Utility Week

Operations & Assets 22 | 14TH - 20TH DECEMBER 2018 | UTILITY WEEK Market view A s with any regulated industry, there is ongoing pressure on water companies to deliver good service and value for money, and it seems the sector is responding. All 17 regional companies submitted their five-year (2020-25) business plans to Ofwat at the beginning of September demonstrating how they will take positive action to improve performance, reduce bills, invest in networks and become more engaged with and respon- sive to customers. This is an oppor- tunity to build cus- tomer trust. Some companies have pledged to invest record amounts in infrastructure, while many have commit- ted to keep average bills flat or even reduce them. Despite the nuances, looking across the PR19 plans submitted, there is a clear trend among water companies to prioritise a "customer first" model that places house- holds at the heart of operations. In particu- lar, there are four themes that have shaped the plans: • Customer service – raising standards and staying responsive to customer needs; • Affordability – keeping bills as low as possible; • Long-term resilience – investing in the upkeep and improvement of infrastructure; • Innovation – finding new ways to improve services. Customer service Customer service is critically important. Water may be an industry where the degree and frequency of interaction with custom- ers is relatively low, but this makes it more important for providers to get it right when interaction does occur. Water is also an essential service without which homes and businesses cannot function, so when a customer gets in touch there is a duty on companies to be quick and effective in their response. Putting customers at the heart of ser- vice delivery, increasing levels of commu- nication and engagement, and responding rapidly in the event of a service issue have all become critical benchmarks for water companies to meet. Across industries, cus- tomer expectations around service and responsiveness have risen, meaning high- quality interactions have never been more important. Companies must also find new ways to build customer relationships and engage- ment. Recently, for example, Severn Trent announced the launch of a video calling service that allows customers to report leaks using their smartphones and interact directly with a virtual field team of engineers by video. This is a good example of a water company embracing innovation and making it easier for customers to inter- act with it. Affordability Affordability will always be a key issue. Pro- viding value for money is part of any water company's licence to operate. At a time when many households still feel squeezed, this becomes even more significant. The cost of utility bills is also a key con- cern in connection with vulnerable custom- ers. Across industries, regulators are pushing to ensure companies address vulnerability as a core consideration. Moreover, vulnerability is not only a financial matter, but perme- ates a host of socio-economic and personal circumstances – for example, age, ill-health and life events such as bereavement or divorce. With this in mind, water providers need properly embedded systems and policies in place to identify vulnerable customers in order to manage and support them appro- priately. A clear policy should be developed and published, led by a senior member of the team. This policy needs to be dissemi- nated and discussed across multiple areas of the business, from customer service teams to collections, complaints and other customer- facing areas, ensuring there is a unified approach. Long-term resilience Long-term resilience is a critical issue that has been thrown into focus recently through the increasing number of extreme weather events in the UK. For example, in February/ March the "Beast from the East" hit the country and led to a freeze-thaw that drove a spike in service issues. This was followed just a few months later by one of the hottest summers seen for many years. The unpre- dictability of the weather will continue to test water companies and never before has the need to invest in networks, upgrade and maintain infrastructure been of greater importance. It is when there are disruptions to service that the responsive customer-first model really proves its value. The Consumer Council for Water (CCWater) found that dur- ing the freeze-thaw, companies that used all their communication channels and showed a presence on the ground received lower levels of complaints. Innovation Finally, innovation is needed to ensure the industry is moving forwards and pushing to find new ways to address ongoing challenges such as leakage and maintenance. However, innovation of a different kind is evident in South West Water's announcement of a £20 million share scheme giving households the opportunity to take up a free dividend- paying share. This gives them a direct stake in the business and thereby potentially increases their sense of engagement. All in all, water companies' PR19 plans appear to demonstrate that they are serious about building customer connections. With Ofwat due to publish its initial assessment of the business plans in January, it's not yet clear if the regulator feels they have done enough. As we enter the winter period, it will be critical for providers to demonstrate how exactly they are becoming more respon- sive and customer-centric. The old saying "actions speak louder than words" has never been more true. Alex Prentice, sector lead, Huntswood 'Customer first' operations In their business plans for 2020-25, water companies have favoured a 'customer first' model that places households at the heart of operations. Alex Prentice says four themes have shaped their plans. Water companies' PR19 plans appear to demonstrate that they are serious about building customer connections

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