Utility Week

UTILITY WEEK | 15TH - 21ST MARCH 2019 | 11 A sense of ownership As our policy correspondent David Black- man pointed out in his campaign report on nationalisation, you would have to go back to the days of "Cedric the Pig" in the mid- 1990s to recall a time when utilities were last so • rmly in the public • ring line. Today the issues are high energy prices and excessive pro• ts in the water industry. And it is this focus on the sector that has seen Labour pledge to bring utilities back into public ownership if elected. Labour's vision includes turning water companies into new Regional Water Authori- ties (RWAs) with a safeguard to prevent reprivatisation; Ofwat being scrapped and regulation transferred to a new National Water Agency; and elected representatives of the region's councils, the industry's three biggest trade unions, and envi- ronmental and consumer rep- resentatives on RWA boards. Networks would also be in Labour's sights despite priva- tisation delivering high invest- ment and increased reliability. Big questions remain over cost, although Labour has threat- ened to e‹ ectively scalp inves- tors, which would itself have long-term consequences for the cost of capital. The art of the deal Striking a fair bargain stands more chance if there is acceptance, humility even, that established positions might need to change. This came through loud and clear in the words of four key industry • gures who joined the debate in week two: Pennon chief execu- tive Chris Loughlin; SSEN managing director Colin Nicol; Maxine Frerk, director of Grid Edge Policy; and Eon UK's chief executive Michael Lewis. Our commentators accepted that improving public opinion wouldn't be easy as the jury remained out across the piece on value for money, trust and renation- alisation – albeit some utilities fare better on reputation with customers than others. So what has to change, we asked? And what support do utility executives need to make genuine progress on forging a social contract with customers? Taking the temperature Against this shiš ing backdrop, and increasingly con› icting media and politi- cal rhetoric about low levels of public trust, Utility Week launched our New Deal campaign in January with an exclusive survey commissioned only the month before from Harris Interactive to establish the real state we are in. Getting public opinion on board would be key to the success of any social contract, so gauging sentiment about water and energy companies – includ- ing whether they should be renationalised and if so why – was vital. There were some heartening • ndings for energy and water bosses, includ- ing that, contrary to what many may believe, more than half of those surveyed were not greatly dissatis• ed with their utility companies – satisfaction being highest for water suppliers at 66 per cent. Nor do they greatly mistrust suppli- ers, suggesting that the service they currently receive is reasonably good. Nevertheless there were warning signs too for those providing the UK's life- line water services, electricity and gas supplies, and electricity networks, as the • gures showed almost half of customers are undecided over satisfaction. Other key ndings of the survey: • rising prices are the number one factor undermining trust; • around a third of respondents felt utilities should be nationalised, although almost a quarter were undecided; • 14 per cent thought utility companies should be owned and managed by private companies – the same num- ber as those who thought it was a job for local government; • 34 per cent would be more likely to vote Labour based on its policy of nationalising utilities, while over half said it would make no di• erence; • the main bene• ts of nationalising utilities were perceived to be cheaper and better services; • the major concern about nationalisa- tion was "it costs too much, and we can't a• ord it", (the answer selected by a third of consumers); • generally, consumers lack an informed view on the pros and cons of renationalisation; • despite the push towards renewa- bles, over half of those polled were not prepared to pay more for electric- ity to speed up the transition; • customers and wider consumers were still unclear about exactly what makes up their • nal bills. expects – more say about lifeline services, the behaviour of monopolies, sustainability and the sharing of rewards – a message ech- oed throughout the business world. "Evolve" and "innovate" were the watch- words for Chris Loughlin of Pennon, who sees "how" – as well as "what" – services are delivered as being equally important. Colin Nicol of SSEN said utilities as cus- todians of critical national infrastructure must do more to show they "respect their privilege" and o‹ er clear evidence of how responsible private investment can cut costs and raise performance. An overwhelming focus on rates of return misses some of the wider mood music, believed Maxine Frerk of Grid Edge Policy. And Eon UK's Michael Lewis said the industry "could not ignore the clamour for change", including challenges around energy e¢ cient housing stock and a smarter energy system. This would need widespread support, he said, especially from customers whose backing was critical. UtilityWeek Interview: Gail Scholes, Robin Hood Energy p26 2019 COULD BE A BETTER YEAR FOR WATER CUSTOMERS THAN SHAREHOLDERS p11 1ST - 7TH FEBRUARY 2019 THE BUSINESS OF UTILITIES MANAGING PENSIONS RISK NEEDS TO BE MORE OF A PRIORITY FOR UTILITIES p14 Our four industry leaders accepted that the old days of the untouchable utility had long gone. The public deserves – and "There will be a number of challenges along the way, all of which we will need to fi nd a way around, including technology, politics, regulation, competition and fi nance." Michael Lewis, chief executive, Eon UK

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