Utility Week

14 | 15TH - 21ST MARCH 2019 | UTILITY WEEK A UtilityWeek c ampaign What we heard was widespread acceptance of the importance of: l sharing rewards, as part of a concerted effort to build stronger trust and improved communications with the public and push further on diversity. l greater corporate transparency, including about performance-related executive pay. l delivering on resilience, such as leakage and service levels. l more protection for customers, including those in vulnerable situations. l progress on environmental and sustainability targets. l more cross-utility collaboration. In return for meeting such a charter, utilities would need to see: l fit for purpose market mechanisms. l considered, clear and future- proof regulatory reform offering sufficient freedom for monopoly businesses to adapt in their own way and to continue to attract investment. l clarity on government policy direction and an honest debate over planning for long-term challenges. l a recognition of the significant operational challenges facing utilities (such as extreme weather and climate change). l support for utilities facing huge technological transformation, such as access to data on EV charging, improved broadband for all in terms of smarter home energy. Potential pledges A t the outset of our two-month New Deal for Utilities campaign we were keen to not only spark more debate about the need for a firm social contract between utilities and the public but to help look at tangible ways industry could move forward on this important journey. Following our research, including can- vassing views from a wide range of figures and players from throughout the sector and from listening to the public, we saw several provisional themes emerge that could poten- tially form pledges for a new social charter, or at least a direction of travel towards one. There was universal acceptance from eve- ryone we spoke to that something needs to change – from tackling the legitimacy deficit and addressing vulnerability, to empowering utilities more as they navigate massive tech- nological challenges and the rising regula- tory agenda of fairness. But the challenge, also agreed by all those we spoke to, is ensuring that any pledges are not overtly onerous on industry but have a robust authenticity with the public and poli- cymakers. Only by achieving this can they be credible and effect genuine change. Phase two As part of the next stage in the campaign, Utility Week aims to facilitate a high-level roundtable discussion with industry players and parliamentarians about the potential social contract pledges we have heard from those within the sector, along with where to go from here. We also aim to submit our findings to the National Infrastructure Commission's regulatory review, and the government's expected Future of Energy White Paper call for evidence later this year. Campaign support Our suggested social contract themes (see leˆ) have resonated strongly with many we have spoken to, including co-author of December's key energy industry report on "ReShaping Regulation", Laura Sandys. With the arrival into the energy system of so many factors unanticipated five years ago, says the report, regulatory architecture must change, and energy policy must "wean itself away" from trying to design a "silver bullet" solution. As the sector shiˆs from "a linear supply- driven system to a diverse, distributed and dynamic market", it says, the change from a "command and control" system design "must resist embedding any specific ele- ment of the current regime that is not fit for purpose". "Instead, it must promote the significant and productive opportunities from the new and rapidly changing shape of the sector. A different set of principles and approaches to regulate the dynamic changes is required." Speaking this week, Sandys, who has also championed an Energy Data Taskforce, endorsed our New Deal for Utilities initia- tive as a valuable exercise in assisting the debate: "I think it's been a very forward- looking campaign. And quite a brave thing – INDUSTRY REACTION "Utility Week's New Deal for Utilities cam- paign raised some interesting and crucial questions about the role of utilities in society and how best to meet rising customer expec- tations." Chris Loughlin, chief executive , Pennon Group For South West Water's New Deal business plan, see interview p6-8 "The campaign has been important, both in the way it has shone a light on the public perception issues we face as an industry and, more importantly, in helping share views on how we can best address these challenges, collectively and with purpose. "Given our position as providers of an essential public need, this will be a debate for the long term. It's therefore essential we keep up momentum – ensuring our words are matched by clear actions that recognise our privileged position and drive continued delivery in the public interest." Colin Nicol, managing director, Scottish and Southern Electricity Networks "As we transition to a low-carbon, flexible future, we must ensure energy works for all, including the most vulnerable, so it is right Driving a dialogue for the future

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