slide 1 expectations of dnos & willingness to pay for improvements in service may 2008

Expectations of DNOs & Willingness to Pay for

Improvements in Service

May 2008

Agenda

• Survey objectives

• Fieldwork Methodology

• Background findings

• Stated preference design & analysis

• Stated preference findings

The objectives were…

To determine:

• consumers’ experience and satisfaction with the quality of service they receive

• areas of quality of service, environmental and social outputs that consumers value and their relative priorities amongst these

• consumers’ awareness of the guaranteed standards, their views on improvements or extensions to the guaranteed standards, their relative priorities for improvements and their willingness to pay for such changes

• consumers’ expectations regarding planned and unplanned interruptions to their electricity supply

• consumers’ expectations regarding notification of planned interruptions and of when they can expect to be restored after unplanned interruptions to their electricity supply

• consumers’ expectations regarding the resilience of their power supply to bad weather or other exceptional events and willingness to pay for improvements in this area

• the extent of consumer contact with DNOs and their satisfaction with this contact

• consumers’ views on variations in quality of service delivered in different geographical areas and their willingness to pay for improvements in service to worst-served consumers or consumers in rural areas

• consumers’ views on the benefits of undergrounding parts of DNOs’ networks and their willingness to pay for a programme of selective undergrounding

• how expectations and willingness to pay for service improvements vary:– for different consumer groups such as domestic consumers, business consumers and consumers in rural areas– for consumers within the different distribution service areas of each DNO – according to the quality of supply customers have experienced

Undertaken through A Comprehensive Research Programme

Stage Two

Quantitative Research

• Quantification of experiences & attitudes• Determining relative service priorities• Identifying WTP

Stage One

Qualitative Research

• Exploring relevant issues• Understanding how consumers think and

feel • Providing necessary context for quant stage• Informing the design of the stated preference

http://www.b2binternational.com/b2b-blog/images/abacus.jpg

The methodology consisted of…

16 Discussion Groups:8 with Domestics

8 with Small Businesses

16 Face-to-Face Depth Interviews:8 with Large Medium Business 8 with Vulnerable Customers

2154 in-home CAPI interviews: average duration 27 mins(weighted to target 2100, 150 per DNO)

Broad quotas on:age, SEG & experience of cuts

Specific quotas on rural versus urban

Random quota sampling by postcodes used to gain as

representative a spread of consumers by DNO as possible

1052 CATI interviews: average duration 25 mins(75 per DNO)

Broad quotas on:company size & experience of cuts

Random sampling approach used to gain as representative a spread of businesses

by DNO as possible

Fieldwork dates: 27 February 2008 to 18 April 2008Fieldwork dates: 27 February 2008 to 6 April 2008

The questionnaire covered…

• electricity consumption

• experience of cuts

• attitudinal questions about consumers’ expectations of quality of service and service standards (including voltage fluctuations for businesses)

• awareness of GS2, GS2A & GS4

• stated preference exercises

Background Findings

Domestic Consumers

Average Bill Sizes

519

458

519

551

536

442

625

515

490

484

522

500

521

490

592

0 100 200 300 400 500 600 700

Total

CN East

CN West

EDF Energy Networks EPN

EDF Energy Networks LPN

EDF Energy Networks SPN

SSE - Hydro

SSE - Southern

CE - YEDL

CE - NEDL

United Utilities

WPD - South Wales

WPD South West

SP Manweb

SP Distribution

Average Bill Size (£s)

