eGain a provider of multichannel customer service and knowledge management software, today announced that one of the energy companies in the UK has chosen eGain SelfService™. Scottish and Southern Energy Plc (SSE) will use eGain to further develop its customer service strategy, enabling customers to resolve queries through an online portal. Once implemented, eGain will help support the organisation’s growing customer base, further develop customer loyalty and lower overall support costs. SSE’s extended online presence and the introduction of new services such as e-billing has driven its organic growth, expanding its customer base from 4.5 million in 2004 to 8.5 million in 2007. In turn, the volume of customer enquiries has increased dramatically and SSE looked for additional methods of customer service to complement the telephone, e-mail and SMS options already available. John Evans, Senior Technical Architect at SSE comments: “We’ve experienced a steady but relentless growth in email volume; from 2,500 four years ago to 42,000 today. Having deployed eGain’s email management system in 2002, our customer service teams have been able to cope with this dramatic increase efficiently and effectively. However, we wanted to give our customers more options and further reduce the strain on our customer service team by introducing web self service technology. With the eGain Mail solution a proven success, it made sense to work with eGain to implement the next stage of our customer service strategy.” With a centralised knowledge base already in place with eGain Mail, eGain SelfService will enable SSE to offer its customers a new range of ways to access information in the common knowledge base including FAQs, search, browse, guided help and virtual agents. The software will provide SSE’s web customers with dynamic and intuitive service on the frontline, 24 hours a day, 7 days a week. Evans explains: “Our customer service agents currently have at least a 10-fold repetition with email enquiries. Encouraging more customer interaction through our website, the eGain self-service system can take away that repetition and free up our customer service staff to concentrate on more complex tasks. With the new web self service system, we are aiming for 20% email deflection. This will not only reduce support costs but shorten queues and improve the customer experience all round.” In addition, eGain’s self-monitoring feature automatically identifies knowledge bottlenecks through self-service usage analysis and user feedback, generating alerts and review tasks for appropriate content owners. The context-sensitive escalation provided by eGain SelfService will provide SSE with a continual record of each individual session, while escalating the interaction to an appropriate agent. In addition to the eGain SelfService, SSE is also upgrading its existing eGain Mail software to the latest version. The solution will be rolled out in SSE’s headquarters and its offices and is due to go live in July. Andrew Mennie, Vice President and General Manager, EMEA at eGain concludes, “In such a cost-competitive environment, customer service is a critical differentiator for utilities companies like SSE with such a wide spectrum of customer type and inquiry. Embracing the next generation of web customer service will provide the speed and accuracy of information that will enable them to reap cost benefits, increase customer retention and continue their growth as a business.”

The gas and electricity supplier npower today withdrew its cheapest online dual fuel tariff - the move was immediately hailed by analysts as further evidence that households across the UK can start planning for another round of price increases. Npower’s Sign Online 10 tariff had been the cheapest joint gas and electricity product in the market, and was aimed at customers switching supplier. The company’s new version of the same online tariff is around £83 a year more expensive than the one it replaced. With crude oil prices hovering around $120 a barrel - almost double the price of a year ago - wholesale gas and electricity prices have also been pushed upwards. Analysts have been predicting that domestic energy bills are set to rise between 10%, and a more likely, 25% over the next 12 months. Such a move would add another £180-190 to the standard average household bill, pushing it towards the £1,200 a year mark for the first time. “We don’t really talk about the online tariffs which can be withdrawn at any time,” said an npower spokesman. “There are no plans to increase the price for any of our other tariffs at the moment,” he said.

