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Economic
Sustainability Performance Report 2012 19
Ongoing profitability
Efficiency of retail business
Optimisation of AGL’s operating model to deliver a
‘lowest-cost-to-serve’ outcome is crucial, given that
retail energy markets in which AGL competes are
among the most competitive in the world.
Approach
AGL is focusing on the management and growth of margins, by
leveraging its upstream strategy and achieving retail economies
of scale through a service platform capable of supporting four
to five million customers.
In FY2012 AGL undertook a system upgrade designed to provide a
better experience for large business customers. This project involved
the migration of large customers onto the SAP Billing System from
four legacy systems; the building of a pricing engine to automate
and streamline gas and electricity pricing; and the design of a meter
data management system to manage the increased data flow that
will be generated by smart meters. The system became operational
in December 2011.
As noted in the FY2011 sustainability performance report, AGL
online was launched for residential customers in April 2011 to enable
customers to self serve and also to increase the ease of switching to
AGL. As at 30 June 2012, over 300,000 customers have registered
with AGL online, with more than 50% of those customers choosing
paperless billing.
Performance
Relatively high levels of retail competitor activity persisted
throughout FY2012. AGL’s average national customer churn
for FY2012 was 15.4%, compared to an average market churn
of 20.3%
1
.
During the year, total customer accounts increased by 180,224 to
approximately 3.47 million. Importantly, dual fuel customer accounts
increased by 151,038 (10.3%) to 1.62 million.
The business is now operating more efficiently, with the cost to
serve per customer account falling 4% from $66.01 to $63.36.
However, the level of operating costs as a proportion of gross
margin increased from 48.8% in FY2011 to 49.2% in FY2012
as a result of New South Wales customer amortisation costs.
The ongoing business priorities for Retail Energy are to build
AGL’s retail capability, achieve operational excellence and
continue to improve customer service. During FY2011, Retail
Energy commenced a project to grow AGL’s total New South Wales
electricity customer base to between 800,000 and 900,000
customers over the next three years. A net 151,940 customers
were added during FY2012. More than 200,000 new customers
have been acquired since the project commenced.
Note
1 Churn figures relate to mass market customers and do not include commercial and
industrial customers.
Net OPEX to gross margin ratio
52.4
%
49.5
48.8
49.2
40
50
60
FY12
FY11
FY10
FY09
Retail markets by state and fuel type
State
Gas
Electricity
Total
NSW
711,185
619,920
1,331,105
Vic.
486,971
637,708
1,124,679
SA
117,271
458,822
576,093
Qld
74,607
367,482
442,089
Total accounts
(Net) 30 June 2012 1,390,034
2,083,932
3,473,966
Percentage change
from 30 June 2011
+1.5%
+8.3%
+5.5%