Duncan Sedgwick looks back on five tough years as chief executive of the Energy Retail Association - and at the challenges facing his successor.

After five years piloting the Energy Retail Association (ERA) through some pretty rough seas, chief executive Duncan Sedgwick relinquished the helm at the end of July to Garry Felgate, formerly with the Carbon Trust.

Sedgwick has been in the energy sector for over 30 years, starting with East Midlands Electricity before it was acquired first by TXU then by Powergen. His career has included roles as customer services director, retail mass markets director and director of transformation, experience that meant he was well placed to represent energy retailers post-privatisation.

"I went through the chain of command as you did in the days of nationalised industry, before going through the fascinating privatisation process," he says. "I left Powergen in 2003 and was involved towards the end of shutting down the Electricity Association before being asked to start up a new energy retail body."

Sedgwick freely admits his first reaction was "why would I want to get involved in running a trade association" and the remit for the new body was less than clear.
"But in a way that was what attracted me," he says. "On 1 October 2003 it was me and a mobile phone. We had no staff or premises and only a rough outline of half a dozen areas we would look at like billing, fuel poverty and energy efficiency."

First attempt
The ERA was the first attempt to bring gas and electricity suppliers together under one roof, and as most suppliers moved to become dual fuel competition intensified.
"One of the challenges was getting companies within a competitive arena together," he says. "Despite what people say, this is a highly competitive market and they are slugging it out, so the ERA is the only place that non-competitive issues are discussed."

Just how seriously the ERA takes the issue of competition is confirmed by the strict instructions for the conduct of members posted in prominent positions in meeting rooms. Any discussion of competitive issues including prices is forbidden, with stern reminders of the penalties for breaching competition regulations.
"Within that competitive arena, there are areas where it is appropriate to have common ground and where coming together for the overall good of the consumer is extremely important," says Sedgwick.

Successes
These discussions led to some of the ERA's most notable successes during his tenure, including the code of practice on selling that virtually stamped out miss-selling, the safety net that dramatically cut disconnections and more recently the creation of the Energy Ombudsman.

"One of the best examples is what happened with selling," says Sedgwick. "As an industry, in the last five years, we have gone from a major problem to really having no issues at all. That won't stop the odd rogue salesman but the robustness of the selling code will stop it becoming the problem it was. The code was probably one of the first things we tackled - it had to have bite and has delivered a lot of consumer benefits."
This, says Sedgwick, demonstrated that the ERA was far more than just a talking shop and lobby group.

"That showed it was about making a difference to consumers - the selling code, the billing code and disconnections safety net all delivered considerable benefits to consumers," he says. "That is what has driven me - I do not want to be inward looking. I have spent most of my time in the industry facing customers and I know what makes a difference to customers."

Mis-selling
Consumer watchdog Energywatch argues that retailers had to be pushed to put their house in order on selling and billing, a view that Sedgwick partly endorses.
"I wouldn't say the industry had to be dragged kicking and screaming but I would agree it did not cover itself in glory when it started selling," he says. "With the benefit of hindsight, we should not have allowed that problem to occur. But we realised we were making a hash of it and needed to put things right. The selling code was an important step as it was the first example of proper self-regulation. It is incredibly difficult for the companies - they are constantly being told they have to compete and do things differently but also that they need to combine together to do something."

Sedgwick also points to the creation of the Energy Ombudsman in 2006 as another example of the industry acting together to provide consumers with an independent arbiter of billing disputes. He is however less happy that Ofgem will regulate retailers' complaints handling standards when the Consumers, Estate Agents and Redress Act comes into force on 1 October.

"The ombudsman scheme was a huge step forward, and it is a shame that didn't happen when Energywatch came in," he says. "With regulated complaints handling, how do we expect companies to differentiate themselves? It is very hard to do that just on price and they have to differentiate on service too. I wouldn't want to see complaints handling becoming so regimented that everyone has to do the same thing."

What no-one could have foreseen five years ago was the way soaring prices and the spectre of rising fuel poverty would focus an intense and often critical media and political spotlight on the ERA and its chief executive.

"We expected there to be some role as spokesman for the industry as well as the back room stuff but no-one could have anticipated oil reaching $140 a barrel. In the last five years, the level of interest has gone from fairly small to just astonishing," says Sedgwick. "If a goal was to achieve a higher profile we have achieved stunning success!

Respect
And although people won't necessarily agree with everything we say I like to think there is respect for what we do and the fact we will not try to hide from difficult issues."
The pace of change within the industry shows no sign of slowing, with smart metering, the next Energy Bill and the transfer of consumer representation from Energywatch to Consumer Direct and the new Consumer Focus all huge issues facing Sedgwick's successor.

As the UK starts to run out of indigenous gas supplies and demand abroad puts pressure on available energy supplies, Sedgwick also believes a priority for the industry is to make the public understand that energy is "precious".
"We can't just carry on using and some cases wasting it," he says. "So the single biggest change that has to occur in the next decade is smart metering. It is the revolution in the way energy is viewed and used."

Smart meters
After years of debate and millions of pounds spent on trials, the government and regulator policy decisions needed to allow a cost effective national rollout of smart metering remain tantalisingly just over the horizon.
"We have to find a way of breaking through this logjam," says Sedgwick. "Metering today is pretty much what we had the day I started in the mid-1970s, and that has to change."
Sedgwick is also critical of confused government policies on fuel poverty and energy efficiency, which it is currently trying to delivery through the Carbon Emissions Reduction Target (CERT).

"It is nonsense to have one scheme that is something to do with energy efficiency but is also dealing with fuel poverty," he says. "We need two separate schemes that are separately funded. The fuel poverty scheme should take a totally different view on winter fuel or cold weather payments, with a separate focused carbon reduction scheme. Those who are fuel poor initially may not be reducing carbon emissions because they are cold or in damp homes, so the other scheme can focus on reducing carbon. I am hearing slightly more encouraging things about what might happen post-2011 although the devil will be in the detail."

Despite their social responsibility policies, asking retailers to sell less energy to help government meet policy objectives on carbon emissions or fuel poverty is a little like asking turkeys to vote for Christmas.

"It is a challenge. We are asking commercial organisations to sell less of their product," Sedgwick says. "The key for the companies will be to ensure as the pie gets smaller their slice gets bigger."

Fuel poverty
The government recently extracted an additional £150 million from the industry to help alleviate fuel poverty, but this is a drop in the ocean if the estimate that six million households are now facing fuel poverty is accurate.

"There have been a lot of positive moves to get people out of fuel poverty but we must never forget that fuel poverty is caused by lack of income, poor quality housing and the price of fuel. While the latter is something suppliers can do something about, the other two are the government's responsibility," argues Sedgwick. "We are no longer Fortress Britain when it comes to energy and when oil goes from $20 to $140 a barrel that is going to make a big difference to the global price of gas."

On a personal level, self-confessed "sports nut" Sedgwick has been looking forward to a well-earned three month break, taking in some Test cricket and the Olympics in Beijing. "I am fulfilling a lifetime ambition to go to the Olympics, so that should be a wonderful experience," he says. "After that I shall be raring to go again. I am not retiring, so watch this space."

New ERA chief executive Dr Garry Felgate, a Fellow of the Energy Institute, was previously a director of the Carbon Trust, previously occupying senior roles with AEA Technology, KPMG and A.T. Kearney. Commenting on his appointment, Felgate said "I plan to make a real impact in dealing with the energy suppliers, regulators, government and most important energy consumers at a time when energy issues rarely seem to be out of media and political focus."

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