The president of Opec, the cartel of oil-producing countries, has given warning that the price of crude could hit $200 a barrel, sparking fears that rising fuel costs will force more businesses into bankruptcy. Chakib Khelil, the Algerian Energy Minister and president of Opec, said that the falling value of the US dollar would continue to drive up oil prices as investors sought to store their wealth in other assets. Lehman Brothers, the bank, has said that high prices are being sustained by an influx of money into the oil market from investment funds. It estimates that “hot money” accounts for between $20 to $30 of the recent increase in oil prices and about $40 billion (£20 billion) has been invested in the sector so far this year, equal to all the money pumped into oil last year. The price of oil hit an all-time high of nearly $120 a barrel today after North Sea production was shut down yesterday because of a strike at the Grangemouth refinery in Scotland. In early trading the price of US light crude rose $1 to $119.93 amid concern about the impact of industrial action at Grangemouth. This came on top of a $2.50 gain on Friday and leaves the price of oil up more than 25 per cent since the start of the year. The price of Brent oil rose 83 cents to $117.17 and oil analysts have predicted that further price rises are likely in the coming months. Supply shortages are expected to get worse over summer, which is hurricane season in the Gulf of Mexico. In addition, demand usually rises in hot months when air-conditioning units are operating at full blast. If financial investors continue to pour money into oil funds, as the president of Opec has suggested, this could cause prices to spike even higher. Today’s price rises came as workers at Grangemouth, which is operated by Ineos, a chemical company, began a two-day walkout yesterday over pension benefits. This forced the closure of the 700,000 barrel-a-day Forties pipeline and sparked fears that Scotland and the North of England could face petrol shortages. Grangemouth supplies 10 per cent of the UK’s petrol but also produces power for BP’s Kinneil plant, which processes the oil from the Forties pipeline. The oil price was also supported by concern over a surge in violence in oil-rich southern Nigeria, which led to five policemen being shot dead on Sunday. Attacks by militia forces forced Royal Dutch Shell and ExxonMobile to shut down oil production temporarily two days ago. Traders were also spooked by continued tensions between the United States and Iran, the world’s fourth-largest oil producer. The rise in oil prices comes despite a 400,000 barrel-a-day reduction in physical demand from the United States, which is consuming less because of its economic slowdown. This has been more than offset by rising financial demand as funds seek alternative investments to the falling US dollar. Analysts fear that the price will rise even higher as supply shortages get worse in the coming months while both physical and financial demand increase. On the supply side, shortages may occur if there is a bad hurricane season in the Gulf of Mexico and because the oil industry typically saves maintenance work at fields such as the North Sea for good weather. Summer usually brings a rise in demand as air-conditioning use rises, particularly in the Middle East. Rapid economic growth in the region has led to a large increase in energy consumption, which is diverting oil and gas away from export markets to feed domestic needs. This has exacerbated the effect of rising energy demand in the region. The high price of oil is already having an impact on the global economy, with airlines going bust and drivers paying more to fill their cars. Eos, the business-class-only airline, went into Chapter 11 bankruptcy protection yesterday and joins at least six other carriers that have also been grounded in the past two weeks by high costs.

As energy bills go up, commentators predictably blame a lack of competition in the British energy market. But they need to take a hard look at what drives the energy price. We’ve had hundreds of years of self-sufficiency, and today that has changed radically. We no longer enjoy a wholesale market “awash with gas”; we are competing globally with countries such as Japan and North Korea, and those on a north European gas network. Seven years from now, we’ll be importing at least 75% of the gas we need. To get this gas we have to compete on price terms with European energy suppliers who are buying under contracts directly linked to the price of oil - which has risen by 80% since early 2007 to $108 a barrel. The wholesale gas price has risen sharply in response. The time-lag of pricing mechanisms in Europe means it may be higher in the winter. Price volatility is also intense. In 2007, wholesale gas prices fell to 13p a therm then swung to a record high of 60p within months. Current prices for summer 2008 are at unprecedented levels, more than 45% higher than this time last year - and yet despite this, gas has not been flowing into the UK when high prices should have attracted it in. Until EU energy markets are truly liberalised, they will continue to adversely impact wholesale prices in Britain. Europeans will take gas from the UK but may not be able or willing to deliver it back when UK prices warrant it. The challenge for British Gas and its rivals is to minimise the impact of these wholesale price swings, to maintain profitability to fund the continuing secure provision of the gas and power which customers need, and yet to remain competitive enough to give them the best deals. In March and April 2007 we cut prices twice, by a total of 20%, but by the summer wholesale prices were rising, which cut margins to 1% for the second half of 2007. British Gas would have lost money in the first half of 2008 if it had not raised prices in January. That wholesale figure, which all suppliers have to pay, is the real driver behind price changes for consumers, representing 50% of the total cost to the customer. Using National Grid pipelines to get the gas around the UK accounts for about 20%, an operating costs account for about 11%. The remaining 18% is made up of environmental subsidies, metering costs, tax and profit. But over the past six years, British Gas’s profit has accounted for an average of just 3%.

