whole mix of customers. There are a lot of older households with above average spending who have a real focus on cutting bills,” he explains.

The team behind First Utility started off in telecoms with First Telecom, but after the firm was sold they moved into energy. They started with a focus on business electricity, before moving into dual fuel for new-build homes, and most recently into the domestic market.

Braham says: “We are looking at one milestone at a time and taking it from there. We are looking to build up a profitable and viable business over time that is sustainable,”

And so far, feedback has been positive.

“Generally customers feedback is extremely positive. There were some teething problems, but issues have been dealt with.”

The target is to grow to having half a million customers in the next three to four years. But, for now, smaller can be more nimble in the UK’s energy market.

“When prices drop, we can pass them on more quickly as we have a flexible back office that can adjust prices,” explains Braham.

Mr Braham also claims prices at First Utility won’t rise fast if the market turns: “When we take on a customer, we guarantee not to increase prices for three months and we hedge ourselves against price increases.”

Smart meter pioneers

Braham believes First Utility staff’s background in telecoms means it has a fresh take on accurate itemised bills. The company has also blazed a trail in providing smart meters.

Smart meters send back measurements of usage every half hour and allow customers to monitor clearly how much energy they are using. Studies suggest customers with smart meters cut their energy consumption by 10%.

First Utility is only offering smart meters in the Midlands, but by the end of the year they should be available in all regions of the UK.

In the meantime, customers read meters and send in figures on a monthly basis.

First:utility - leading the way with smart meters

“Four days ago, we emailed out bills for February, and 60% of customers have responded with meter readings. Two to three days later the bills go out, reflecting the readings,” explains First Utility’s Braham.

“Once you have the data from meters, you can make it useful to customers and you can create an accurate bill, put it online, and let them view near real time energy usage,” he says.

“We are light years away from what the rest of the industry is doing, especially from the ‘big six’ who are not known for their customer service.”

He explained many of the big firms will struggle to move from standard meters to smart meters providing a reading every 30 minutes, or 17,520 meter readings a year.

FirstUtility’s deal with Google means customers can monitor their energy consumption from their computers via the search engine’s PowerMeter tool.

The government is aiming to have smart meters in all homes by 2020, and First Utility believes it can still remain ahead of the big firms.

“It is not that tricky to install a meter, the tricky part is taking the data and producing an accurate bill,” says Braham.

Make the change

As the whole of the UK heads towards smart meters, it may be worth getting in early and seeing if the benefits stack up.

While a number of firms have announced price cuts, there are warnings from the industry and the regulator that gas and electricity prices may have to rise to pay for new power stations and carbon reduction projects.

First Utility has no cancellation fees on its smart meter or iSave tariffs, so it may be worth examining your options now, particularly if you have a large household. The benefits of a smart meter could help you make significant savings on your energy bills.