E.On says it will have the lowest costs in the industry and will boost earnings by £100 million annually by 2023 by moving to a new customer service platform to be completed in partnership with Kraken Technologies, part of Octopus Energy Group.
E.On said it would use the platform for its UK residential and SME energy retail businesses – saying the partnership “underlines E.On’s long-term commitment to the UK”.
The partnership will require transfer of millions of customer contracts from platforms used by E.On and by Npower customers recently acquired by E.On.
Changing customer service platforms has previously been a troublesome process for energy utilities. To do it, E.On will establish a new subsidiary, E.ONnext, which will use the Kraken Technologies platform and help develop it further.
Npower’s former residential and commercial customers will migrate to the new platform from spring 2020, with E.On UK’s residential and commercial customers following from 2021. E.On said it was relying on Kraken Technologies’ expertise to help ensure the success of the migrations and a smooth customer experience.
E.On UK announced a package of measures to restructure its UK business in late 2019. Now it says the E.ONnext platform will, “bring about a clear turnaround in the business’s operating performance”. In the long term, it said, the partnership would allow E.On UK to achieve a “cost-leading market position in the UK energy landscape”. The new platform would be future-proof and able to provide customers with “an easy to understand, transparent and personalised customer service”.
E.On expects combined pre-tax earnings of at least £100 million in 2022. That is expected to be improved by more than £50 million in 2023 and more than £100 million beyond 2023 compared to the previous plan, it said. E.On expects to generate positive free cash flow from 2023 onward.
Octopus Energy describes its Kraken system as a cloud-based energy platform for interacting with both consumers (via the web, mobile and smart-meters) and the industry (including data flows, consumption forecasting, trading on the wholesale market).
As well as underpinning Octopus Energy’s own supply customers, Octopus signed an agreement with Good Energy to use the platform in late 2019.
The company is staffing up to continue the platform development and told potential applicants that, “The UK energy market is complicated, outdated and process-heavy – there’s an awful lot of domain modelling that we need to get right.” It added, “With the advent of smart meters, we’ll soon be processing millions of meter readings a day. We need the right technology in place to handle this smoothly as well as feeding data into a machine learning pipeline that models and predicts consumption.”
Karsten Wildberger, COO and member of the board of management of E.ON SE, said, “In November we announced that we would successfully reposition our business in the U.K. and counter the difficult market conditions. The formation of E.ONnext is the key step in achieving this goal quickly and to the benefit of our customers in the UK.”