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UTILITY Week 22nd May 2015

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UTILITY WEEK | 22ND - 28TH MAY 2015 | 23 Customers Research O ver the past few years, the improve- ment of customer experience in other sectors has increased expectations of monopoly service providers. As utilities seek to maintain legitimacy, customer experience is key. Regulators have seized on this agenda and Ofwat is leading the way. Coupled with a wider focus on legitimacy and affordabil- ity, Ofwat has driven a new regulatory model that seeks to put customers at the heart of water companies' strategies. Central to this is the SIM. This is a regu- latory tool that uses financial penalties and rewards to drive improvements in customer experience in the water sector. This report focuses on the comparative performance of the nine water and waste- water companies (WASCs) operating in Eng- land with regard to SIM, since the measure's introduction in 2010. It highlights the top performers and laggards, and brings out the insights and learnings from each. It also asks to what extent SIM has achieved its objec- tives, and what the future holds. How are water companies performing? In 2014, the average customer satisfaction score for a WASC was 4.49 out of 5 – an improvement of 0.39 points from 4.10 in 2010/11, the measure's first year. They now rank higher than the water-only companies. The Ofwat league table can be divided into three sections, shown in Figure 1. At the le are high performers, companies that have exceeded Ofwat's targets and will be rewarded with up to 0.5 per cent of their total integrated revenue. Wessex Water has con- sistently led the table since its introduction with an average score of 86. Anglian Water and Northumbrian Water follow closely in the upper quartile, scoring 83 (+0.3 per cent year on year) and 81 (+0.2 per cent year on year), respectively. Yorkshire Water, Severn Trent and United Utilities are average performers, that is, they have not performed badly, but have not out- performed the targets to the degree where they merit financial reward. At the right are poor performers – South East, Southern Water and Thames Water – which close the table with comparatively low scores of 68, 67 and 65, respectively. Each of these faces a financial penalty. WASCs have achieved considerable improvement in customer service scores since the introduction of SIM, and now rank higher than smaller water-only companies, which led the table at its introduction in 2010. In 2014, the average customer satisfac- tion score for a water and sewerage company was 4.49 out of 5. This is up 0.39 points from 4.10 in 2010-11, the measure's first year. Comparative company performance According to data from consultancy McCal- lum Layton, each of the nine WASCs has shown considerable improvement with SIM. Figure 2 (overleaf) is a view of WASC perfor- mance over the past two years. Southern Water has shown the largest improvement, with a 0.19 point rise, from 4.22 (2012-13) to 4.41 (2013-14). Northumbrian Water's performance has also been notable with a 0.16 point rise to 4.62 out of 5. Anglian Water, typically a league table leader, was the only WASC to show a dip in its overall satisfaction scores – of 0.03 point between 2012-13 (4.69) and 2013-14 (4.66). Laggards: these are companies that have little or no change in their satisfaction scores. They continue to take the bottom spot in the rankings. Thames Water has consistently been at the bottom end of the SIM league table with a comparatively low score. However, Figure 1 shows a slight upwards trend with an eight- point increase to an average score of 70.67 in 2013-14. Even though Thames is at the lower end of the table, a detailed view of the sat- isfaction scores indicate a consistent (but small) rise in almost all areas of SIM. Top performers: these are companies that lead the SIM league table with high overall satisfaction scores. They have contin- ued to improve their performance every year. Anglian Water scores second place in the league table, based on a high score in areas such as satisfaction with visits and staff helpfulness and attitude, at 4.81 and 4.82, respectively. There has been a small drop in score in areas such as ease of contacting call centres and satisfaction with visits, which may have pulled Anglian from the number one spot. Northumbrian Water has moved into the top bracket in the past two years. It has seen a +0.28 point improvement in its score for keeping customers informed, which has helped push up the overall score. Another high performing area, with a +0.18 point increase, is staff knowledge and professionalism. Stable performers: these are companies that have consistently and continuously improved their performance. Wessex Water has led the league table since the inception of SIM, and continues to Secrets of SIM We present highlights of Utility Week's exclusive research looking at how customer service is measured in the water sector though the use of SIM scores. FIGURE 1: THREE-YEAR SCORE FOR WASCs VERSUS REWARDS AND PENALTY FOR THEIR PERFORMANCE Wessex Anglian NWL Yorkshire Severn Trent United Utilities South West Southern Water Thames 100 80 60 40 20 0 +0.5% +0.3% +0.2% Average performers receive no adjustment -0.5% -0.7% -0.9% Informationi source: Ofwat

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