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utILItY WeeK | 13th - 19th June 2014 | 9 Interview S ometimes the simplest questions are the hardest to answer. But in the matter of how South West Water succeeded in being the only big water and sewer- age company to be fast-tracked through PR14, it is a sim- ple answer that may pose difficult questions for those in the industry still wrestling with their business plans. Chief executive Chris Loughlin says there was no silver bullet. South West Water simply embraced the new price review philosophy and based its plan full square behind what its customers said they wanted. "I don't think there's any special magic to that," Loughlin smiles. He elaborates: "This price review was supposed to be a philosophical shi, so rather than double-guessing what Ofwat wants and filling in Ofwat spreadsheets as accurately as possible, there's a refocus… on the relationship between the company and the customer. We really, really got that. We really bought that and accepted that as a principle. So that's the agenda we set off with. "Frankly, if you look at it at the beginning and say 'we want to be enhanced, what's Ofwat's criteria to make us enhanced and let's tick those boxes', you've missed the point." So the South West Water board never once sat down and discussed how to become enhanced. Instead, it focused on putting together "a good quality plan, well supported by evidence, with a thorough audit trail that went right back to the customer research every single step of the way". In this it succeeded, earning particular praise from Ofwat for its extensive, responsive engagement pro- gramme. Plus it secured support from an impressive 84 per cent of customers for its real terms bills to 2020. Note that in PR09, the company's price plans were only acceptable to 34 per cent of customers. Fair play. But was it not a bold choice on Ofwat's part to fast-track a company: a) whose small, below-average- income customer base has long-struggled with high bills (not South West Water's fault but nonetheless a sensitive local issue); and b) which was languishing near the bottom of the service incentive mechanism table at last count (14th out of 18 in average scores for 2011-13)? Loughlin takes the point but bats it away. "I certainly observe that given we've got a historical position of relative high prices, the bar for Ofwat to jump over to be comfortable to give us enhanced status could well have been perceived to be higher. You could look at it a dif- ferent way though. Ofwat was trying to devise a rational process that wasn't based on the politics, wasn't based on what looks to be the right thing. Had they decided we were enhanced but then decided not to make us enhanced because it wouldn't look right, that would really undermine their process." For the record, South West Water's 2015-20 business plan will directly address both high price and customer service issues (see box). Reading between the lines, it was a no-brainer for South West to accept enhanced status once it had pre- qualified on 10 March. It had already modelled the impli- cations of Ofwat's January risk and reward guidance and found them acceptable. It is now in the enviable position of having received and responded to [by 4 June] its dra determination while its peers continue to pour blood, sweat and tears into reworking their plans. As a listed company, the reputational benefit of being singled out for praise is not insignificant either. And then there's the financial reward of £11 million, and