So swings in the wholesale price of well over 50% are vastly more significant in relation to what customers pay than a movement of a couple of percentage points in retail price margins. There is no evidence to suggest the increase in wholesale market prices is driven by anti-competitive behaviour, and all the key measures of retail competitiveness - pricing, product innovation and switching rates - suggests energy retail markets are also functioning effectively. Since 2001 there have been numerous investigations into the market by Ofgem, the DTI and the EC. All have consistently found no evidence of
anticompetitive behaviour. A recent report for the government from Oxera, an independent energy consultancy, concluded that “the UK energy market is the most competitive in the EU and G7 … UK consumers have consistently benefited from amongst the lowest energy prices in Europe”. Official statistics show the domestic gas price in Britain for medium consumers was the lowest in the EU. A lot of these benefits stem from investment in new customer products. For instance, fixed or capped prices and green products help drive competition as firms seek ways in which to protect their customer base. About 4.2 million British households have chosen new ways to buy their energy, ranging from online tariffs to fuel protection packages for vulnerable customers. This level of competition has delivered some of the highest switching rates in the sector. Ofgem says a record 5.1 million people changed provider in 2007. In the less liberalised markets of Europe, things are different. In Germany only 9.2% of domestic electricity customers switched in 2007. The UK’s switching rate of 55% is far higher than the second most competitive market in Europe - Sweden, with 32%. Healthy competition is a vital element in securing billions of pounds of investment in new energy supplies for Britain and delivering innovative products to customers. Those who fail to see this bigger picture need to take those blinkers off. Sam Laidlaw is chief executive of Centrica, British Gas’s parent company

