1. 1 CER SME Electricity Market Survey Results 2014 Prepared for: Prepared by: June 2014 &

2. 2 Background ● Electricity and Gas SME surveys conducted during March 2014  Total of 400 electricity and 250 gas interviews completed  Margin of error on a sample size of 400 is  5% and 6% on a sample of 250. For smaller subsamples the margin will be greater. ● Survey data collection methodology was Computer Assisted Telephone Interviewing (CATI)  Survey length of approximately 20 minutes ● Respondents were decision makers for electricity or gas supply related issues within the organisation  Included both private sector and public sector, government organisations and sole traders ● The final respondent set comprises a broadly representative of the SME sector organisations with fewer than 250 employees in Ireland  Sample was quota controlled on number of employees and region. A spread across sector NACE code was also ensured.

3. Respondent & Market Profile

4. 4 Respondent profile (Base: All SMEs – 400) ● Population of respondents is representative of business sizes across the SME market ● 17% of respondents identified themselves as on Maximum Demand (2013:14%) ● 45% stated that they were on a variable rate tariff (2013: 43%) Number of employees NACE201220132014 Agriculture, forestry and fishing5%4%2% Industry Mining and quarrying Manufacturing 7% 5% Construction5%9%11% Wholesale and retail trade; repair of motor vehicles and motorcycles 17% 20%23% Business and Professional Services31%19%18% Public administration and defence; social security, Education Human health and social work activities 15% 14%10% Other Transportation and storage2%4%5% Accommodation and food service activities Leisure hotels Arts, entertainment and recreation 5% 8%16% Other service activities13%15%10% Activities of extraterritorial organisations and bodies 1% 4%-

5. 5 Respondent profile (Base: All SMEs – 400) ● Respondents sought for survey were those responsible for electricity supply related issues. There are a large number of roles within the SME organisations, whose responsibility encompasses electricity supply decisions  The highest proportion is the managing director/owners role, reflecting the large proportion of businesses with small numbers of employees ● There were no significant differences compared to 2013 Respondent Other/ Shared Nobody Paying the bill85%16%0% Monitoring the level of usage 84%8%9% Reducing the size of the bill90%9%4% Deciding on the tariff that suits your organisation 80%17%3% Making changes to your account such 89%13%1% Billing details, payment methods etc 88%13%0% Deciding on which energy supplier will be used 87%19%0% Role of Respondent

6. 6 Expenditure on electricity (Base: All SMEs – 400) Annual expenditure on electricity (€) ● Average expenditure on electricity as a percentage of non-wage costs was 9% (2013:7.5%)  47% of respondents provided an answer to this question reflecting a combination of sensitivity and knowledge (2012: 37%) ● Average annual expenditure was €15,055 (2013: €14,119)  88% of respondents provided an answer to this question Expenditure on electricity (% of non-wage costs) % of non-wage cost Amount spent on electricity annually (€)

7. 7 Energy management: Cost and Usage Reviews (Base: All SMEs – 400) ● Business’ most commonly review both cost and usage annually ● Just over 20% of SMEs never review usage, while 12% claim to never review cost ● On average circa 10% review cost and usage at frequencies other than the options noted Frequency of electricity cost reviews Frequency of electricity usage reviews

8. 8 Market share: SME electricity suppliers (Base: All SMEs – 400) ● Proportionate representivity by market share ● Satisfaction with service by Supplier in supporting the business continues to decline across all Suppliers Satisfaction with service by Supplier in supporting the business 8 * Caution: Small base % of respondents with each supplier (Proportion of respondents with each supplier)

9. 9 Bill Delivery and Frequency (Base: All SMEs – 400) ● Majority of SME’s receive their bill by post with evidence of an increase in the website channel ● Continued increase in those reporting a two month bill frequency Bill delivery channel Bill delivery channel – by Supplier Bill Frequency 201220132014 Monthly44%45%43% Two Monthly49%52%54% Quarterly5%2% Other2%1%2% * Caution: Small base

10. 10 Perceptions of price change over time (Base: All SMEs – 400) Price Change by Supplier Electric Ireland Bord Gais*AirtricityEnergia %% ● Almost a half of the SME respondents perceive that there has been an increase in the price charged by their supplier in the past 12 months ● This is most noteworthy in the case of Electric Ireland, where 57% held that perception * Caution: Small base

