Interview: Kevin Roxburgh, Chief Executive of Scottish Gas

“We are trying to keep messages very clear for customers so they can make informed choices”

Kevin Roxburgh very clearly remembers his first day starting work at Scottish Gas more than 31 years ago on 5 January, 1981.

Back then the office was based at the old gasworks in Granton, next to the controversial grade-B listed gas tower, whereas now the company has a shiny new office behind Telford College. The company headquarters were built there in 2005 on the promise the area was to be served by the trams. Roxburgh, clearly an optimist, believes they might yet come out. But for now the campus feels somewhat isolated.

He started as a junior clerical assistant at the tender age of 16. He was so skint when he started that he had to borrow his older brother’s school blazer – with the badge removed – until his first paycheque allowed him to buy a new suit and jacket.

Since then he has moved around the country with British Gas, spending seven years in Leicester, Oxford and London. Latterly he was based in Chester, heading up the firm’s debt collection arm – probably one of the least popular roles when it comes to customers of Centrica, which owns British Gas and Scottish Gas, and services the energy needs of ten million households across the UK.

He now runs the Scottish Gas business, and also heads the firm’s Pay As You Go Energy division, aimed at those who, for whatever reason, pre-pay for their gas and electric.

Roxburgh insists that though the pre-pay system has often been more expensive for consumers, this is no longer the case.

“It has been more expensive in the past. It is more expensive to service a pre-pay customer than it is a non-pre-pay customer. Every time a customer vends in a shop, a commission has to be paid to the shop. Now we absorb those costs, so it is the same tariff for those customers.”

Roxburgh is also aware of the need to mollify customers who are angry about how the utilities companies ratchet up prices when the cost of oil and gas goes through the roof, but then don’t lower their costs when they fall, comparing the situation to the plight of the banks.

“The energy sector is so much in the public domain just now in the press and media, there is lots of lessons being learned very, very quickly, and British Gas and Scottish Gas are no different.

“We understand there is a need to be transparent on costs and transparent about why energy prices are going the way they are going. We are trying to keep messages very clear and very simple for customers and the public at large so they can make informed choices.

“We feel we are starting from a handicapped position because there is so much negativity around the energy sector. Like the banking sector, we have learned a few harsh lessons along the way. We need to rebuild that trust in the energy market.”

Last year was a terrible year for Centrica – it lost 97,000 customers to lower-cost providers and warm weather cut gas and electricity use.

After a profits warning in November, it disappointed the City with a tiny 1 per cent increase in its operating profit after what chairman Sir Roger Carr described as “a year of turbulence”.

Profit at Centrica’s downstream supply business – which sells the power to residential and business users – fell 17 per cent, mostly due to higher gas prices. But the firm benefits too when oil and gas prices are high. Its UK upstream business, which includes eight power stations in the UK and is one of the largest gas producers in the North sea – grew profits by a third to £1 billion. And it is this difference that tends to upset people.

Roxburgh points to the fact that although customers get up in arms over increases, UK customers pay less for gas and electricity than their European counterparts due to Britain’s more competitive open market.

“Our prices are generally the lowest in Europe – lowest on gas and third lowest in electricity,” says Roxburgh. “But for the UK consumer their world is comparing their history with what they have today and they see an increase in price and that is the pain they suffer.

“But there is no doubt about it, the open market has driven benefits for the consumer.”

According to Roxburgh, the impacts which affected the wider group were mitigated in Scotland. The company only shed 60 to 70 jobs from its 4,200-strong Scottish workforce, and the number of customers lost “balanced out”. He adds: “We did lose some customers and a lot of that is due to price sensitivity, because some customers will switch on price and price alone, and we understand that.”

But not all parts of the group lost customers – the company’s Pay As You Go customer numbers swelled by 53,000 last year.

Roxburgh believes Scottish Gas weathered the mild winter storm which hit Centrica last year better due to an enlightened management policy. There are many executives who pay lip service to staff training and “wellbeing”, but Roxburgh sees how it works in action.

He launched a learning and development programme 18 months ago that he believes has made a real, measurable impact on the business. In addition, as a committed hill-runner, he oversees a staff wellness programme, while all the trainees at its Hamilton-based training academy also participate in the Duke of Edinburgh Award programme.

“This business was very successful last year and our customer satisfaction numbers were very strong,” he says. “It is no coincidence that we have put a lot of investment into our people and we have seen good commercial results on the back of that.”