Britain’s imports of liquefied natural gas have slowed almost to a standstill this year, adding to the pressure on domestic prices, which have already risen by at least 15%. The sharp fall in LNG imports is an embarrassment for the government after heavy spending on the infrastructure needed to boost shipments to compensate for dwindling gas supplies from the North Sea. It also follows a drop in the level of gas imports from continental Europe in spite of higher prices in Britain. LNG is gas that has been converted to liquid to make it easier to transport. Imports over the winter are believed to be less than half of the previous year. The last LNG cargo to dock at the Isle of Grain terminal was at the end of January, though another shipment could arrive next week. LNG is sold as an international commodity with cargoes traded on a global basis. The price is set internationally and Britain has to compete with countries such as Japan and South Korea that are heavily reliant on oil and gas imports and are prepared to pay accordingly. Britain has spent heavily on building the necessary infrastructure - new LNG capacity is being built at Milford Haven, the world’s longest undersea pipeline, the Langaled pipeline, gives the UK access to one of Norway’s biggest gas fields and Britain now has access to continental European supplies through a pipeline to the Netherlands as well as the Belgian interconnector. But as Paul Golby, chief executive of E.ON UK, notes, building the infrastructure does not necessarily mean Britain will always get the gas it needs. “I think there has been a little naivety about gas infrastructure - an assumption that if the metal is there, the gas is going to flow,” he said. “That does not follow.” This month Thor Otto Lohne, the executive vice-president of the Norwegian pipeline company Gassco, reportedly warned an energy seminar that long-term contracts with continental European companies meant that: “the UK is a secondary priority. Like it or not, that is a fact”. Britain’s concerns about gas supply come as the world’s gas-producing nations meet today in Tehran to discuss forming an Opec-style grouping to influence prices. British consumer bodies have complained about high gas prices with bills rising by 15% this year. But whereas continental European companies can buy supplies from Britain, they are often reluctant to export even when prices are higher than in their home markets. The House of Commons business and enterprise committee and the industry regulator, Ofgem, have said they are looking at the UK market in the light of rising residential fuel bills. Craig Lowery, head of energy markets at the research company EIC, said long-run contracts and public-service obligations meant gas flows through the pipelines from continental Europe did not always respond to price signals, while Britain was geographically right at the end of the pipeline as far as westward gas flows were concerned. “If you build the infrastructure it does not guarantee that the gas is going to come. That is the commercial reality.” A Centrica spokesman said: “We are not getting enough gas into the UK, at least not without paying very high prices. We’re currently seeing a whole series of global circumstances and influences impacting on UK gas prices. “Not least, record oil prices are impacting directly on gas prices, because there is a direct linkage between the two, particularly in continental Europe. But we are also seeing heavy demand for LNG from the far east attracting shipments which might otherwise have come here, and also the ongoing impact of a dysfunctional European market sitting next to our highly competitive one. The market in which we buy our gas is now pretty much a worldwide one.” A spokesman for National Grid acknowledged there were uncertainties. “Having the capacity does not mean the molecules are going to arrive.” Britain, however, had the advantage over many other countries, he said, in that it has a diverse range of sources for gas. “We have our own indigenous supply; we can draw on the LNG market; we have the flow from Norway and from continental Europe.” The government sees gas as part of a balanced portfolio of energy sources which include new nuclear capacity, renewables and coal to replace existing generating capacity. Golby is keen to stress that because of the long lead times required to bring in new nuclear and coal plants, decisions need to be taken in the near future on how to meet the need for new generation. If those decisions are not taken within the next one or two years Britain risks “sleep walking” into a gas-dependent world or will suddenly realise that only another dash for gas will ensure Britain has enough power generation. Gas plants can be built much more quickly than nuclear or coal. New nuclear power plant could take 10 years to bring into service, coal between four to eight years. “The one thing we know we can do is build a gas-fired power station in probably two years,” Golby said. If gas plays a bigger than expected role in future, Britain will not be able to switch to alternatives as they become available. “There’s no way in five years we are going to turn to something else - that’s not a financial option,” Golby said. “Security of supply is not a simple issue. We have to think in terms of getting a balance of different types of supply because over-reliance on one is really dangerous.”

The installation of smart meters across the country could cost more than £16 billion, dwarfing earlier industry estimates, according to figures released by the Government yesterday. The £16.1 billion estimate was contained in a preliminary study of the economics of smart metering by Mott Macdonald, the engineering firm. It stands in stark contrast to industry claims that the installation of the meters in 45 million homes and businesses, a process which could take up to 20 years, would cost only £6 billion. Smart meters, which measure exactly how much energy is used at all times, are designed to encourage efficiency. As well as helping consumers to identify ways to reduce their usage and their bills by turning off electrical equipment and using more energy-efficient devices, they enable power companies to introduce off-peak deals similar to those offered by telephone operators. They will allow consumers to be rewarded for using energy at off-peak times, such as between 1am and 5am, enabling a reduction in the total generating capacity necessary to power the UK. They should lead to more accurate billing by ensuring correct data is sent back to suppliers leading to accurate monthly bills. The Government, industry and consumer groups agree the UK’s existing electricity meters need to be replaced but officials and campaigners have given warning that companies have underestimated the cost of installation, which will be passed on to consumers through their utility bills. Yesterday the Government edged closer to ordering nationwide use of the new meters by informing energy companies that powers to do so would be included in a new Energy Bill. It stopped short of saying it would definitely back the scheme, pointing out that there were still big questions over cost and complexity and that more studies were necessary before a final decision could be taken. In a letter to Britain’s leading power companies, the Department of Business said that a final decision had been delayed until November because the Government is not yet convinced that the meters will be cost-effective. “We wish to deepen our understanding and, as far as we can, resolve remaining uncertainties before we take those final decisions,” the letter stated. A spokeswoman for the Department said yesterday that the £16.1 billion figure was the highest estimate of several in the report. They varied according to how the rollout would be implemented, the likely cost of the metering equipment and the timeframe. Mott Macdonald said that the cost could be only £7.5 billion if the industry took a more gradual approach. The Energy Bill enters its third reading in Parliament next week, making this the last opportunity for the Government to amend it. “These amendments give Government the powers it needs to take the next steps on smart metering subject to resolving remaining uncertainties,” the letter said. The plan is for companies to begin installing the meters in 2010, with the implementation lasting for years. But the Government and industry cannot agree the cost of the programme. Centrica, the owner of British Gas, said its own studies showed that the rollout could be achieved for £6 billion. Sam Laidlaw, the chief executive, said: “We are convinced there will be a significant positive return for the UK. This stems from our own detailed research, presented to government.”

