Ofwat wants the water companies to include a set of performance commitments relating specifically to resilience for the next 10 to 15 years, as well as a new asset health performance commitment, in their AMP7 Business Plans.
Speaking at Utility Week in Birmingham, John Russell, Senior Director of Strategy and Planning at Ofwat said the water industry regulator is currently looking at asset health and has completed a report looking at the asset health of the sector which will tell more about what operational resilience might be needed in the future. Ofwat is aiming to publish the report in the near future.
Russell said that although the sector is working together to develop resilience metrics, Ofwat expects “things to go further and wider than before.”
“For example we want to see evidence that companies have considered cross-boundary resilience solutions such as water transfers and catchment area management rather than just answers in their own patch” he added. “We want to see more integrated thinking about the management of water resources and wastewater together for PR19.”
Customers are seen by Ofwat as key to PR19 – the regulator expects companies to raise the bar with active customer participation rather than passive engagement.
Russell continued:
“The difference between the water sector and other utilities is that customers sit in the centre of the value chain. By that I mean they not only drive the demand for water, they are an integral part of what goes into our system too. They are not passive users of the vital services that water companies provide…Encouraging customers to recognise themselves as active users in the chain will help the sector to understand what customers want, and to act on their wishes.”
“It might take a generation or more but we need to start getting customers used to the idea that water is a valuable and finite resource.”
This would require a much more intensive and long-term engagement with customers, rather than periodic, sporadic campaigns during periods of drought.
Ofwat considers benchmarking customer service against other sectors
Ofwat’s Senior Director of Strategy and Planning said the regulator is also developing a replacement for the SIM which looks at the full experience of a wider range of customers and is considering benchmarking customer service against other sectors.
John Russell continued:
“It’s clear the water sector faces a customer service challenge in that the benchmarks for good customer service won’t necessarily be set in the water sector.”
“For instance, in January, the Institute of Customer Service published its yearly UK Customer Satisfaction Index. The top three companies in terms of customer satisfaction this year are Amazon, ASOS and John Lewis. There were no water companies in the top 50.”
Russell told delegates that customers don’t compare the service they receive from their water company with the services provided by other water companies. Instead, they compare the services they received with companies like Amazon, ASOS and John Lewis.
Commenting on innovation, Russell said that while Ofwat thought there had been radical change with innovation and technology-led advances in service in other competitive sectors, until now water had been left behind.
“In the energy sector products such as Hive enable customers to control their lights and turn on their heating remotely. Boiler IQ offered by British Gas can automatically monitor your boiler for faults.”
“There’s nothing like that yet in water, but more efficient water appliances, metering and SMART technology in homes is deepening customer control over the amount of water they use, which in turn can further resilience and bring the bills down.”
Russell said Ofwat is also seeing companies taking steps to make better use of data in order to their services and better use of technology in order to communicate with customers. Next month Ofwat will publish a report on how it expects to see companies using customer data.
He concluded by setting out the following four key themes in Ofwat’s upcoming price review in 2019:
- A focus on resilience in the round for the long term,
- A real push forward regarding on customer service. We want the sector to look outside itself and compete with other sectors regarding experience for customers.
- Finding new and innovative ways to deliver more for less
- Affordable bills over the long term for all, including those who are to pay or are in vulnerable situations.
Each of the themes would offer long term benefits for customers and Ofwat wants the sector look ahead, to 2024, 2029, 2034 and beyond.
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