Utility Week

UTILITY WEEK | 30TH NOVEMBER - 6TH DECEMBER 2018 | 9 Policy & Regulation This, he argues, would minimise costs and spread them across all consumers over a number of years: "The principle is that any large-scale scheme is part of a UK ambition and ultimately a global ambition to meet cli- mate change obligations and it's not appro- priate to effectively penalise the people in the first area to convert just because of where they live." On this basis, the financial impact of the first phase of the project would peak in 2034 when it would add 7 per cent to the typical annual energy bill. He says it is up to the government whether to socialise the costs further by funding all or part of the conversion through taxation. One of the main aims of the H21 pro- gramme is to provide ministers with the evi- dence necessary to make a policy decision on hydrogen conversion in the early 2020s. "The only reason we can't actually make a policy decision now – not withstanding political will and short-term politics – is because we're still in the process of gather- ing the remaining pieces of safety evidence to confirm that 100 per cent hydrogen rep- resents a comparable risk to natural gas or town gas," Sadler explains. He says the next stage of the programme will be to undertake the front-end engineer- ing and design for the conversion over a period of three to four years starting in 2019. This should enable a final investment deci- sion to be made by 2023. Live trials are also likely to be conducted in "very small areas" over the winter of 2022/23 to "really underpin the economics and just give a bit more confidence in the end-to-end system. Sadler is keen to tout the strong local backing for the scheme, noting that numer- ous local authorities have written letters of support: "There is a collective will from the North for this to happen". He says the project would not only deliver benefits in terms of climate change and air pollution, but also "create tens of thousands of jobs for decade aer decade" in one of the UK's least economically productive areas. For ministers looking to address the eco- nomic imbalance between the north and south, this could present an attractive offer. Summary of key performance data for large-scale hydrogen technologies Auto thermal Steam methane Electrolysis Coal reforming reforming gasification Energy efficiency (%) 79.9 79.5 70.9 5.3 CO2 footprint 13.1 20.5 0 60.3 Specific cost (£/MW) 631 721 1,160 1,691 Area (ha/GW) 10-15 25-30 30-40 40-70 Market view Anger management Water utilities must get their conflict resolution strategies in order ahead of PR19, says Simon Colvin. T he water industry's next price review is almost here. In Janu- ary, Ofwat will deliver its first assessment of water company busi- ness plans for 2020-25 and kick-off 12 months of increased scrutiny for the sector. At the end of the year the reg- ulator will set the price, service and incentive package against which the performance of water utilities will be measured against over the next five years. Improving the sector's customer engagement is one of the core aims of PR19, and water companies need to review the measures they have in place to handle aggressive, vexatious customers to ensure they're fit for purpose. Aggressive customer interaction can result in significant commercial damage if it isn't handled properly. From a legal perspective, the pres- sure points are twofold. First, water utilities can find themselves liable for costly claims from frontline employ- ees if there isn't a conflict resolution mechanism in place to protect them from physical or mental harm. And second, if a poorly-handled customer complaint is escalated to a public forum, be it in the media or in the form of a legal challenge, it can irreparably damage a water provider's reputa- tion. Customer satisfaction is a metric Ofwat is keen to make a more promi- nent measure of success from 2020, especially given the regulator's sup- port for "social contracts", which rec- ognise customers want to understand how water companies perform in areas such as corporate social responsibil- ity and the environment and executive remuneration, in addition to service delivery. As a part of PR19, Ofwat is piloting a new financial incentive programme, WaterworCX. Though what it will look like in practice is unclear, the inten- tion is to bring the customer service credentials of monopoly water compa- nies in line with competitive markets. Under the proposed framework, social media complaints would be measured for the first time, and customers who have never dealt with their water com- pany directly would be surveyed on the second-hand perception they have of their provider's service. If Water- worCX passes its pilot phase, a poor reputation created by the fallout of a badly-handled customer complaint could make the difference between financial penalty and reward. Even so, when it comes to difficult customer interactions, the primary focus should always be the health and wellbeing of staff. Conflicts usually occur when a customer's life has been seriously affected, such as by a burst water main causing flooding. The onus is on water providers to make it clear they do not tolerate customers acting inappropriately in these situations and to implement resolution strategies that equip employees to act if they do, ensuring the necessary support can be draed in if required. A good strategy will deliver against this and the chal- lenges presented by PR19 simultane- ously, protecting staff, addressing customer grievances effectively and safeguarding the business from legal challenges and reputational damage. The most important element of a conflict resolution strategy is a clear process that identifies and expedites challenging customer grievances. Water companies must separate the innocuous, day-to-day complaints that their frontline staff are tasked with handling from the grievances that pose a legitimate personal, legal or reputational threat. Ultimately, the sooner a case that carries risk is escalated to those equipped to handle it, the sooner its fallout can be managed, and its potential damage mitigated. Simon Colvin, partner and head of utilities, Weightmans LLP

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