Unions at a major British oil refinery were due to meet management for talks on a planned strike that drove oil prices to a new record on Monday as a farmers’ union said fuel suppliers had imposed rationing. The 200,000 barrels per day Grangemouth refinery in Scotland was cutting production on Monday ahead of a two-day strike due to start on Sunday over pensions cuts. A shutdown at Grangemouth could cut flows of North Sea crude into Britain and hit British gas supplies if the Forties pipeline, which feeds the refinery, is forced to close. “The union is meeting the company later this evening,” a source with the refinery’s union told Reuters by telephone. “The plant is in the process of beginning to shut down.” Ineos was not immediately available for comment on talks. Earlier, refinery owner Ineos’ Communications Manager Richard Longden said it would take a week to fully shut the plant. Worries about a supply disruption at Grangemouth was one of the factors helping push U.S. oil futures to a new record high of $117.76 a barrel on Monday. Oil traders said the effects could be felt first on the diesel market. “It’s more a diesel problem than anything else,” said one London based oil trader. A spokesman for British Prime Minister Gordon Brown said the dispute was a matter for the company and unions to resolve. “There is contingency planning under way,” he said, without giving details. The threat of shortages pushed the price of London ICE gas oil futures, the basis for diesel prices throughout Europe, within a few dollars of their all time record high of $1,079 per tonne. European gasoline hit a record of $1,002 per tonne. In New York, gasoline futures surged to their record high of $3.0040 a gallon and heating oil, the basis for U.S. diesel and heating oil prices, hit its all time peak at $3.3309 a gallon. Workers have threatened to strike over pensions on April 27-28 at the refinery at Grangemouth on the east coast of Scotland, which the plant’s owners said over the weekend would force the facility to close for at least a month. Scotland’s branch of the National Farmer’s Union said its members had reported fuel rationing at a time when spring sowing and lambing meant increased fuel needs, and encouraged its members to conserve fuel. “This is a busy time of year for farmers and we are already hearing reports that some suppliers are unable to fulfill demand for fuel,” Scott Walker, National Farmers Union Scotland policy manager, said in a statement. “Some farmers are only receiving 50 percent of their fuel orders as suppliers restrict deliveries for fear of a shortage in days or weeks to come.” A full shutdown of Grangemouth would force Scottish suppliers to import cargoes from elsewhere in Europe or seek supplies from refiners in northern England. “The petroleum industry has an ability to handle the potential closure of Grangemouth,” said Luke Bosdet, a spokesman for the AA, a British motorists association.

