TOP 50: DiXi Group Presented a New Rating of Electricity Suppliers
On 30 June, the DiXi Group analytical center presented the first issue of the Rating of Electricity Suppliers in 2021. This time, experts noted the TOP 5 “improvements” in the rating and the TOP-5 “failures”.
This rating allows assessing companies by indicators, making generalisations, and tracking progress. Regular updating of the Rating of Electricity Suppliers will help consumers understand who is who in the market and will encourage healthy competition among companies. The pilot issue of the rating was presented in November last year.
“We then assumed that this product would be interesting and useful for both business and Ukrainian consumers. When we observed how many times the rating was mentioned by supplying companies and journalists, we were convinced that our assumption was correct,” said Olena Pavlenko, President of DiXi Group, opening the presentation.
“It is important to create the conditions for the continued development of competition in the retail market and to encourage suppliers to improve their reasonable and balanced choices by equipping them with appropriate tools,” said Ashley King, USAID representative. “We believe that it is also very important to strengthen consumers in every possible way, helping them to become more active market participants, to help them make a more balanced choice of services. The necessary conditions for market development can be created by the joint efforts of governmental authorities and independent community organisations. Therefore, we support the idea of the DiXi Group analytical center to create and regularly issue the Rating of Electricity Suppliers, which allows for a comprehensive assessment of companies and progress analysis.”
Iryna Osovyk, Deputy Head of the Department of Retail Electricity Market of the National Commission for State Regulation of Energy and Public Utilities, noted that the study had very sound conclusions. “We will definitely study them, especially the proposals so that we can take this into account when changing the rules,” she said.
“Today, there is no analog of the rating by DiXi Group,” said Olena Antonova, former member of the National Commission for State Regulation of Energy and Public Utilities, during the presentation. “If you want to look at a high-level overview of the state of the retail market, we have only three documents you can refer to, namely the annual report and monitoring reports of the National Commission for State Regulation of Energy and Public Utilities and your rating.”
How have the companies’ results changed since November last year?
This year, the modification of the sampling approach, as well as changes in the electricity market, led to the updating of the TOP 50 suppliers. The current issue of the rating includes 12 new companies.
- The average rating score of suppliers has grown, and the level of their development is gradually leveling. Compared to the pilot issue of the rating, the average rating score of the TOP 50 companies increased from 0.345 to 0.359 (+4%), which in general demonstrates some progress in the work of suppliers in the market. The homogeneity of the sample indicates a tendency to the gradual reduction of gaps between suppliers.
- The distribution of suppliers by groups did not almost change, and the group “hidden reserves” showed the greatest progress. As in the pilot issue, the group of “leaders” included only three suppliers, while the number of “average performers” decreased from 28 to 27 and “hidden reserves” increased from 19 to 20 companies. At the same time, there is still a noticeable separation of the “leaders” group from the “average performers” group. The level of development increased most noticeably in the “hidden reserves” group (+13.1%).
“The retail electricity market, which began operating on the new model on 1 January 2019, is still immature and in the process of formation,” said Bohdan Serebrennikov, DiXi Group Expert.“The main reason is the “greenhouse factor” – most companies have operated in non-competitive monopolised local markets since the mid-90s and do not still have established competencies to compete for the customer. The overall average rating score of companies in the analysed sample of TOP 50 suppliers is only 0.359 with the maximum possible value – 1. The overwhelming majority of suppliers have a lot of room to improve their commercial activities and increase competitive advantages”.
- Suppliers demonstrated diverse development dynamics and noticeable changes in rating positions. The assessment of individual companies included in the TOP 50 pilot and the current issue of the rating showed both significant progress and regress in their market activities.
The following companies showed TOP 5 “improvements” in the ranking: Kyiv Oblast EC LLC (+19 positions), TEC LLC (+18), Energy 365 LLC (+11), Lvivenergozbut LLC (+6), Kirovohrad Oblast EC LLC (+6).
The TOP 5 “failures” include: Odesa Oblast EC LLC (-26 positions), Energo Zbut Trans LLC (-14), Cherkasyenergozbut LLC (-12), Kherson Oblast EC LLC (-10), Enera Vinnytsia LLC (-8).
- Universal Service Providers (USP) show higher scores compared to Free Price Providers (FPS) in all rating categories but the gaps between them are gradually narrowing. The average total rating score of USP (0.457) is 1.76 times higher than the same indicator of FPS (0.260). However, the gap between USP and FPS, compared to the pilot assessment, was reduced by approximately 8%. Moreover, among the suppliers which are on the top 25 positions of the rating, 22 are USP and 3 are FPS, while in the pilot rating only 2 FPS were in the first half of the rating.
- Higher supplier rating is associated with higher sales and retail market share. There is a close relationship between the overall rating score of the supplier and the volume of electricity sold by it. This pattern will encourage companies to strengthen their competitive advantages, namely to improve the quality of online services, expand and create more flexible, customer-oriented commercial offers for consumers, improve transparency to scale the business and reach the national level.
- The average scores of suppliers in the ratings formed by the four categories differ significantly. The highest average score was obtained by the suppliers in the category “Consumer notification” (0.630), and the lowest one – in the category “Transparency and business activity” (0.108). Moreover, there are no leaders in the last category at all, and low scores are due to an unformed culture of transparency – only 6 of the 50 suppliers have fully or partially published their financial statements for 2020 (at the time of assessment) and no company has published non-financial statements. The average scores of suppliers in the categories “Online services” (0.354) and “Commercial offers” (0.400) remain quite low, indicating a significant reserve of companies to improve their practices. At the same time, suppliers demonstrated significant progress in both categories (average rating scores increased by 15% and 20%, respectively).
“Significant progress of companies in the ranking is possible if they are willing to increase their transparency, implement modern online service formats and create a wider range of commercial offers tailored to customer needs,” said Bohdan Serebrennikov, DiXi Group Expert, Project Manager. “In addition, until the next assessment at the end of 2021, it should be expected that more suppliers will make public financial and/or non-financial statements for 2020. Access to assessing the work of competitors will ensure awareness of best practices in the market and help suppliers improve their commercial activities focusing on consumer needs.”
Detailed and systematised information on the results of assessing the TOP 50 electricity suppliers by rating indicators can be obtained to order. To do this, send a letter to [email protected]
Download Rating of Electricity Suppliers 2021 (Issue I)
The event was held in the framework of the USAID Energy Sector Transparency Project implemented by DiXi Group NGO. The publication of the Rating of Electricity Suppliers was made possible with the support of the American people through the United States Agency for International Development (USAID). Information contained in this research is the sole responsibility of DiXi Group and do not necessarily reflect the views of USAID or the United States Government.
Source: DiXi Group