Utility Week

12 | 15TH - 21ST MARCH 2019 | UTILITY WEEK A UtilityWeek c ampaign High pay: are you worth it? Wading into the thorny issue of executive pay, part six of our campaign asked if the utility captains of industry were worth their pay grade. A year earlier when Michael Gove berated water executives for rewarding themselves "handsomely", his remarks, while apparently designed as a wake-up call – inevitably chimed with the populist groundswell of dismay over economic dis- parity in the UK, as well as Labour's deter- mination to make political capital from it. But how, we asked, do you measure the market worth of those in water and energy's top jobs? Are salaries justiƒ ed and what is a fair rate? And should we not strive to attract the very best to run our life- line services. Labour had a crack at it by revealing it would see the earnings of chief executives of government-owned companies set at no more than 20 times that of its lowest-paid worker, in a bid to ensure "fairness within our economy". Based on even the average wage, rather than the lowest, this means a chief execu- tive could be paid no more than £552,000, 20 times the UK average of £27,600. Other highly lucrative parts of pay packages, such as share options and personal bonuses, could also be scrapped, with any rewards distributed among all those within the company. But while half a million pounds may sound a small fortune to lower income earners, would such a sum attract the high achievers needed to lead our vital water and energy ƒ rms? While not easy to get the industry's chief executives to expand on pay and packages, Northumbrian Water's chief executive, Heidi Mottram, was happy to ƒ eld the question. Mottram, who earned £667,000 in 2017/18, said: "It's important that we articulate and describe the contri- bution that we make and the service that's provided to our customers. "Generally, when the debate goes on around executive pay, I think the public get frustrated if the CEO is not successful or delivering but still appears to be well remunerated. "But these calls will cause us to re˜ ect again about a greater level of transparency and a link to what we're delivering. Sharing the rewards Our week ƒ ve report explored how water and energy companies needed to go beyond delivering a "largely invisible" public and o™ en emergency service, to shouting more about what they do. They also need to reveal more about how they were doing or were planning to share rewards with the public. Utilities were, we heard, already getting better at ƒ nding innovative ways of delivering more for less. And touchpoints with the public were building – for example a spokesperson for Energy UK said energy companies now provided "a broad range of support and beneƒ ts to their customers and communities", from investment and apprenticeships to schools' programmes, community funds, charity partnerships and support for customers in vulnerable circumstances. However, Tony Smith, chief executive of the Consumer Council for Water, said more companies should ensure customers get some of the rewards from outper- formance, and that social tariœ s "relied too heavily" on other customers' willing- ness to fund them. "That goodwill is in danger of running dry," he warned. Collaborative projects such as the recently launched Corporate Forum on Sus- tainable Finance initiative to encourage businesses and policymakers to view sustainable ƒ nance as critical were cited as strong responses. As was Anglian Water's record tackling plastic waste in the East, driving down leakage, consult- ing with customers and its second green bond to generate sustainable ƒ nance. However, Luke Pollard, Labour shadow environment minister added his voice to the campaign debate and criticised water company dividends and lack of suf- ƒ cient action over resilience, climate change and consumption. In terms of networks, main- taining the country's energy infrastructure during extreme weather can be tough, and it is important companies are visible and communicate with customers when there are risks of interrup- tions, said ENA's chief executive David Smith. Trust us, we're utilities Public image is di¢ cult to change, Fridrik Larsen, chief executive of consultancy Larsen Energy Branding, told our campaign. A positive image "must be earned", and building a strong brand is vital. In a split second, people judge a brand by everything they know about it. The best way of creating a positive public image, he suggested, was to develop a brand that "communicated eœ ectively and built lasting relationships with the public". It was a point supported by Ben Quigley of brand and creative agency D.œ erent, who said while price was an important factor for customers choosing a utility provider, putting the corporate focus on cost disregards the power of a strong brand. Greg Jackson, chief executive of Octopus Energy, agreed, adding: "I o™ en hear people from legacy utility companies bemoaning their public percep- tion. But the reality is that people's experience of companies shapes their perception. "Earning trust from the public, press and poli- cymakers is the only way we as businesses can jus- tify a leading role in shaping the new market. Failure to do so will lead to Blockbuster-like failures, but those who can emerge as consumer champions and value-driven innovators can be the Net˜ ixes of this new world." UtilityWeek Analysis: Ofwat's crushing verdict on PR19 plans p12 WHAT WILL FILL THE GAP LEFT BY CANCELLED NUCLEAR PLANS? p20 8TH - 14TH FEBRUARY 2019 THE BUSINESS OF UTILITIES THE INNER WORKINGS OF OFWAT'S SERVICE INCENTIVE MECHANISM SCORES p26 Image problems 'We must ensure the industry is run in the interests of the many not the few.' Luke Pollard, Labour shadow environment minister 'We must ensure the industry is run in the interests of the many not

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