Utility Week

Utility Week 13th December 2013

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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Interview I first met Peter Peacock 18 months ago, when the Customer Forum (see box overleaf) he chairs in Scotland had been up and running for about seven months. He was optimistic about the prospect of working with Scottish Water to agree price and service levels for the coming regulatory period 2015-21. He was full of praise for the company, saying it had bought into the idea "in a big way". Before meeting him in Edinburgh late last month, a couple of weeks after Scottish Water published its draft business plan for 2015-21, I wondered how much of his positive feeling would remain. But Peacock's early view is unshaken: "So far, it's not even been a negotiation, it's been an engagement process that has delivered results." The draft plan, he says, is a product of genuine engagement, transparency and co-operation between his Forum and Scottish Water, built on joint learning, hard work and a willingness to listen on the water company's part. Two key activities that have taken place over the past 18 months have been instrumental in getting to this point, he explains. First, the forum and Scottish Water shared a research programme and jointly analysed the findings. "That was instrumental in prioritising investment," he says. "We struck an agreement about what [the research findings] tell us, and therefore what should we prioritise by way of potential investment." Customers didn't want any deterioration of service and among their priorities for service improvements were sewer flooding, supply interruptions, leakage and drinking water quality. That said, Peacock notes customer understanding of water and what it costs is very low in Scotland, possibly because it is not billed directly. "When we asked people what they were paying, they might say £30 or £300 – they hadn't really a clue." The same cannot be said of businesses. "They are more hawkish on price," says Peacock. "They don't see any reason for prices increasing at all unless there is some clear justification for it." The second activity that aided the creation of a mutually acceptable draft business plan was the forum's detailed scrutiny of in-depth service improvement reports provided by Scottish Water. These covered every aspect of the business, including maintenance spending, capital investment needs, efficiencies and financing. The Forum quizzed the water company – most often its chief executive – at regular meetings and highlighted what it liked, what it had queries about and what it found unsatisfactory. Peacock says: "The importance of that is, when you get to the business plan that's out now, a huge amount of that has already been subject to discussion. The busiUTILITY WEEK | 13th - 19th December 2013 | 9

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