Slide 1: Building a sustainable business
Building a sustainable business Managing our social, ethical and environmental impact 21 November 2007 1
Slide 2: Catherine May
Catherine May Group Director of Corporate Affairs Centrica 2
Slide 3: Introductions
Introductions • Catherine May, Group Director of Corporate Affairs, Centrica • Kieran McKinney, Director of Investor Relations, Centrica • Simon Henderson, Director of Corporate Reputation, Centrica • Ian Peters, Chief Operating Officer, British Gas • Gearóid Lane, Managing Director, British Gas New
Slide 4: Kieran McKinney
Kieran McKinney Director of Investor Relations Centrica 4
Slide 5: Our strategic priorities
Our strategic priorities 1 Transform British Gas 2 Sharpen up the organisation and reduce costs 3 Reduce risk through increased integration 4 Build on our growth platforms 5
Slide 6: Strategic priorities: progress
Strategic priorities: progress Transform British Gas 1 Sharpen up the organisation 2 • Led customer prices down with two price reductions • Restructured BGR into manageable P&Ls • Improving customer service • Implemented 3 year planning horizon • Aim to return to among the best in the industry • Qua
Slide 7: Focus for today's discussion
Focus for today’s discussion • Governance and approach: Simon • Building sustainable customer service: Ian • British Gas New Energy: Gearóid • Investment in low carbon generation: Sarwjit • Questions 7
Slide 8: Simon Henderson
Simon Henderson Director of Corporate Reputation Centrica 8
Slide 9: Governance: CR Committee
Governance: CR Committee • Board Committee • Revised terms of reference • Focused membership • Risks and opportunities Members Duties Mary Francis, chairman Senior Independent NED • Review processes and controls for identifying and managing CR risks and opportunities Andrew Mackenzie Independent NED
Slide 10: Management: defining our approach
Management: defining our approach • Maximise shareholder value in line with business principles • Proactively engage with stakeholder groups • Identify and prioritise key impact areas • Control risks and maximise opportunities • Deliver work programmes and specific initiatives • Monitor and benchmar
Slide 11: CR impact areas: what matters
CR impact areas: what matters Energy Managing the reliable supply of energy now and in the future, Sustainability and keeping prices affordable Playing a leading role in the move towards a low carbon economy by Climate investing in sources of low carbon generation and energy efficiency. Change Inter
Slide 12: Business Principles: in action
Business Principles: in action Guide to Sound Business Practice On-line learning programme 12
Slide 13: Ian Peters
Ian Peters Chief Operating Officer British Gas 13
Slide 14: Investing in customer service
Investing in customer service We’ve made significant investments to restore service in British Gas Residential • 800 contact centre agents • Extensive training programmes for all customer service staff • Widening accountabilities to empower our people to resolve questions first time • Major investme
Slide 15: Positive impacts have been delivered
Positive impacts have been delivered • Average speed to answer telephones has fallen from 260 seconds at its worst in April to consistently below 30 seconds in recent weeks • Abandoned calls have reduced from 18% in April to 3% • Internal call transfers have halved to 10% • Repeat calls have dropped
Slide 16: energywatch's external reporting has changed
energywatch’s external reporting has changed energywatch now include all contacts in their external reporting, including general enquiries Our internal statistics reflect the continued improvement in the level of complaints received and totals outstanding 16
Slide 17: energywatch complaints declining
energywatch complaints declining A lag indicator of Still much more service performance improvement required September shows actual Numbers from energywatch energywatch contact vs. Industry (excl BGR) for BGR but Forecast for include mid call transfers Industry, as actual is 18000 from March 07 curr
Slide 18: New British Gas website launched
New British Gas website launched • 26% increase in on-line billing • 620k on-line self servers • Increase in core product sales of 58% • Reduced CPA compared to offline channels • Visits increased by 95% Enhanced self service Website provides and a step change in a firm platform for customer experie
