News from yesterday31 Oct 2012 12:28
(Reuters) - Telecom Plus Plc , a provider of power and phone services in the UK, stands to benefit if Prime Minister David Cameron follows through on his surprise pledge to force energy suppliers to simplify their pricing structure and give their lowest rates to all customers, Chief Executive Andrew Lindsay said.
Cameron said earlier this month that the changes were needed to drive down prices for consumers, but it was unclear if he meant that suppliers should be forced to offer their lowest or only if they would be required to disclose the lowest rate on bills.
Lindsay said that either way, the changes -- if implemented -- would likely mean the end of cheap introductory offers that compete with his company's low-cost tariff model.
"It would make our competitive position in the market much, much greater," he said in an interview, although he added that he expected changes to Cameron's plan before it was implemented.
Currently Telecom Plus, which operates under the Utility Warehouse brand, has a tiny 1.5 percent share of the UK electricity utility and telecoms market.
If Cameron's plan is implemented, the big six energy suppliers -- Centrica , Germany's RWE , and E.ON , Scottish Power , SSE and France's EDF -- are likely to cancel their cheapest tariffs and move customers onto a standard plan, Lindsay added.
The big companies only offer a few customers their cheapest prices, he said.
"We are priced somewhere between the standard tariff and the cheapest tariff at the moment," he said. "If the cheapest tariffs are all removed, then certainly we would become much more competitive because there would be nobody else below us."
The Big Six, apart from E.ON, have already raised prices in the face of high gas prices. Lindsay said Telecom Plus would follow suit, but aimed to keep its prices below those of its rivals.
Telecom Plus, which supplies more than 400,000 homes and small businesses, plans to raise prices by an average 8 percent, effective December 1, an increase Lindsay said was of similar magnitude to the price increases of its larger competitors.
Britain's energy market regulator, Ofgem, has stopped short of backing Cameron's plan but said it may ban complex tariffs and require suppliers to offer a standard charge and single unit price, making it easier for customers to compare plans.
Ofgem does, however, plan to force suppliers to print their cheapest tariff on consumers' bills.
Telecom Plus, which gets 91 percent of its revenue from residential customers, said it wants to reduce the churn rate on these customers to 1 percent or below per month, helped by an higher uptake of services, but does not see this happening soon.
"Certainly in the next five years but we might do it within two years," Lindsay said. Telecom Plus currently loses about 1.4 percent of its residential customers each month, down from 1.7 percent in the year to March 31, 2011.
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