11. 11 Payment Record and Arrears (Base: All SMEs – 400) Stated bill payment record ● 88% of SMEs claim to pay on time and in full, a decrease on previous measurements ● This continued high rate may reflect a ‘broad’ interpretation of what constitutes arrears and perhaps some reluctance to disclose such sensitive information

12. 12 Awareness of competitors (Base: All SMEs – 400) ● Unprompted awareness reflects top of mind presence in the consumer mind and provides a good estimate of perception of competitive activity in a market ● For electricity suppliers 85% mentioned Electric Ireland or a prior name (ESB, Customer Supply): 49% mentioned Electric Ireland in 2013, up from 37% in 2013, and 23% in 2012 Unprompted awareness of Electricity Suppliers Supplier Named - Unprompted 2010201220132014 Electric Ireland (etc) 71%79% 85% Bord Gais54%45%47%50% Airtricity72%59%65%68% Energia39%28%26%41% Vayu2%1%

13. Competition & Deregulation

14. 14 Awareness of ESB Networks vs Electric Ireland and Power Supply responsibilities (Base: All SMEs – 400) Who has responsibility? SupplierNetworksOtherDon’t Know Generation of electricity 20%71%6%4% Repairing power failures 11%86%1%2% Maintenance of the electricity grid 11%85%0%4% Billing and payment88%8%3%1% Reading the meter60%31%6%3% ● Prompted awareness of Electric Ireland is at 98%, up from 79% in 2013 ● Prompted awareness of ESB Networks is at 93% and there is good clarity of the relative responsibilities of ESB Networks compared with that of the Suppliers

15. 15 Satisfaction with Aspects of Competition Level of Competition Quality of Competition Range of Offers ● Notable decline across all metrics of competition, in particular Satisfaction with Range of Offers ● Indication of consumers disengagement with the market as consumers now more likely to rate satisfaction with competition as middle of the road (neither/nor). ● Relatively low levels of Satisfaction with Competition articulated by SME sector (Base: All SMEs – 400 )

16. 16 Awareness that prices are not regulated (Base: All SMEs 400) ● There is a comparatively low level of market knowledge amongst the SME respondents, with 49% not aware that prices are no longer regulated ● This is symptomatic of the comparatively low level of engagement with energy, also seen in terms of low awareness of unit costs amongst the SME sector. Aware of non regulation of price 201220132014 Aware40%36%37% Somewhat Aware10%11%14% Not Aware50%53%49% Aware of non regulation of price, by Supplier Q: Are you aware electricity prices charged by suppliers are not regulated which means that suppliers can set their prices at whatever level they choose? *Caution Small base

17. 17 Improvement and Dis-improvement since Deregulation (Base: All SMEs 400) Cost of Electricity 201220132014 Improved 32%25% Dis-improved 27%26%21% Level of service provided by suppliers Level of innovation in services provided by suppliers Responsiveness of suppliers to business needs Range of options available by suppliers to business customers Ability of businesses to select supplier that best meets their needs 201220132014 Improved 27%28%35% Dis-improved 12%16%13% 201220132014 Improved 20%23%26% Dis-improved 13%16%21% 201220132014 Improved 12%35%40% Dis-improved 29%12%16% 201220132014 Improved 25% Dis-improved 14%13%22% 201220132014 Improved 15%26%24% Dis-improved 28%15%23%

18. 18 Contact by Suppliers (Base: All SMEs 400) ● SME respondents recall higher levels of contact from competitors to their electricity supplier, with increased in the level of both phone and business visit contact ● Contact activity at supplier level is varied Contact Channel 201220132014 Phone 28%21%28% Mail6%4%7% Business visit29%25%34% 2013- Yes: 50% No: 50% 201220132014 Electric Ireland51%48%57% Bord Gais*62%46%58% Airtricity40%56%45% Energia55%30%63% Contact by Supplier *Caution: Small base

19. 19 Awareness and understanding of offers available (Base: All SMEs 400) ● There is a comparatively low level of market understanding, specifically of alternative offers, of which SME’s might avail ● An increasing proportion of the SME’s are indicating that they are not aware of other offers available Level of understanding of other offers 201220132014 No/Small Understanding 30%21%15% Some understanding 29%20% Mostly/Fully understand 30%42%31% Not aware of the offers available 12%17%34% Level of understanding of offers by current supplier Q: Thinking about the different offers available from electricity suppliers, please rate your understanding of the offers available.? * Caution: Small base

