Utility Week

UTILITY Week 16 05 14

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

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UTILITY WEEK | 16Th - 22nd MaY 2014 | 3 Leader Ellen Bennett This week 4 | Seven days 6 | Opinion Stephen Fitzpatrick, founder and managing director, Ovo Energy 8 | Interview Graham Keegan, chief operating officer, Eight2O 13 Policy & Regulation 13 | News Solar subsidies cut 14 | Analysis Peers back shale exploration 15 | Market view Water firms must do more 19 Finance & Investment 19 | News Energy profits hit by mild winter 20 Operations & Assets 20 | High viz Beauly-denny 22 | Market view Keeping cyber criminals at bay 22 | Analysis Networks failing on competition 23 | Expert view Rolta 24 Customers 24 | News Npower complaints 25 | Analysis Are water bills value for money? 26 | Market view It's all about customer perception 27 Markets & Trading 27 | News Tankard's new pricing index 28 | Analysis Germany fills nuclear void 30 Community 30 | Subscriber focus Gordon Downie, Shepherd and Wedderburn 31 | Disconnector Tell the people what they get for their cash What's the difference between price and value? That can be a hard question for utilities to answer, because they are unable to differenti- ate on product. Water is water; power is power. Not for the big six or the water companies the luxury of offering luxury, in the style of John Lewis or Waitrose, to justify a higher price point. Instead, the extra cash customers pay for water and energy compared with ten or 20 years ago covers benefits they rarely see: higher quality standards for drinking water, new sources of renewable energy. Try putting that in box and tying it up with a ribbon. But customers are willing to pay more if they perceive more value, according to Ofwat's chief regulation officer, Sonia Brown, who writes for us this week (see p15). Brown hits back at criticism of the outperformance rewards included in PR14, arguing that evidence from South West Water shows "once you set rewards in the context of a whole package of risk and rewards, customers were willing to pay for enhanced performance in certain areas". Yet CCWater's annual survey shows this week that customer sat- isfaction with value for money of water supply is at its lowest level for four years, despite broad positivity when it comes to customer service (p25). The planned price cuts in the next AMP cycle should go some way to addressing this: it's rare that a bill goes down, and the public hopefully will be appreciative. Much of this will be down to communication, however. When it comes to value for money, per- ception is half the battle, and right now it's a battle water companies are losing. The moment when bills are cut provides water companies with a prime opportunity not only to advertise their willingness to reduce prices where possible, but also to communicate how the remainder of the bill is being spent. DNOs have a similar opportunity with ED1, when most are cutting their charges. Creating greater transparency on the bill and making customers aware of what networks do for their small cut has long been a talking point. Following the fallout from this winter's storms, it's time for that talk to turn into action. Like the water companies, the networks have a prime opportunity to shout about what they do, and a compelling case to make on value for money. Ellen Bennett, Editor ellen.bennett@fav-house.com GaS 14 | Analysis Peers back shale gas exploration 27 | News New Tankard index 'more transparent' WaTER 8 | Interview Graham Keegan, COO, Eight2O 15 | Market view Ofwat says firms must 'go beyond the day job' 25 | Analysis do customers think water bills are value for money? ELECTRICITY 13 | News Subsidies to be cut for solar projects 20 | High viz Beauly-denny 21 | Pipe up alan Thomson 23 | Analysis dnOs failing on competition 28 | Analysis Germany fills nuclear void EnERGY 6 | Opinion Stephen Fitzpatrick, Ovo Energy 19 | News First-quarter profits hit by mild winter 23 | Market view Rolta 24 | News Npower still propping up complaints table 24 | I am the customer Mervyn Kohler, age UK 26 | Market view Winner takes all in customer perception Knowledge worth keeping Visit the Downloads section of Utility Week's website for special reports and exclusive research commissioned for the utilities industry. http://www.utilityweek.co.uk/downloads

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