Utility Week

30 | AUGUST 2022 | UTILITY WEEK Water Analysis Is C-MeX fit for purpose? The replacement for the SIM was supposed to drive customer service improvements across the industry but some say it lacks strong enough incentives and ignores complaints-handling. A er a decade of measuring customer service through the Service Incentive Mechanism (SIM), Ofwat decided to relaunch the mechanism in the form of the customer measure of experience for residen- tial customers (C-MeX) in 2020. Now, as the regulator prepares to reveal its framework for the PR24 price control, consumer groups are asking whether C-MeX is fit for purpose or whether major changes will be needed in the next price control. Evolution not revolution The C-MeX measure is determined by two surveys, one measuring satisfaction among customers who have recently contacted their water company, and the other measuring it among a random selection of customers to give a broader picture of how the company is viewed. How much standard financial reward, or financial penalty, each of the 17 water com- panies receives is decided by the combina- tion of the two surveys with each having equal weighting. Previously, 75% of a SIM score was based on a survey of customers who had direct interaction with the company recently, and the remainder on the number of complaints and unwanted contacts received. While there was widespread agreement that SIM contributed to significant improvements in customer service in the water sector, and a 60% reduction in written complaints, Ofwat identified several areas that it felt could be improved. Juliet Young, chief economist at Ofwat, said SIM didn't allow the regulator to make comparisons with other sectors and was only able to rank the companies against each other. "There was a worry that we were giving a company an outperformance payment, whereas the industry as a whole was not doing particularly well. Things got better with SIM but we didn't want to reward a company for being the best of a bad bunch," she says. Ofwat was also seeing convergence at the top end of the table and wanted to push those companies further. Customer lobby group CCW was very welcoming of C-MeX when it was first intro- duced but thinks the time is ripe to make the measure "sharper and a bit more effective". Steve Hobbs, senior policy manager at CCW, says it has not seen a step-change in customer service since its introduction. He describes it as more an "evolution rather than a revolution". "We've seen companies at the top end improving, and we have seen some com- panies go up, and the fact that it measures customer satisfaction in the round is making companies think differently," he says. CCW has identified several areas that it feels could be improved, such as the level of reward available, the attention given to com- plaints and the lack of a formal follow-up process on feedback. Ofwat says it is too early to judge the effec- tiveness of C-MeX, but points to the improve- ments made by the four poorest performing companies in 2020/21 over the previous year as early indication that C-MeX is having posi- tive results. However, one of the main differences between SIM and C-MeX – the ability to com- pare water companies with companies out- side the sector – has yet to yield the desired improvements. In 2020/21 none of the 17 companies achieved a high enough score to place within the top 25% of companies in the UK Customer Satisfaction Index (UKCSI), which barred them from accessing higher perfor- mance payments.

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