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Results within key customer segments

Wholesale and retail supply of electricity and gas Consolidated financial statements
Social capital Social capital

Electricity and natural gas retail supply to the final consumers is conducted by TAURON Sprzedaż and TAURON Sprzedaż GZE subsidiaries. The customer segmentation applied by TAURON Capital Group (strategic, business and mass customers), depending on the volume of electricity consumed, is aimed at tailoring the product offering, sales channels and marketing communications to the expectations of the specific customer segment.

Categories of TAURON Capital Group’s final customers resulting from the market segmentation used and the specific nature of their business operations

Lp. Customer group Description of customers
1. Strategic customers Customers with the annual potential energy consumption at a level not lower than 40 GWh or strategic business partners of TAURON Capital Group, i.e. mainly entities representing the sector of heavy industry, for example: metallurgical industry, chemical industry, mining industry, automotive industry.
2. Business customers Customers with the annual potential energy consumption at a level above 250 MWh (other than consumers), or purchasing energy based on the provisions of the Act of January 29, 2004, Public procurement law, i.e. entities representing the other sectors of the manufacturing industry, producers of equipment, consumers from food industry, public sector, construction sector and municipal services sector.
3. Mass customers – small and medium-sized enterprises Customers dealing with sales, services, banking, catering and small businesses.
4. Mass customers – households Households.

In 2020, the supply companies (subsidiaries) were operating in a market environment where the level of competitiveness in the individual market segments did not change significantly as compared to the previous years. The household market (individual customers) continued in 2020 to be covered by the obligation to have the electricity sales prices approved by the President of ERO.

According to the ERO data, from mid-2007 until December 2020, i.e. since the beginning of the electricity market liberalization process, approx. 657 000 households and more than 214 000 institutional entities switched their electricity supplier.

In the institutions and business entities (business customer) market segment the competition is strong and companies have already been taking advantage of the liberalization of electricity prices for several years. The progress of the liberalization has resulted in the increasing awareness of business customers expecting competitive solutions. The enhanced sales activities of the energy companies exert ever increasing price pressure. Business customers are willing to switch their supplier. The consequences of such a situation include activities aimed at protecting own customer base against the actions taken by the competition by introducing loyalty building agreements.

The household segment, where the number of supplier switch cases represents a small percentage, is considered to offer a strong potential. In 2020, more than 23 500 consumers of electricity switched their suppliers (including approximately 4 200 institutional customers and approximately 19 400 households). In 2020, the pace of supplier changes in case of households dropped, as compared to 2019, by 2.9%, and in case of institutional entities, by 1.98%.

The offering of TAURON Sprzedaż for the business segment in 2020 included 2 media: electricity and gas fuel. The above company continued its activities geared towards building customer loyalty, with particular emphasis placed on developing an offering that would meet customer expectations. Customers were offered a number of products to choose from, taking into account their needs and the specifics of electricity consumption, including ecological, exchange based and technical products. The activities related to the promotion and sale of the “EKO” products – TAURON EKO PREMIUM (TEP), TAURON EKO BIZNES, Guarantees of Origin – were continued.

As part of these activities, the entire volume of the TEP product from the certified sources that were a part of the assets of TAURON Capital Group was sold and the external sources were used. At the end of the year, this product of electricity was sold for the years 2020-2023 in a volume in the order of 1 TWh. The share of the customers buying electricity and gas fuel based on the exchange model came in at 28% of the total volume purchased by the customers this year. 

An increased interest in the photovoltaic installations was observed, which translated into a significant increase in the customer inquiries for proposals and the implementation of the first photovoltaic projects, such as a contract with a chain of stores, the subject of which was the sale and installation of 50 PV installations, each with a capacity of almost 40 kWp.

The process of mass segment customers (individual customer and small and medium sized enterprises) migrating from the tariff-based pricing to the product-based pricing, was also observed in 2020. As of the end of 2020, TAURON Capital Group was selling electricity under agreements guaranteeing commercial terms over the specified period to 46% of the segment’s customers (loyalty-building agreements), while 54% of the customers were buying electricity at tariff-based prices.

The key element of the commercial offering for the mass customers in 2020 were the combined products: Elektryk and Serwisant, based on the assistance functionality, that were used by more than 2 million customers. The assistance products will represent the core of the offering also in 2021.

Furthermore, in 2020 the range of products addressed to the customers was extended by adding specialized products, e.g. photovoltaics in particular, with its sales in 2020 reaching almost 1 300, i.e. almost 7 times more than in 2019.

The COVID-19 pandemic was a significant element that has impacted and continues to impact the everyday business operations. The outbreak of the pandemic changed a lot of behaviors in the business space, and the entire segment entered the mode of performing sales activities under epidemic conditions. The pandemic situation had a negative impact on the 2020 results due to the volumes of electricity consumption that were not realized by the customers. The decrease in electricity demand during the lockdown period clocked in at 9-10%, and on an annual basis terms, it came in at approx. 7%.

In 2020, the retail supply of electricity by the Supply Segment companies to almost 5.6 million customers stood at 32.4 TWh, i.e. 96% of the 2019 level when the supply came in at approx. 33.7 TWh. The decline of the supply volume was reported, first and foremost, in the Strategic Customer Segment, which was primarily due to COVID-19.

The below table presents information on the volume of electricity supplied by TAURON Capital Group’s subsidiaries conducting operations related to the retail electricity supply, as well as the number of customers, broken down into individual customer segments, in 2020.

Volume of retail electricity supplied and the number of customers in 2020

Lp. Customer type Electricity volume supplied (TWh) Number of customers (‘000)
1. Strategic customers 4.4 1
2. Business customers 12.7 200
3. Mass customers, including: 12.0 5,389
      households 9.9 5,011
4. Supply to TAURON Dystrybucja to cover the balancing differences 3.0 0.001
5. Other (exports, in-house needs) 0.3
Supply Segment 32.4 5,590

In the financial years ended on December 31, 2020, and December 31, 2019, TAURON Capital Group did not identify single customers from outside TAURON Capital Group that would generate revenues from the sales of coal, generated electricity and heat, electricity distribution services, as well as wholesale and retail electricity and gas, accordingly, exceeding the level of 10% of the total sales revenues of TAURON Capital Group.