20. 20 Ease of comparison of other offers Awareness and understanding of offers available (Base: All SMEs 400) ● The comparatively low level of market understanding is confirmed in the high proportion of SME respondents who report that they have not attempted to compare other offers ● This ease of comparison has decreased since 2012 and is now under 1/4 of SME’s Ease of comparison of other offers since 2012 201220132014 33% 30% 24%

21. Switching

22. 22 How many times have you ever switched electricity suppliers? Electricity Switching experience – level of switching (Base: All SMEs 400) ● The level of switching (in the last 12 months) has increased to 22% in 2014, compared with 15% in 2013 – of these 42% were switch backs to their previous supplier ● One third of the SME respondents have never switched supplier - with over 50% of Electric Ireland’s SME respondents indicating that they have never switched – ● In contrast 28% have switched more than twice ● Amongst the switchers, 30% have switched once or more than once on the last 12 months. How many times have you ever switched electricity suppliers – by supplier? * Caution small base

23. 23 How many times have you switched Gas suppliers? Switching experience – level of switching among SME electricity customers with Gas (Base: All with gas – 85) ● The level of switching among SME electricity customers, who also have natural gas display a lower level of switching activity with 47% ever switching. ● Of these, 35% switched in the past 12 months. ● Of those SME’s with gas, who did not switch, 33% considered switching to an alternative gas supplier. How many times have you switched Gas suppliers – by supplier? * Caution: Small base

24. 24 Among switchers, which supplier did you switch to? Switching experience – level of switching for electricity (Base: All who switched electricity supplier in past 12 months – 85) ● Those SME’s that report having switched tend to look at a number of other suppliers ● Those SME’s who have moved to Bord Gáis Energy, reported the least consideration of other suppliers Among switchers, considered switching to: Current Customers of: Electric Ireland* Bord Gáis Energy * Airtricity*Energia* No other supplier considered 29% 59%27%26% Electric Ireland 28%33%21%15%31% Bord Gáis Energy 35%36%20%32%37% Airtricity 46%52%41%46%40% Energia 26%22%21%27%32% Vayu 3%8% *Caution small base size **Base includes switching back to previous supplier

25. 25 Electricity - Contact method used to switch (Base: All switchers - 85) © 2013The Research Perspective Method used to switch ● Site visits are still the primary channel, through which SME’s switch supplier

26. 26 Electricity - Switching Package/option with existing supplier (Base: All non-switchers - 315) ● Among non switchers, 18% reported changing package to avail of discounts related to direct debit or online billing.

27. 27 Electricity - Changing Payment channel and Bill frequency with existing supplier (Base: All SMEs – 400) ● Evidence of increased engagement in the areas of changing bill frequency and payment channel, but levels of change are still comparatively low Q: Have you telephoned/emailed your supplier to enquire about other packages, other payment methods or bill payment options in the past 12 months?

28. 28 Electricity – Switching consideration (Base: All non-switchers - 315) Switching consideration: ● At 40%, reasonable level of SME activity in the self-reported consideration of alternative suppliers, of which 27% reported making contact ● Consideration is more pronounced among Airtricity customers and least pronounced among Electric Ireland’s customer. Switching consideration – by supplier? * Caution: Small base

29. 29 Electricity Switching – Experience with Dual Fuel ● Those on dual fuel showing the highest incidence of switching electricity suppliers, with 2 in 5 dual fuel consumers having switched suppliers more than twice. How many times have you switched electricity suppliers? All Electricity Consumers (Base: 400) All Dual Consumers (Base: 28) All Non Dual Fuel Consumers (Base: 372) Never Once Twice More than twice Never Once Twice More than twice Never Once Twice More than twice *Caution: Small base

30. 30 Electricity – Reasons for switching, amongst switchers (Base: All who have switched to new supplier in last 12 months – 52) Top 5 reasons Important Not Important 20132014 20132014 To achieve a reduction in the total cost of electricity 71%89% 17%5% The new supplier offered a more flexible tariff structure 54%61% 27%26% My business’ bill increased in size because my previous supplier had increased prices 46%44% 35% To avail of a combined offer for electricity and natural gas 17%43% 50%38% I expected the customer service from the new supplier would be better 27%37% 46%37% ● The Top 5 considerations for switching focus on the quest for a reduction in cost and service requirements