UK-based utilities are planning to increase prices for the second time in 2008, with possible increases of a maximum of 25% on utility bills in the summer, reported The Observer. The news source reported that this will come as a rude shock for UK households who are yet to recover from the 15% increase, earlier in 2008. Additionally, the UK’s primary gas supplier, Norway, has warned the UK regulatory body Ofgem and government officials that the UK is not its top priority for gas exports. The Norwegian pipeline company Gassco has reportedly stated that, given its long-term supply contracts with continental European distributors, the UK cannot depend on it for gas supplies. Industry analysts estimate that with dwindling North Sea reserves, the UK will have to depend on Norway and Russia for almost 50% of its gas needs by 2010. This could reportedly undermine the UK’s energy security and push millions of British households into fuel poverty, as fuel costs rise.

Householdsers could save millions of pounds on energy bills by using a meter capable of telling you how much your kettle costs to run. The Energy Saving Trust, which offers impartial energy advice claims Ealing residents could save £5.3m in energy bills each year with the installation of a Smart Meter. The trust wants the Government to put pressure on energy suppliers to offer their customers the meters, which show consumers the how much energy appliances in their house use, and what it costs. The trust’s research suggests eight out of ten people do not know what they are paying for gas and electricity. The meters would cost around £100 to £200 if mass produced. The trust says trials of the Smart Meter have shown they can reduce bills between five and 10 per cent.

Up to 100,000 households could be helped with their fuel bills under a deal agreed between the UK’s big six energy companies and the government. The energy firms have agreed to boost their collective annual spending on social assistance programmes by £225m over the next three years. Spending will go up from £50m in the past financial year to £100m this year, £125m in 2009-10 and £150m in 2010-11. The deal was brokered by Energy Secretary John Hutton. if all the extra money was used to offset bills it could remove up to 100,000 homes from fuel poverty, although fewer would benefit if it was spent on more permanent energy efficiency measures. I do not underestimate the difficulties and anxiety that rising energy prices can cause. But consumer group Energywatch recently said social tariffs reached only one in 15 of the most vulnerable households. A home is judged to be in fuel poverty if 10% or more of the household income is spent on energy bills. The big six energy firms are British Gas, E.On, Scottish Power, Scottish & Southern, EDF, and NPower. “I do not underestimate the difficulties and anxiety that rising energy prices can cause but I believe that this extra cash, coupled with ensuring we have the most competitive market possible, will help us toward our goal of eradicating fuel poverty in the UK,” said Mr Hutton. The extra assistance will be targeted at households on low incomes which are most vulnerable to fuel poverty, including the elderly. In 2008-9, the government is increasing winter fuel payments to £250 for over-60s, and to £400 for over-80s. Earlier this week, two charities said they were taking legal action against the government for not doing enough to help people hit by rising fuel prices. Friends of the Earth and Help the Aged are bringing the joint legal challenge to end “the misery of fuel poverty”. All six big energy suppliers have announced significant price rises since the start of the year. This move is very helpful but won’t, on its own, end fuel poverty. Peter Lehmann, former chairman of the Fuel Poverty Advisory Group. Scottish and Southern Energy was the last to make the move with an average 14.2% increase in electricity bills, and a 15.8% lift in gas charges for domestic customers on 1 April. In early January, Npower put prices up for its electricity customers by 12.7%, while its gas price rose by 17.2%. EDF put up electricity tariffs by 7.9% and gas prices by 12.9%. British Gas increased gas and electricity prices by 15%. Scottish Power increased gas bills by 15% and electricity bills by 14%, and E.On put up gas bills by 15% and electricity tariffs by 9.7%.

Chancellor Alistair Darling announced an aim to encourage the energy companies to increase social tariffs to £150m a year in the Budget. The deal with the energy companies runs up to 2011, but the government expects the assistance to continue at the level of at least £150m a year. “This move is very helpful but won’t, on its own, end fuel poverty,” said Peter Lehmann, former chairman of the Fuel Poverty Advisory Group, which has called on the government to better target money to help vulnerable households. Ann Robinson, director of consumer policy at price comparison website USwitch.com, said the extra help was dwarfed by rising bills. “This is welcome but falls well short of the 500,000 additional households plunged into fuel poverty by the 15% increase to household energy bills this year.”