Utility Week

UTILITY WEEK | MARCH 2023 | 19 Finance Comment Jane Gray Content director T here has never been greater pressure on nance teams within energy and water utilities to perform and support business agility in the face of a multitude of interlink- ing and morphing challenges, from runaway in ation and bad debt to monumental capital investment requirements in an evolving landscape of policy and market frameworks. Utility Week's research for this report – created in associa- tion with the global business process management rm WNS – shows this pressure all too clearly. Via our online survey and in-depth interviews nancial leaders have painted a picture of relentless reforecast- ing, spreadsheet gymnastics and concern about the impact of this demanding environment on talent retention. Chinks of light are visible. Regulated utilities in particular are grateful for the protec- tive e ects of index-linked asset values and con dence in investment for sustainabil- ity – whether that be to reduce exposure to high energy costs and cut emissions or to lay the foundations for access to future markets – remains high. But the increasingly grim economic environment and its impact on consumer nances is driving prudence. As one report contributor put it, "we're looking to tighten our belts next year", articulating a sentiment that is clearly shared by nance leaders across the sector and which is driving a hunt for e† ciency opportunities. The concern is that this focus on e† ciency comes exactly at a time when we need to see investment in innovation, recruitment and smart new products, services and assets for the net-zero future. It is crucial that mitigation of short-term economic risks does not come at the expense of long-term objectives. To make well-balanced decisions, nance leaders need contextualised and varied data at their ngertips. While many have invested well in organi- sational systems to support good nancial management, responses to our survey show there is room for improvement in data management and inter- rogation. Increasingly, this includes the ability to draw in non- nancial data from across the business and beyond and lever- age it to uncover opportunities for marginal gains, standardisa- tion and long-term stabilisation of costs. This report contains deep insights into the sentiments and challenges facing nance leaders in the utilities sector as they try to simultaneously drive e† ciency, productivity and growth. We hope it will serve as a timely source of inspiration and validation for those leaders and their colleagues in senior management positions as they strive to perform in a profoundly challenging environment. "Knowledge is power when it comes to controlling costs" How finance leaders in energy and water view the year ahead 2023 UK UTILITIES CFO OUTLOOK A Utility Week research report in association with WNS January 2023 CONTENTS Download The Report Download The Report Uk Utilities Cfo Outlook 2023 Free At: Https:// Utilityweek.co.uk/Cfo-Outlook-2023/ Increased regulatory and policy interventions were perceived to be the biggest risks (53% and 47% respectively) among utilities overall, but energy networks put lack of capacity and resilience in the supply chain as their biggest risk (71%). Utilities said that eŠ cient systems and better use of data are essential to deliver the performance improvements and cost eŠ ciencies demanded by the regulator. Respondents rated the ‹ tness for purpose of their systems as 3.7 out of 5 – but the way they collect, hold and process data lower at 3.3 out of 5 (where 5 is the highest). Respondents expressed widespread concern about meeting the challenges of climate change and decarbonisation and how it would be paid for, complaining of a policy vacuum and the need for greater reforms. in association with "There is concern across all utilities about the ability of consumers to pay their bills in 2023, with bad debt expected to rise." Week to determine what the impact has been on the nance operation, where the major risks are perceived to lie, and how con dent leaders feel about their ability to mitigate these threats to nancial resilience. We also examined expectations around the impacts of macroeconomic and political volatility on investment and investor appetite in the sector.

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