Slide 19: British Gas Customer KPIs: October 2007
British Gas Customer KPIs: October 2007 Improvement This Year Average Products per Customer © 3.5% Customer Defection Rate ª 32% Net Promoter Score (NPS) © 55% Brand Preference © ALL CONSUMERS who would choose British Gas 8% Price Perception ª (Seen as more expensive among gas and/or elec) 45% 19
Slide 20: Energy account volumes have grown since Q1
Energy account volumes have grown since Q1 price reductions and service recovery. This is the first consistent growth trend since 2003 Total customer account numbers (m) 16.0 15.9 15.8 15.7 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 20
Slide 21: British Gas Business: Customer satisfaction rising steadily
British Gas Business: Customer satisfaction has been rising steadily 7.4 BGB CSAT Survey Results 7.2 Corporate Customers Datamonitor Major Energy Users Survey 7 Q3 2007 6.8 6.6 Q3 ’07 Rank Move (vs. Q2) 6.4 Gas 1st Place (2nd) 6.2 Electricity 6th Place (7th) 6 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 SME
Slide 22: British Gas Services: progress in customer service
British Gas Services: Significant and sustained progress in customer service Winter Performance 2005 2006 2007* 2005 - 2007 Calls answered 8.5m 9.7m 10.6m Calls abandoned 25% 10% 3.4% Average speed to answer 23secs 30secs 18secs Breakdowns 2.2m 2.4m 2.4m Broken promises 5.7% 3.5% 2.6% * Full year fo
Slide 23: Supporting Vulnerable Customers Beyond The Obligations
Supporting Vulnerable Customers Beyond The Obligations 23 23
Slide 24: Proactively tackling fuel poverty
As the industry leader, we are proactively tackling fuel poverty with a number of discretionary initiatives, which in turn strengthen our reputation, reduce risk & enable commercial decision making Reaching our most Customer insight, ground level vulnerable customers networks & increasing awareness
Slide 25: Social initiatives improve accessibility of affordable energy
Our social initiatives improve the accessibility of affordable energy and provide support for our most vulnerable customers Essentials • Launched in February 2007 • 3 year £32m annual commitment for up to 750,000 customers Tariff • Lowest standard tariff regardless of payment method • Average saving
Slide 26: Long-standing commitment to social initiatives
British Gas has a long-standing commitment to social initiatives • British Gas customers on average save the most on its social tariff • Recent Ofgem research supplemented by FPAG report recognises BGR as the leader in this field The average saving for a British Gas British Gas Social Tariff benefit
Slide 27: Gearóid Lane
Gearóid Lane Managing Director British Gas New Energy 27
Slide 28: Centrica's Position on Climate Change
Centrica’s Position on Climate Change Climate change • Significant stakeholder debate and action in Europe and also in North America. • Climate change is happening. Policies and action plans to slow and stabilise greenhouse gas emissions are needed - we are committed to play our part Risks and oppor
Slide 29: Climate change: challenge and response
Climate change: challenge and response Market Drivers Strategic Response Consumers will choose Promote brand credentials brands that fit with their and maintain upstream ethics advantage Reducing energy sales top line Consumers will use less gas Lead in green energy and Greenest suppliers gain and e
Slide 30: British Gas New Energy
British Gas New Energy • Position British Gas as the leading energy player in the UK on green issues, building on existing leadership position: • Lowest carbon intensity of any UK energy supplier • Largest supplier of energy efficiency products and services in UK • £750m commitment to renewables, le
Slide 31: Early wins
Early wins • Launch of ‘Future Energy’ and ‘Zero Carbon’ • ‘Green Streets’ • Energy Savers Report • We’re In This Together • Ceres Power • Partnership trials – Sky and Currys • Increasing recognition of ‘green’ credentials • Carbon Disclosure Leadership Index • WWF/Innovest Surveys • Response to ‘Ze
Slide 32: Above The Line Advertising Overview
