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Utility Week research ings will facilitate forward planning for competition – a move that will have an effect on the entire country for generations to come." We have conducted an extensive piece of research (see box, Research methodology) among incumbent water companies to gauge their views on the new competition proposals, their intentions in the competitive market and what they are doing now to prepare. The main areas of questioning were: • the policy framework for water retail competition and expectations of the market; • water company intentions post-2017; • billing issues; • customer relationship management issues; • metering and field operations issues; • staffing issues. The findings are summarised here. Policy framework and market expectations We asked incumbent water companies how strongly they agreed or disagreed with six statements about retail competition policy and the competitive retail market. • he policy framework for business retail T competition is robust. Only one-fifth of respondents agreed that the policy framework was robust. A far larger proportion – nearly half – disagreed or strongly disagreed, with one-third having no strong feeling either way. According to verbatim comments from respondents, policy framework concerns included: unknown retail margins; the timing of the replacement of the cost principle; Ofwat's time and resource availability; and market readiness. • he business water market will open T on time in 2017. There was significantly more confidence in the market opening on time than in the policy framework being robust. Over one-third agreed that it would open as planned on 1 April 2017, though another third disagreed. • here will be an active market in terms T of switching levels among SMEs and big businesses. Survey respondents were in broad agreement that big businesses would be active switchers. Only one-quarter said the same would be true of small and medium-sized enterprises (SMEs). • ater companies should have the option W to withdraw from the retail market altogether to focus on wholesale. This issue elicited the strongest consensus of any question in the survey, with 78 per cent in agreement. As the Water Bill currently stands, incumbents will be required to remain vertically integrated and hence continue to provide retail services to businesses after market opening. Water company intentions in the competitive retail market What will be your company's priority in the competitive retail market? Please rank (1st to 4th) the following in order of importance. 5% 8% 28% 67% 23% 72% 21% 51% 10% 13% 43% 10% 18% Ranked 1st Average 3.5 ranking 2.4 2.7 1.4 8% 20% Ranked 2nd Ranked 3rd Ranked 4th 3% Limiting retail activity to focus on the wholesale part of your business Building and reinforcing a local brand Acquiring customers outside your current supply area Retaining existing customers Which value-added services do you expect to offer to existing customers and which will you offer to new customers? Tailored billing and payment arrangements 85% Water auditing and efficiency advice services 81% Dedicated account manager Tailored tariffs Water saving smart devices free or discounted Quicker complaint handling/resolution Instant services for in-house equipment To retain existing customers • omestic customers will benefit from D water retail competition for businesses Few had faith that households would benefit from retail market opening, with 63 per cent disagreeing and 26 per cent having no fixed view. Water company intentions in the c ompetitive retail market Utility Week and Tata Consultancy Services asked incumbent water companies how they intended to conduct themselves in the retail market after 2017. • efensive pri orities. Retaining existD ing business customers surfaced as the industry's number one priority, followed by building and reinforcing their local brand. This is a clearly defensive stance, focused on protecting current market share first and foremost. • ervice-orientated differentiation. OverS whelmingly, water companies are planning to differentiate themselves in the competitive market through service rather than price propositions. Better service was mentioned by nearly twice as many respondents as lower costs. There was near universal agreement from the industry that it would offer: tailored billing and payment arrangements; 11% 11% 56% 48% 44% 37% 81% 78% 74% 100% 100% 96% To attract new customers water auditing and efficiency advice services; and dedicated account management as value-added services for business customers. Three-quarters also said they were planning on offering tailored tariffs. Other value-added services attracted some but not universal support. More incumbents plan to offer every type of value-added service to retain existing customers than to attract new ones. Reorganising for retail. We asked respondents to select the three areas of their company's business that they thought would be most affected by reorganising for retail competition. CRM Are your existing CRM processes capable of handling the enhanced customer services likely to be required by retail competition? Yes, definitely 15% The business has not confirmed its plan 11% No, definitely not 15% Yes, partly 59% UTILITY WEEK | 1st - 7th November 2013 | 9