King Country Energy is a small but strong and profitable gentailer serving fewer than 18,000 customers in the North Island region that gives the firm its name. The company is centred on providing quality service to its local customers, and is fiercely passionate about its King Country roots and the community it serves.
KCE currently supplies about 74 per cent of the region’s electricity consumers. And while KCE is not the lowest-priced retailer in the area, it continually focuses on reducing supply costs and cost-to-serve to keep prices down. KCE hasn’t raised its prices since October 2011 and prior to that contained its last three price increases to an average of 5.6 per cent.
In the year to March 31, KCE initiated a number of targeted campaigns to reduce operating costs and lift retail performance. It concentrated on reducing bad debts, and as a result has decreased the number of debtor accounts by 35 per cent. It has reduced the number of ‘days to pay’ from 19.9 to 16.7.
In another policy, customers have been encouraged to pay by direct debit, which has seen 5.7 per cent more signed up for this method of bill payment. KCE has also delayed disconnecting vacant properties to save on costs, and this has resulted in a saving of 44 per cent of previous disconnection and reconnection costs.
KCE has realigned its pricing by readjusting all of its commercial plans to ensure all customers are returning a positive margin. On this basis, KCE is now achieving $82.46 in EBITDAF per MWh, outperforming all other retailers bar TrustPower.
Churn
Amid an industry-wide average customer churn of 19 per cent in the past 12 months, KCE has held steady at around 12 per cent. A number of measures were adopted to keep customers on board, including a very successful ‘win-back’ campaign in the last period – which saw KCE communicating with customers who had initiated a switch to another retailer – resulting in 49 per cent of switches being cancelled.
A dedicated customer service advocate was introduced to assist vulnerable customers, which has seen 100 per cent of customer concerns resolved in the past year. Rob Foster and his team also carried out a door-knocking campaign visiting neighbourhoods and talking to customers about their service and any concerns they might have.
Photo meter reading is one of the new initiatives for the company, which has led to a 70 per cent reduction in the number of previously missed readings. Some of KCE’s customers live in hard to reach places where meter reading was difficult at times. So the company initiated an option for customers to send in a photo of their meter reading in the place of having someone come out to read it.
Overall, KCE delivered a strong financial performance in the year to March 2013, with revenue and EBITDAF up 33 per cent and 19 per cent respectively. Net profit was adversely impacted by non-cash charges for the revaluation of electricity hedges and the drought, which forced the company to purchase electricity at spot prices on the wholesale market.
KCE’s reliance on purchases from the wholesale market has generally reduced thanks to its acquisition of Todd Energy’s stake in the Mangahao power station, taking its ownership of the asset to 100 per cent. This strategic buyout has narrowed the shortfall between the volume of electricity the company is able to generate and how much it needs to purchase from the wholesale market to meet customers’ needs. Accordingly the company now faces reduced risks around electricity supply and has a new platform for retail growth.
The Energy Retailer of the Year award category is sponsored by Chapman Tripp