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Why the UK is 62nd for getting electricity

Business Juice CEO James Constant looks at why the UK came 62nd in the IFC’s Doing Business rankings.

I like a good survey; I find it amazing how we’re willing to tell a perfect stranger our intimate details in return for an Amazon voucher. I always do wonder however whether anyone actually reads the results and acts upon them…Business Juice is driven by such insight and it’s a hugely valuable tool in a market bereft of intelligent commentary and accurate interpretation. That said it’s pretty obvious that not all surveys are a catalyst for positive change.

Take the laughable FIFA world rankings, where the England football team, that paragon of total lack of achievement place 5th ahead of the likes of Italy, France and Brazil who between them have won 55% of the World Cups held since England’s sole tournament victory in 1966.

Compare those to the ICC cricket rankings, a lesson in objectivity, albeit that England have faltered from their deserved #1 position after a torrid summer, in fact that just goes to show the value of the methodology used.

And another difference? Cricket genuinely prizes the ranking status and makes it an objective goal on the international circuit and they tailor their approach to improve their standing. Football? Well, football thinks money, and money thinks tournaments, and tournaments means four weeks every other year (or two weeks if you’re England).

My point? A good, objective survey is a hugely valuable asset when used effectively and that means having achievable goals, a clear method, and the ability, ambition and desire to improve oneself on the ranking scale.

Take the lesser known International Finance Corporation (IFC) Economy Rankings. The UK stands 7th in the ‘ease of doing business rank’. Commendable. Apparently.

Most small businesses will be surprised to hear that the UK stands 1st in terms of ‘getting credit’ – stop guffawing at the back.

How about 8th in resolving insolvency? Well to be fair as a nation of shopkeepers we have a lot of practice right now.

Or 10th in ‘protecting investors’?

Barings, BCCI, Northern Rock, Icesave…again plenty of experience there.

In fact we’re in the top 25 (out of 185) of all the categories, bar two.

One, ‘Registering Property’ is, as we know a torrid affair.

The second, ‘Getting Electricity’ is sadly far more of an issue for anybody who has tried to add a new meter and supply to a building.

In fact at least in property transactions there is a known and to a large degree a regulated and protected process, it’s just that it takes a lot of time, is costly and if it’s a desirable property asset is highly competitive.

‘Getting Electricity’ is defined by the IFC as “the procedures, time and cost involved in getting a permanent electricity connection to supply a ‘standardized warehouse.”

It is simply a nightmare, no apparently willing participants, no rules, no obligations, nothing, apart from a great big burden on the person needing the electricity supply.

Ring a business energy supplier and the reaction will most likely be “No we don’t do ‘new connections’”. If you’re lucky enough to find a compliant supplier, they may charge a huge premium based on the uncertainty around the date of connection and how much a brand new warehouse will consume.

Even finding a supplier willing to take on the risk brings another challenge: “You’ll need to speak to your distributor”.

Distributor? The person responsible for the wires in the area, most commonly focussed on repairing faults, not establishing new connections. Call them and the likely response is “yes we do, but not now and not for the foreseeable future.”

But assuming you can find a compliant supplier and distributor, the challenges don’t end there. Getting a date for the connection is the point at which he stress really begins: getting the work done on time to facilitate the network connection is the biggest challenge of all…too soon and you’ve paid for an unproductive premise, too late and you’ve missed your connection date and the process starts all over again.

Even once the site is ready the curse of the connection often strikes with the contractor from the distributor failing to turn up at the scheduled time. Cue frantic calls, emails and faxes to find out that your meticulously planned installation has been trumped by an emergency somewhere else on the network.

A New date needed and fresh problems potentially arise.

But finally the distributor arrives and connects the supply, but where’s the meter?

“Not us mate” says the distributor.

Supplier? “No not us, try the meter operator in your area”.

“The who?” Frantic calls, emails and faxes. (Sound familiar?). The meter operator is found, the requirements are unknown, the distributor has the detailed understanding, and they need to talk. The how, when and where is unknown, but it happens, we don’t know when but it does, and at some point the meter installer finally arrives and fits the required asset.

The distributor switches the supply on. The site is ready to go. At last.

Problems over? Not quite.

The punitive standing charge that is commonplace for new connections. Designed to cover the costs of install whilst no power is being drawn, it is now supplemented by punishing unit rates until enough consumption history can be garnered by the supplier to accurately price the premise.

This cost burden creaks the resources of any business.

A smart meter can speed the process of understanding demand. Call the supplier, “yes we can do that, but it’ll cost you more, oh and that meter isn’t compatible, we’ll have to get the meter operator to pull that one out and install another.”

The meter operator arrives, they don’t have the protocols to support that meter, and it can’t be fitted. Frantic calls, emails and faxes. A new meter operator is needed. A new future appointment is needed. A new set of delays and headaches.

Like Lampard and Gerrard in midfield together, everyone knows it doesn’t work yet no one does anything about it.

At least the IFC has the good grace to let the rankings tell the true story, something FIFA forgot a long time ago.

So what can be done?

Firstly you need a supplier who wants to service your needs. They do exist. Talk to your broker to find the best supplier for you, including negotiating away those punitive pre-contract rates. Then work with your chosen supplier, perhaps even using your broker to support the process administration. Other than that, have patience and don’t leave it to the last minute.

It’s a penalty not worth paying.


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