Experience of Unplanned Cuts

45

45

75

51

34

60

27

51

30

31

38

43

61

46

39

52

50

22

47

61

35

69

45

68

66

61

55

37

54

58

3

4

3

3

5

5

5

4

3

3

1

2

2

3

0 10 20 30 40 50 60 70 80 90 100

Total

CN East

CN West




SSE - Hydro

SSE - Southern

CE - YEDL

CE - NEDL

United Utilities

WPD - South Wales

WPD South West

SP Manweb

SP Distribution

% Respondents

Yes No Don't know/can't remember

Frequency & Duration of Unplanned Cuts

2

1

2

3

10

24

55

2

8

2

7

17

32

31

2

2

2

4

12

26

49

0 10 20 30 40 50 60 70 80 90 100

Don't know

Other

5

4

3

2

1

% Respondents Who Experienced A Cut

Total

Rural

Urban

1

1

5

15

0

5

22

15

35

2

5

13

15

4

15

13

33

1

2

7

15

5

20

15

35

*

*

0 10 20 30 40 50

720+

361-720

181-360

120-180

91-120

61-90

31-60

16-30

0-15

% Respondents Who Experienced Cuts

total

rural

urban

FREQUENCY DURATION

MEAN = 1.9 MEAN = 92 MINUTES

Experience of Planned Cuts

7

7

4

7

5

3

2

6

4

4

6

21

15

8

8

89

90

91

91

89

94

96

88

94

92

90

77

84

88

80

4

3

5

3

7

3

2

6

1

5

5

2

1

4

12

0 10 20 30 40 50 60 70 80 90 100

Total

CN East

CN West




SSE - Hydro

SSE - Southern

CE - YEDL

CE - NEDL

United Utilities

WPD - South Wales

WPD South West

SP Manweb

SP Distribution

% Respondents


Frequency & Duration of Planned Cuts

2

1

1

13

80

2

0

6

24

68

2

1

2

17

76

0 10 20 30 40 50 60 70 80 90 100

Don't know

5

3

2

1

% Respondents Who Experienced A Planned Cut

total

rural

urban

5

7

18

1

23

8

38

8

18

26

5

7

2

34

6

10

20

2

18

6

37

0 10 20 30 40 50

361-720

181-360

120-180

61-90

31-60

16-30

0-15

% Respondents Who Experienced A Planned Cut

total

rural

urban

FREQUENCY

MEAN = 1.2

DURATION

MEAN = 99 MINUTES

Distributor Contact

Supplier12%

No one78%

Distributor4%

Don't know/can't remember

5%

Both supplier and distributor

1%

5

9

21

31

35

0 10 20 30 40 50

Don't know/can'tremember

No

Yes, both

Yes, recorded message

Yes, operator

% Respondents Who Contacted Distributor

4% had been contacted or called back by their distributor during an unplanned power cut

Do you believe it is reasonable for a power cut to occur in severe weather, ie a major storm or flooding?

75747778

6881

786969

7962

8487

6870

105

54

11513

2312

610

56

2810

11

31

11

2

12

1

1013

1117

1211

77

1412

127

52

16

473

8221

33

1411

14

0 10 20 30 40 50 60 70 80 90 100

Total

CN East

CN West




SSE - Hydro

SSE - Southern

CE - YEDL

CE - NEDL

United Utilities

WPD - South Wales

WPD South West

SP Manweb

SP Distribution

% Respondents

Yes Yes, in a major storm, but not flooding Yes, in flooding but not a major storm No Don't know

Service Expectations

• On average, the maximum number of cuts lasting more than 3 hours that they felt a DNO should be allowed in any one year before paying compensation was 2 (excluding 1% of extremes of 10+)

• Most (79%) felt that power should be restored within 3 hours following an unplanned cut (43% said within 1 hour)

• In normal conditions it was felt that a distributor should be required to pay compensation to a consumer after an average of 12 hours without power following an unplanned cut

• After a major storm affecting 100,000 customers most expected power to be restored in 6 hours or less (44%); although a further two fifths (40%) felt within 24 hours was acceptable

Do you think that distribution companies should be doing more to reduce the impact of severe weather on their networks?

5

9

1

2

4

5

6

7

12

13

13

17

26

0 10 20 30 40 50

Other

Don't know/not sure

Potential damage to property/freezers/alarms etc

Because of the possible effect on vulnerable people (the old, ill and young children)

Should deal with problems more quickly/should employ more staff to deal withproblems

Companies make enough profit/should be using profits to make improvements

Distribution company's responsibility/job

They charge enough/we pay enough

They are a service/we should not be inconvenienced

Technology available/should be investing in new technology/shouldn't happen in thisday and age

Should regularly maintain/protect equipment better

Cables should be underground/more underground cables

Should be prepared for extreme weather/climate change/have a contingency plan

% Respondents Feeling Distribtors Should Do More

45% felt that DNOsshould be doing more to reduce the impact of severe weather on their networks

Do you think that your distribution company should be taking any steps to reduce their company’s impact on the environment?

