Utility Week

14 | 31ST AUGUST - 6TH SEPTEMBER 2018 | UTILITY WEEK Policy & Regulation Market view T he water sector hasn't had it easy this year. As if one extreme weather event wasn't engough (the freeze-thaw thanks to The Beast from the East), in recent weeks the UK has encountered the longest heatwave since the 1940s – depending on how you measure these things – leaving many areas with the prospect of hosepipe bans. In this context, building resilience has never been more important and water companies must ensure they have the correct processes and capabilities in place. Operational issues that affect the service received by households and businesses bring with them a host of challenges that water companies must tackle head-on so they can focus on being more proactive with customers. Responsive and reliable communication with customers is crucial and there is more that can be done to ensure customers are at the heart of all activity. A role for regulation Ofwat has a crucial role to play in using regulation as a lever to encourage improved performance for customers. As the next price review, PR19, approaches, improvements are being sought on customer service, long- term resilience, affordability and innovation, alongside the ongoing push to meet ambitious leakage targets. This is a window of opportunity water companies should embrace to ensure all business activities are customer-centric and compliant. In addition, the regulator has shown a willingness to use both incentives and penalties, when necessary. For example, Ofwat's service incentive mechanism (SIM) seeks to encourage water companies to provide a better service to customers – something it claims to be achieving. Conversely, in early June, Ofwat issued its first significant penalty package for a failure to meet leakage commitments promised to customers. While many water companies are stepping up their performance to meet targets set by Ofwat, others clearly have some way to go. With more ambitious aims for PR19, customer service is top of the agenda to meet the challenges and deliver value for money. Communication is key As a public service, trust in the water sector is of paramount importance. There are benefits to geographical monopolies in the water sector because companies can build deep and long-term relationships with customers. Companies have a strong understanding of their customers and their needs, which is particularly helpful when seeking to address vulnerability and affordability issues. Moreover, while the pinch points created by extreme weather exacerbate frustration felt by customers, it is ongoing engagement that forms the bedrock of a strong relationship. Findings from the Consumer Council for Water (CCWater) in its report into the freeze-thaw showed that the companies that used all their communication channels and had staff on the ground were the ones that fared best in feedback from customers. Water companies are service providers first and foremost, and there is good practice in evidence, with some suppliers Keep communications open Recent weather – both hot and freezing – has pushed water companies to their limits, but Alex Prentice says improving performance for customers will be crucial going forwards. demonstrating the value of robust business planning in preparation for unforeseen challenges. For others, there are lessons to be learnt and this may be the opportune time to consider input from external customer engagement experts. From Huntswood's experience, it is high-quality and proactive communication that anticipates customer needs, coupled with highly responsive query handling that works to effectively and quickly rebuild trust and reduce overall complaints levels. Improving the customer experience There is no silver bullet in the battle to win over customers' hearts and minds. However, strong communication serves customers by improving understanding, protects the reputation of water companies and their licence to operate, and provides a competitive edge and lower costs for dealing with fewer complaints. Expertise and experience are key to providing excellent ongoing customer service and the capacity to deal with sudden spikes in complaints. Water companies should focus on robust business planning, while also seeking out strategic external partnerships that help tackle customer challenges and enable water companies to focus on their core activities. While many water companies are improving on both these fronts, there is still much to be done. Customers have high expectations when it comes to their water supply, and water companies should strive to view their business through the eyes of customers. They must also seek out areas of improvement – from senior management to the culture of the business, from communication design and the whole customer journey to the skills and knowledge of frontline staff. With extreme weather events likely to become more frequent, ongoing pressure from regulators and potential political threats, now is the time for push for the best customer service possible. Alex Prentice, sector lead, utilities, Huntswood The Beast from the East found some water companies wanting

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