Utility Week

UTILITY Week 22nd May 2015

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

Issue link: https://fhpublishing.uberflip.com/i/514326

Contents of this Issue


Page 15 of 31

16 | 22ND - 28TH MAY 2015 | UTILITY WEEK Operations & Assets Market view I n June 2005, National Grid sold four of its eight gas distribution networks, mark- ing the start of life for new independent operators. Although the electricity and water sec- tors had experienced competition and benchmarking, this new era for gas distribution created a comparative marketplace for us for the first time. Before 2005 all gas distribution was the responsibiltiy of a single UK opera- tor, Transco. The network sale cre- ated four new ownership groups, with Wales & West Utilities (WWU) owning and managing over 35,000 kilometres of pipe- work across an operating region covering more than a sixth of the UK. It's fair to say that, as far as some outside commentators were concerned, the jury was very much out on whether the new inde- pendent networks could survive and prosper. Ten years on and I believe the answer to that question is, without doubt, yes they can. By every key measure set out by our regu- lator Ofgem, the independent gas networks have led the way in performance, driven by the desire to succeed in the brave new world of comparative regulation. Three regulatory price reviews over the past decade have kept the industry busy. The most recent of them introduced the new regulatory concept of RIIO (reve- nues, incentives, innovation, outputs) – signalling a much greater focus on innovation and outputs in particu- lar – along with a longer regulatory period of eight years. This review demanded a much greater focus on stakeholder engage- ment and on demonstrating the consumer benefit of the money we spend – something we fully support as a business, and which has become even more important as con- Gas networks are working It is ten years since the UK's first independent gas distribution companies were created. Graham Edwards explains what the past decade has meant for the sector and what the future holds. WWU has flourished under the market conditions since four of the eight gas networks were sold. We have consistently been a leading performer in customer satisfaction over the whole of that period, something that is unprecedented in the utility industry. And before anyone shouts that utilities are not the benchmark for cus- tomer service in the UK – WWU has been scored highly by the UK Institute of Customer Service – placing us alongside leading household names for customer service such as retailer John Lewis and financial services provider First Direct. Of course this success has not come without significant challenges to overcome. We were tasked with setting up a business developed from an operating region with a distinct need for investment in both assets and people. Our workforce was sceptical and apprehensive of the new regime and disillusioned by the changes in the gas industry. From the outset we had to get our strategic direction right, so everyone knew what we were striving to achieve. We set out key objec- tives to shape our new business and developed a strategy to make sure we strived for excellence in customer service, safety and operational efficiency – encouraging ownership and accountability throughout the organisation. Setting up a new company was a great opportunity for us to determine what we wanted to stand for and, ten years on, we are now recognised as one of the leading players in our sector. Over the past decade we have attended more than a million gas escapes, connected 130,000 properties to our network and replaced almost 40 per cent of our iron mains with plastic pipe. This has been a key activity for us given the poor condition of much of our inherited old iron mains – though despite the age and condition of some of our infrastructure, it still provides a reliable service. On average consumers can expect to experience an interruption to their gas supply once in 40 years. This kind of reliability is bolstered by the significant investment we make each year in our assets. Between start-up in 2005 and the end of this current regulatory period in 2021, we will have invested almost £2 billion to ensure a safe and reliable gas supply for consumers. Our approach has also been recognised by the Health and Safety Executive, which recently rated WWU as exemplary in the safety leadership of what is a major risk industry. Another area of significant investment over the past ten years has been in our workforce. We recognised at the outset the age profile of our people, caused by a lack of recruitment over many years. Over the past 10 years we have significantly refreshed our workforce, recruiting more than 500 new people – including 100 apprentices. This has brought an injection of fresh talent into the business, and also reduced the average age of our workforce significantly. If all this activity hasn't kept us fully occupied, the business has also changed ownership during the period. Global infrastructure group Cheung Kong acquired WWU in 2012, adding to its substantial portfolio of utility businesses in the UK. The new owners didn't make any management changes – the same leadership team is still in place. This is testament to the success of the business. It is pleasing that our performance over the past ten years has also been recognised externally – with WWU clocking up a ra of awards over the period, both at the company and individual level. We look forward to the next ten years, and seeing how we and the other gas networks can continue to contribute to the cost-effective deliv- ery of greener energy that also delivers excellent value for consumers. Ten years of Wales & West Utilities "The drive for carbon reduction clearly raises questions about the future of gas in the UK, given its fossil fuel status."

Articles in this issue

Archives of this issue

view archives of Utility Week - UTILITY Week 22nd May 2015