56% felt that DNOsshould be taking steps to reduce their company’s impact on the environment

78

4

4

1

1

1

1

1

1

2

3

3

5

0 10 20 30 40 50 60 70 80 90 100

Not stated

Other

Don't know

Companies have a responsibility to become greener

Recycling/waste management/reduce paper bills

Get rid of overhead power cables/pylons

Give advice on energy saving to customers

Use wave power

Use solar power

Should be investing/researching green technology

Put power cables underground

Use wind power

Use greener/renewable energy/reduce their emissions (general)

% Respondents Who Think Distributors Should Do More

Awareness of Standards

Standard % Awareness

GS2: If your electricity supply fails during normal weather conditions because of a problem on your distribution system, your distributor will restore it within 18 hours of first becoming aware of the problem. If they fail and you make a valid claim within three months of the date the supply is restored, they will arrange for you to receive a compensation payment. You will also receive further compensation for each additional 12 hours you are without supply.

7

GS2A: If your electricity supply fails because of a problem on the distribution system and you are without power for three hours or more, on four or more different occasions in any single year (April to March) you are entitled to a compensation payment. You must make a valid claim for this payment within three months of the end of the year to which the claim applies.

4

GS4: If your distributor needs to switch off your power to work on the network they will give you at least 2 days’ notice. If they fail to give 2 days’ notice or switch your electricity off on a different day, then you can claim (within 1 month of the failure) a compensation payment.

10

Background Findings

Business Consumers

Size of Organisations: Small = <100KwH or <£30,000pa; Medium = 100KwH-<1MW or £30,000-£275,000pa; Large = 1MW+ or >£275,000pa

65

66

64

62

67

64

73

66

56

67

62

63

62

77

65

24

28

22

25

27

29

18

26

33

20

28

24

23

12

25

11

7

14

14

7

7

9

8

11

13

10

13

15

11

10

0 10 20 30 40 50 60 70 80 90 100

Total

CN East

CN West




SSE - Hydro

SSE - Southern

CE - YEDL

CE - NEDL

United Utilities

WPD - South Wales

WPD South West

SP Manweb

SP Distribution

% Respondents

Small Medium Large

Experience of Unplanned Cuts

38

36

40

44

33

50

51

46

39

32

27

41

31

27

37

58

54

56

53

61

47

45

47

56

64

71

59

69

69

61

4

11

4

3

5

3

4

7

5

4

3

4

3

0 10 20 30 40 50 60 70 80 90 100

Total

CN East

CN West




SSE - Hydro

SSE - Southern

CE - YEDL

CE - NEDL

United Utilities

WPD - South Wales

WPD South West

SP Manweb

SP Distribution

% Respondents


Frequency & Duration of Unplanned Cuts

4

6

5

5

17

21

41

0 10 20 30 40 50

not stated

6+

5

4

3

2

1

% Respondents Who Had Experienced Unplanned Cuts

13

2

3

10

7

11

6

17

10

20

0 10 20 30 40 50

Not stated

721+

361-720

181-360

120-180

91-120

61-90

31-60

16-30

0-15

% Respondents

FREQUENCY DURATION


Experience of Planned Cuts

9

9

6

5

4

4

16

11

13

9

8

8

8

11

8

88

84

91

92

92

95

83

84

84

85

86

89

88

87

91

4

7

3

3

4

1

1

5

3

5

6

3

5

3

1

0 10 20 30 40 50 60 70 80 90 100

Total

CN East

CN West




SSE - Hydro

SSE - Southern

CE - YEDL

CE - NEDL

United Utilities

WPD - South Wales

WPD South West

SP Manweb

SP Distribution

% Respondents


Frequency & Duration of Planned Cuts

12

2

8

16

4

10

1

9

12

26

0 10 20 30 40 50

Not stated

721+

361-720

181-360

120-180

91-120

61-90

31-60

16-30

0-15

% Respondents Who Experienced An Unplanned Cut

3

1

3

4

16

72

0 10 20 30 40 50 60 70 80 90 100

not stated

6

4

3

2

1

% Respondents Who Has Experienced A Planned Cut

FREQUENCY DURATION


Distributor Contact

Don't know/can't remember

9%

No one47%

Supplier & distributor

1%

Distributor17%

Supplier26%

6

1

10

40

43

0 10 20 30 40 50

Don't know/can'tremember

No

Yes, both

Yes, recorded message

Yes, operator

% Respondents Who Contacted Their Distributor

11% had been contacted or called back by their distributor during an unplanned power cut

