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"Moving from a passive to an ac ve network", "Moving from the tradi onal last-century model of a centralised push u lity to a modern push/pull customer-centric business" and "improved data quality, agile working, and fl exibility in the workforce" were three responses we received from those working in networks. "Energy as a service rather than selling KWh" was one of the many comments that came from genera on and retail, with "moving from a centralised genera on and single supply to more fl uid and decentralised transac on" coming through as another key theme. For water, meanwhile, "delivering customer expecta ons in a cost-eff ec ve and effi cient manner" was a comment that characterised many views from the sector, where customer service came through as a key tenet of transi on. The survey found that while many businesses believe transi on is underway, there is not a sense of complete upheaval across the industry. Marked between 1 and 10, the average state of transi on in u li es was rated 7.1, while the average for individual businesses was 6.7. Energy genera on & retail was the only category where respondents scored the state of transi on in their businesses (7.6) as being higher than across energy genera on and retail as a whole (7.3). Looking ahead to 2030, the UWL survey also inves gated to what extent businesses are expec ng to transi on over the next decade. The current average state of transi on of 6.7 is expected to rise to 8.0 by 2030. Overall, businesses an cipate their state of transi on will be more aligned with the industry as a whole by 2030. The survey found that, on average, businesses expect the impact of industry trends driving transi on to be 23 per cent higher in fi ve years' me. Key trends considered to be the major drivers for transi on include compe ve pressures (6.4 now vs. 7.0 in fi ve years), changing customer expecta ons or habits (6.1 vs. 7.4), changing policy and regulatory framework (6.1 vs. 7.2), sustainability considera ons (5.7 vs. 7.1), big data (5.6 vs. 7.1), smart meters (4.8 vs. 6.0), electric vehicles (4.2 vs. 6.3) and M&A ac vity (4.1 vs. 4.9). Other trends that are likely to drive transi on include climate change and step changes in sustainability, as well as changes in Government, changes in workforce and convergence of services. Headline trends rela ng to new technologies are likely to include the digitalisa on of energy, the Internet of Things and augmented or virtual reality. New technologies an cipated to facilitate transi on across all u li es include data analy cs, smart grid technology, water metering, water reuse, blockchain, robo cs and low carbon heat. Across all of the technologies surveyed, the average pping point for mass take-up is expected to be 2027. THE SHAPE OF WATER With Ofwat preparing to publish its ini al assessment of business plans as part of the 2019 price review, the issue of transi on and planning for future challenges is understandably high on the water agenda. But what does this period of change and its resul ng uncertainty mean for water companies in real terms? The publica on of Ofwat's methodology for PR19 centred on four key themes that represent a step change for water companies and how they deliver for their customers, now and in the future. The regulator outlined the four pillars of the methodology as great customer service, long-term resilience, aff ordability and innova on. These core tenets are o en at the heart of any discussion around the concept of transi on in the sector. But transi on in theory is very diff erent to applying the themes in real terms to everyday business decisions that aff ect customers across the country. The UWL survey took an in-depth look at the state of transi on across the sector and some of the major barriers that risk impeding progress for water companies. Currently, the sector is seen to be in a greater state of transi on than individual businesses. On average, respondents scored their business at 7.0 and the wider industry as 7.4. According to one respondent, transi on in the water sector means "delivering customer expecta ons in a cost-eff ec ve and effi cient manner". Similarly to energy u li es, the customer must be both catered for and an ac ve par cipant in the water sector's transi on to a smarter, more resilient and more sustainable future. But Ian Barker, managing director at consultancy Water Policy Interna onal, raises concerns that the sector is not yet doing enough to engage with its customers. "Adop ng new technologies, smart metering in par cular, will be a major part of this move to be er engagement with customers," he says. The UWL survey found that water metering is expected to reach its pping point for mass take-up in 2026, while water reuse technologies will be a li le slower un l 2029. "It's important that there is a focus on consumers taking more control of their water usage," Barker says. "However, if customers aren't delivering in the way that a company has forecast then they're in trouble. It's crucial that customers know that they are part of the solu on. At the moment, that o en isn't the case." Overall, Barker admits it's a "mixed picture" across the water sector. The approach to environmental issues exemplifi es this, with some companies excelling, while others really struggle to meet standards. Barker says: "Wessex Water, for example, is doing quite a good job across the board on environmental issues, but that's not the case across the sector. "There have been recent examples of companies being fi ned for pollu ng the environment – this highlights the systema c lack of a en on that some fi rms are giving to environmental issues. "Technology will play a role in monitoring areas such as sewerage and wastewater. But ul mately companies must be more proac ve in dealing with issues long before they become a serious problem." A key factor will be developing the right training and skills to ensure that water businesses have the right people across its teams who place environmental concerns as a cornerstone for all decision-making. Mark Smith, CEO at consultancy WRc, also believes fi rms must place more importance on dealing with the skills gap to drive innova on throughout businesses. "U li es must address the real skills gap with genuine interac on with suppliers and universi es," he says. "Young people will be a racted to a great technical industry, not a red u lity that merely manages assets and is self- congratulatory." But even if companies adequately address the skills gap, Smith believes that a major barrier for innova on lies with the regulator. "I am not confi dent that the current regulatory models across water truly encourage suffi cient innova on to tackle future infrastructure challenges," he says. "Price and compliance at minimum cost with old reliable suppliers is unfortunately s ll the name of the game. C-MeX [Ofwat's customer measure of experience] is interes ng but we're s ll awai ng details to see what this will really mean for the sector." Barker agrees that current regulatory models can be restric ve but believes there is also room for companies to collaborate more as a means of driving innova on and best prac ce. "Ofwat o en talks about wan ng all companies to be in the upper quar le, which is nonsense, but there is defi nitely scope for companies to learn more from each other," he says. "I work interna onally so I know there's a lot that can also be learned from other countries. "Unfortunately, there's an arrogance in the UK that we have nothing to learn from others. That's just not the case." wwtonline.co.uk | FEBRUARY 2019 WET NEWS 19 I N A S S O C I A T I O N W I T H Unfortunately, there's an arrogance in the UK that we have nothing to learn from others. That's just not the case II ASK THE INDUSTRY On a scale of 1-10, to what extent do you think your industry is in a state of transi on? "Some businesses are clearly transi oning more than others. The industry itself is probably around 5 or 6. There are some that are resistant to new business models, there are others who are grabbing it with both hands. The key to success will be keeping that process in your own hands and taking the opportunity to lead the transi on rather than changes being forced onto you." David Ellio , group director, strategy and new markets, Wessex Water "I would es mate the industry to be in transi on scale 10." Mark Smith, CEO, WRc "I would score this at a 6-7, especially on core issues such as customer engagement, resilience and the environment. But it really is a mixed picture across the industry." Ian Barker, managing director, Water Policy Interna onal

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