Utility Week

6 | 25TH -31ST JANUARY 2019 | UTILITY WEEK A UtilityWeek c ampaign Industry feedback Striking a New Deal: challenges and opportunities Last week's launch of our New Deal for Utilities campaign has sparked responses from those with expertise across the industry, including the water sector, networks, energy retail and regulation. This week we hear from four key thought leaders about the challenges they face in their respective sectors, what a potential social contract between utility companies and the public might look like, and what is needed to help make a 'New Deal' happen. W e live in changing and challenging times. As providers of essential services with a vital role in the lives of consumers and com- munities, utilities invest for the long term in their assets and infrastructure. As I said at the Utility Week Congress last October, the need for sustained, long-term invest- ment has never been greater. And the drivers for investment have become more acute. Customer and societal expectations are, rightly, rising. Continuous improvement in ser- vices is crucial and utilities must evolve and innovate to satisfy customers' needs and wants. Maintaining the status quo is not an option. Climate change presents a clear, present and growing dan- ger, as weather patterns become Water Chris Loughlin Chief executive, Pennon Group plc (owner of South West Water) ney ahead it can be salutary to recognise the road travelled. England's privatised water industry has spent more than £150 billion over the past 30 years. This has helped to trans- form services, improve resilience and enhance the environment in ways that never happened before, when the industry strug- gled to compete for scarce public funding from perennial govern- ment priorities such as the NHS, education and defence. Last year, despite the coldest spell for a generation followed by the hottest summer in England on record, there were no water restrictions, whereas in the past hosepipe bans were a regular occurrence. To sustain and build on progress made, the industry plans to invest a further £50 billion over the next price review period, from 2020 to 2025. Accessing cheap finance to fund essential investment remains mission critical. In my own company Pennon, owner of South West Water and waste management firm Viridor, we successfully operate two business models – one regu- lated, the other not – and have been able to secure some of the lowest cost of financing avail- able, much of it via sustainable financing sources. This helps to drive efficiency, reduce bills and, guided by our vision and values, ensure we do the right thing – for our customers, communities, the environment and investors. The water industry's societal responsibilities are under the spotlight and the beam is getting brighter. To shine rather than shrink in the spotlight, we need to recognise that the context in which we operate has changed, and respond accordingly. Despite high levels of public trust and customer satisfaction (according to ComRes research, trust is significantly higher for water companies than for gov- ernment or councils), the public mood has shied. Customers want more than simply receiv- ing a service at a fair price. They want more control and involve- ment, and to see benefits being shared fairly. How results are delivered is as important as what is delivered. Sustained investment is key to unlocking future competition more extreme and volatile. The National Infrastructure Com- mission predicts a drought risk every four years and a £40 bil- lion cost to the economy over the next 30 years if water supplies are not secured. The Met Office predicts much hotter summers, reduced summer rainfall and increased winter precipitation over the next 60 years or so. An increasing population, not just globally but here in the UK, will put extra pressure on existing infrastructure. In my own lifetime there has been a threefold increase in the world population and by 2050 the planet will host 2.2 billion more people. The UK is projected to have 3.6 million more inhabit- ants by 2026. These statistics concentrate the mind and cannot be ignored. When planning for the jour- " JOIN THE DEBATE Follow our campaign online at: www. utilityweek.co.uk on our Twitter @Utility Week and on LinkedIn, #NewDealForUtilities. To share your thoughts or for more details contact acting editor: suzanneheneghan@fav-house.com

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