Experience of Voltage Fluctuations

29

25

22

30

12

37

31

34

27

32

27

36

28

29

38

63

66

70

63

76

59

58

55

65

59

63

57

63

65

57

8

9

8

7

12

4

10

11

8

9

10

7

9

5

5

0 10 20 30 40 50 60 70 80 90 100

Total

CN East

CN West




SSE - Hydro

SSE - Southern

CE - YEDL

CE - NEDL

United Utilities

WPD - South Wales

WPD South West

SP Manweb

SP Distribution

% Respondents


Experience of Voltage Fluctuations

• Some claimed to experience them on a daily basis (1%), but most experienced them up to 5 times a year (59%)

• 35% of businesses had implemented measures, or invested in equipment, to protect the business in the event of a power dip or surge in supply

• Levels of investment ranged from the odd pound to as much as £25,000,000:– Small: £45K– Medium: £33K– Large: £1.8M

• Just less than one third of businesses stated that their business’s insurance covered them in the event of a loss of business as a result of a power cut:– large businesses were more likely to be covered than small

businesses (39% large, 30% medium and 27% small)

Do you believe it is reasonable for a power cut to occur in severe weather, ie a major storm or flooding?

1

1

3

10

86

0 10 20 30 40 50 60 70 80 90 100

Don't know

Yes, in flooding but nota major storm

Yes, in a major storm,but not flooding

No

Yes

% Respondents

Service Expectations

• On average, the maximum number of cuts lasting more than 3 hours that they felt a DNO should be allowed in any one year before paying compensation was 1.7

• Most (53%) felt that power should be restored within 1 hour following an unplanned cut (a further 30% said within 2-3 hours)

• In normal conditions it was felt that a distributor should be required to pay compensation to a business after an average of 6 hours without power following an unplanned cut

• After a major storm affecting 100,000 customers most expected power to be restored in 6 hours or less (34%); although a further two fifths (40%) felt within 24 hours was acceptable:– the proportion expecting restoration within 6 hours was higher

amongst larger businesses (44% large, 38% medium and 31% small)

Do you think that distribution companies should be doing more to reduce the impact of severe weather on their networks?

55% felt that DNOsshould be doing more to reduce the impact of severe weather on their networks

5

12

0

1

3

4

6

8

10

12

14

14

32

0 10 20 30 40 50

Other

Don't know/not sure

Potential damage to property/freezers/alarms etc

Should deal with problems more quickly/should employ more staff todeal with problems

Distribution company's responsibility/job

Companies make enough profit/should be using profits to makeimprovements

They charge enough/we pay enough

To reduce negative effects on business/profits

Technology available/should be investing in new technology/shouldn'thappen in this day and age

Cables should be underground/more underground cables

They are a service/we should not be inconvenienced

Should regularly maintain/protect equipment better

Should be prepared for extreme weather/climate change/have acontingency plan

% Respondents

Do you think that your distribution company should be taking any steps to reduce their company’s impact on the environment?

71% felt that DNOsshould be taking steps to reduce their company’s impact on the environment

20

15

3

3

4

5

5

9

10

43

0 10 20 30 40 50

Don't know

Other

Improving efficiency of equip/power distribution

Recycling/waste management/reduce paper bills

Companies have a responsibility to become greener

Should use enviro friendly service vans/cars

Use wind power

Put power cables underground

Should be investing/researching green technology

Use greener/renewable energy/reduce their emissions (general)

% Respondents Who Think Distributors Should Do More

62% would like information to be available from their DNO on how they could be more energy efficient, most via email (37%) or leaflet (25%), although 10% wanted a visit

Awareness of Standards

Large % Medium%

Small %

Total%

If your electricity supply fails during normal weather conditions because of a problem on your distribution system your distributor will restore it within 18 hours of first becoming aware of the problem. If they fail and you make a valid claim within three months of the date the supply is restored, they will arrange for you to receive a compensation payment. You will also receive further compensation for each additional 12 hours you are without supply

11 17 22 14

If your electricity supply fails because of a problem on your distribution system and you are without power for three hours or more, on four or more different occasions in any single year (April to March), you are entitled to a compensation payment. You must make a valid claim for this payment within three months of the end of the year to which the claim applies

4 9 15 7

If your distributor needs to switch off your power to work on the network they will give you at least 2 days’ notice. If they fail to give 2 days’ notice or switch your electricity off on a different day, then you can claim (within 1 month of the failure) a compensation payment

13 19 24 15

Stated Preference

slide 1 expectations of dnos & willingness to pay for improvements in service may 2008

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