Above The Line Advertising Overview Green with lead as ‘money saving’ Green with focus on environmental attributes Waste Watchers Expert Falling & Green MIGWYA Lowest CO2 Jan 2005 Oct 2006 May 2007 London - June 2007 Sept 2007 Lowest CO2 Save energy and Make it greener emissions for Free, where you
Slide 33: Posters and online directing people to makeitgreenernow.co.uk
Posters and online directing people to makeitgreenernow.co.uk 33
Slide 34: Lowest CO2 emissions TV campaign
Lowest CO2 emissions TV campaign 34
Slide 35: Energy Efficiency: Turning obligation into opportunity
Energy Efficiency: Turning obligation into opportunity EEC/CERT Programmes • DEFRA estimate of £1.2bn industry cost under EEC2 (British Gas 1/3) • This doubles under CERT (2008-2010) What has this given us? Innovation in delivery • Cost advantage in delivery against • Council Tax Initiatives (65 cou
Slide 36: Green Streets
Green Streets • A year-long national social experiment to demonstrate how to make homes more energy efficient through behavioural changes and installing energy efficient products launched to national media in early October. • Working with IPPR (Institute for Public Policy Research) who will be submi
Slide 37: "Energy for Tomorrow" Badge Mark
“Energy for Tomorrow” Badge Mark • The green badge mark will signify that any product, service or programme that bears this logo will reduce CO2 emissions • “Where you see this badge, you can be confident that the product or service described will genuinely help to reduce carbon emissions.” • The ba
Slide 38: Moving forward
Moving forward • Driving business activities forward with continued momentum • Increased focus on technology innovation • Strong pipeline of low carbon products and services • Use of CERT to drive advantage, innovation and brand • Further novel brand enhancing programmes • Important role for green b
Slide 39: Sarwjit Sambhi
Sarwjit Sambhi Director of UK Power and Renewables Centrica Energy 39
Slide 40: Market Environment (1)
Market Environment (1) Projected Reserve Margin 2008-2020 30.00% 25.00% Industry view on required margin 20.00% Reserve Margin 15.00% 10.00% 5.00% 0.00% 07 08 12 13 17 18 05 06 09 10 11 14 15 16 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 no new build langage only plus marchwood plus grain
Slide 41: Market Environment (2)
Market Environment (2) Oxera/DTI View of Delivery under the Banded RO 80 Other Biomass Co-Firing 70 LFG Onshore Wind Offshore Wind 60 Target Generation TWh 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Report by Oxera published with the DTI Consultati
Slide 42: Leader in low carbon generation in the UK
Leader in low carbon generation in the UK Carbon intensity of generation portfolio of major suppliers 900 800 EDF 700 SP CO2 g/kWh 600 SSE RWE 500 E.ON 400 Centrica 300 2005 2008 2011 2014 Source: Centrica analysis Oct-07 42
Slide 43: Continued investment in low carbon generation
Continued investment in low carbon generation Eston Grange IGCC 850 MW (2012+) Roosecote 229 MW Spalding 860 MW Tolling Contract with InterGen Langage New Build 885 MW (Q1 2009) 43
Slide 44: Growing portfolio of wind power – 1.6GW
Growing portfolio of wind power – 1.6GW Glens of Foudland Inner 26MW Braes of Doune Lynn 72MW Dowsing Operational 50/50 JV with Airtricity 194 MW Operational Offshore Wind Round 1 Construction 2007/8 Lincs 250 MW Offshore Wind Round 2 Seabed lease granted Application Jan 07 Docking Shoal 500 MW Offs
Slide 45: North America
North America DE Renewable Portfolio • Direct Energy has one of lowest carbon intensity generation Contract/ Size/ Project versus competitors in our key Sponsor term Status markets – 1.2GW of owned generation • Buffalo Gap 120 MW/15 Operational I/AES years. is all gas fired – 0.8GW portfolio of • Sa
Slide 46: Climate policy
Climate policy UK / Europe US Canada • UK Renewable Obligation • State renewables • Provincial carbon Scheme • 29 States with Renewable • First compliance market • 2002-27 Portfolio Standards (RPS) or in Alberta effective July • 10% renewable power by announced goals 2007 2010, 15% by 2015 • 14 Stat
Slide 47: Summary
Summary • We are a leader in low carbon generation • We continue to invest in existing low carbon technologies – CCGT and wind • Future investment underpinned by current policy 47 47
Slide 48: Questions
Questions 48