31. 31 Electricity – Reasons for switching, amongst switchers (Base: All who have switched to new supplier in last 12 months – 52) Important Not Important 20132014 20132014 The previous supplier had recently announced a price rise 54%38% 37%32% The new supplier offered greater assistance on energy reduction initiatives 32% 39%42% I was unhappy with the service I have received from my former supplier 15%26% 66%53% My business was not satisfied with the service provided by our former supplier 22%25% 56%55% To get more information on electricity usage 22%20% 51%53% I preferred the online billing option from my new supplier 20%18% 61%60% ● Additional considerations for switching include increases in the relevance of meeting service expectations

32. 32 Electricity – Reasons for switching back to old supplier, amongst switchers (Base: All who have switched back to previous supplier – 33*) Top 7 reasons:Important Not Important To achieve a reduction in the total cost of electricity94%0% The business expected to get more savings by returning to my original supplier70%0% My original supplier contacted me with a better offer if I would switch back52%34% My business’ bill increased in size because my previous supplier had increased prices59%25% The price the business received from my new supplier was not as good as I had expected42%39% The previous supplier had announced a price rise47%28% The original supplier offered a more flexible tariff structure43%29% ● Top 7 reasons for returning to the original supplier all related to price/tariff considerations *Caution: Small base

33. 33 Electricity – Reasons for switching back to old supplier, amongst switchers (Base: All who have switched back to previous supplier – 33*) Other Reasons citedImportant Not Important The business was not satisfied with the service provided by our new supplier 28%47% The service from the new supplier was not as good as the service received from my original supplier 26%55% The business’s original supplier offered greater assistance on energy reduction initiatives 29%48% I did not find the bill of my new supplier understandable29%56% I did not like the frequency with which I received a bill22%70% I preferred the online billing option from my original supplier20%64% We would have had to pay a large deposit24%70% To avail of a combined offer for electricity and natural gas35%65% We would be charged a penalty and the saving to be made with a new supplier would not cover this penalty 24%59% ● Top amongst non price considerations in the decision to return to the original supplier is service falling short of expectations *Caution: Small base

34. 34 Understanding of Discount agreement (Base: All switched in past 12 months – 85) Price Guarantee Period Q: How long does the discount you were offered when you switched last for? NO restrictions on future switching? 201220132014 32% 59% 72% Period of restriction 201220132014 6 months6%20%3% 1 year69%56%86% 2+ years6%8%11% Don’t know19%16%

35. 35 Electricity – Non Switchers – reasons for not switching (Base: All who have not switched – 315) Top 7 reasons Important Not Important 201220132014 We are satisfied with the service that we receive from our current supplier 50%64%50% 24% We do not believe that the prices will stay as low as the alternative suppliers claim 30%37%46% 32% We do not believe that the level of discount is sufficient to justify switching 23%39%43% 36% Other priorities have meant that this has not been considered30%43%41% 37% We do not believe that the prices will be as low as the alternative suppliers claim 28%32%38% We are concerned about whether the alternative supplier will provide a reliable supply of electricity 23%31% 53% We are concerned about whether the alternative supplier will be as responsive if there is a power outage 24%30%32%51% ● The First 5 considerations for not switching focus on lack of conviction that the alternative will be any better than the current choice

36. 36 Electricity – Non Switchers – reasons for not switching (Base: All who have not switched – 315) Other reasons Important Not Important 201220132014 We are concerned that the alternative suppliers may not stay in the electricity market for long18%20%26%57% The offers from the other suppliers are too complex11%19%20%53% We are not able to switch because of the contract with our current supplier9%15%13%79% We would have had to pay a large deposit 14%74% We would be charged a penalty and the saving to be made with a new supplier would not cover this penalty 11%77% It is not possible for my business to switch due to outstanding arrears on our business’ electricity account 4%91% We do not believe that we are able to switch because of arrears on the business’ account33%65%8%86% We do not want a new supplier to ask about our current supplier if there were arrears on the business’ account37%68%7%84%

37. 37 Rating the overall experience of switching Experience of switching process (Base: All switched in past 12 months - 85) The overall rating of the experience of switching increased to 88% stating that it was easy or very easy – the process of switching is not a barrier to switching Of those who switched, 3% indicated that they were required to pay a deposit, which averaged at Euro 600 Rating the overall experience of switching by Supplier *Caution: Small base

38. 38 Rating the overall experience of switching Impact of switching process (Base: All who have switched & received a bill – 78) The impact of the switching process is broadly as expected for the SME’s who switched. 201220132014 AgreeDisagreeAgreeDisagreeAgreeDisagree My business’ bill was reduced by the amount I expected 57%25%67%15%61%30% The service from my new supplier was satisfactory 79%6%80%2%78%6% We understood the terms and conditions of the offer the business had signed up for 77%8%83%4%81%5% *Caution: Small base

39. 39 Impact of switching process (Base: All who changed package with current supplier - 59) 19% of the respondents indicate that they are likely to switch again in the next 12 months Changed Package - Agree Changed Package - Disagree My business' bill was reduced by the amount I expected47%30% We understood the terms and conditions of the offer the business had signed up for 74%13% We have complied with the terms and conditions (for instance online billing or payment by direct debit) 84%8%

40. Dual Fuel

41. 41 Dual Fuel Benefits for switching to a single supplier for gas and electricity include both saving and convenience considerations, with service ranking lower Factor in the decision to change to a single supplier for dual fuel (Base: All dual fuel – 28) Benefit Not at all a benefit The greater reduction in electricity prices offered when your business also used the same supplier for gas 78%10% The greater reduction in gas prices offered when you also used the same supplier for electricity 80%4% The greater saving overall80%4% The convenience of having a single supplier for both 73%12% Aspects of the service provided by your supplier - for both electricity and gas 57%13% Factor in the decision not to have a single supplier for dual fuel (Base: All non-dual fuel – 57) Benefit Not at all a benefit The savings are greater if your business uses two different suppliers 39%43% Satisfied with the service provided by our current supplier for each and see no reason to switch 55%15% You do not trust a single supplier to provide both electricity and gas 29%49% Do not want to receive a single bill for both gas and electricity 25%60% You are concerned about what would happen if your business fell behind on payments for either 29%55% Have not got around to switching to a single supplier 22%43%

42. Billing & Payment

43. 43 Bill Understanding and impact (Base: All SMEs - 400) Change vs 2013 (-12%)(-15%)(-6%)(-9%)(-19%) Understand the calculation of the bill Bill is easy to understand Bill makes it easy to understand the electricity used Makes it easy to understand the electricity charged for Change vs 2013 (-8%)(-12%)(-11%)(-3%)(-12%) Change vs 2013 (-14%)(-13%)(-28%)(-10%)(-19%) Change vs 2013 (-13%)(-19%)(-14%)(-11%)(-13%) *Caution: Small base

44. 44 Bill Frequency (Base: All SMEs - 400) My business would prefer to receive bills more frequently Business would prefer to receive bills more frequently– by Supplier? * Caution: Small base

45. Complaints

46. 46 Experience and knowledge of Complaint process (Base: All SMEs - 400) ● 10% of SME respondents had complained within the last 12 months ● The most common category of complain is in relation to billing and payment (29%), closely followed by Networks related issues such as reliability of supply ● Issues related to switching emerged at 4% this year Proportion of respondents who complained over last year Complaint topic (Base: All complained – 40) 201220132014 Billing and payment55% 40%29% Late payment or disconnection21% 5%6% Other issues18% 40%31% Reliability of supply/power failures/supply issues 6% 0%23% Issue related to switching0% 4% Connection/modification of supply0% 5%6% 201220132014 10% 5% 9%

47. 47 Experience and knowledge of Complaint process (Base: All SMEs - 400) ● Suppliers continue to be the first port of call in terms of receiving complaints, with 78% of SME’s respondents indicating that they contacted their supplier and 23% reporting that they contacted ESBN 2013- Yes: 53% 2012- Yes: 54% Who to complain to (Base: All complained – 40) 2014 Your current or previous supplier78% ESB Networks23% The Commission for Energy Regulation 7% Don't know3%

48. 48 Satisfaction with complaint handling (Base: All complained – 40) ● 2014 Satisfaction with problem handling has returned to 2012 levels Satisfaction with COMPLAINT HANDLINGSatisfaction with COMPLAINT OUTCOME Satisfaction with 20122013*2014 Complaint handling43%0%35% Complaint outcome41%22%40% *Very small sample size

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