Utility Week

UTILITY Week 30th October 2015

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Page 13 of 31

Policy & Regulation 14 | 30TH OCTOBER - 5TH NOVEMBER 2 015 | UTILITY WEEK Policy & Regulation T rust and confidence and utility compa- nies: they may not seen the most natu- ral of bedfellows at the moment, but the panel at Utility Week's fringe event at the Labour party conference in Brighton agreed that the sector's reputation could be rebuilt (or in some cases retained). The bad news is that it will take time and a lot of effort to get to that customer satisfaction nirvana. The key issue, flagged by shadow energy minister Alan Whitehead, is affordability. "Customers want to feel as though they are not being ripped off," he said. The chal- lenge facing the energy suppliers – and the other utilities – is ensuring customers feel as though they are getting value for money from their energy and water supplies. Citizens advice director of energy Audrey Gallacher reiterated the "value for money issue" as a major barrier to trust and confi- dence, but also slammed utility companies' complaints handling process and a lack of engagement with customers. However, Southern Water chief executive Matthew Wright and UK Power Networks chief executive Basil Scarsella defended their industries for maintaining higher levels of T he Utility Week and Energy Networks Association political roadshow rolled up to Manchester town hall for the sec- ond in its series of fringe events examining trust and confidence. This session, with a knowledgeable audi- ence of party members, largely focused on the role that regulation has to play in help- ing utilities rebuild and maintain the faith of their customers and legitimacy. Minister for constitutional reform John Penrose, the author of the 2013 We Deserve Better report that examined the role of eco- nomic regulators, was on the panel and criti- cised the way the industry had developed only slowly since privatisation. He said it had come to rely on a "tick-box exercise" to keep companies in shape deliver for customers. "We're stuck in a post-privatisation world where the regulator is trying to do our job for us, but consumers should be able to do it themselves with ease." Energy ombudsman Lewis Shand Smith agreed with Penrose, highlighting Ofgem's standard condition 25C, which states that the energy companies must treat customers fairly. "Can you imagine any other industry that the regulator tells companies to treat their customers fairly?" he told delegates. Labour engagement Tory light touch The solution, he said, was a "culture change", which could be achieved through lighter touch regulation rather than the more prescriptive regime that Penrose outlined. United Utilities commercial director Jose Davila also signed up to this school of thought, and highlighted the work that is underway, not only in his company, but also in the water sector. "Regulation won't ever go away," he said, but added that the important thing was to engage with the customers on the decisions that will impact them, and to deliver service of a level that would be expected in a com- petitive market. Electricity North West chief executive Steve Johnson admitted that the energy sec- tor did not have the trust and confidence of its customers, but he said the distribution network companies needed to differentiate themselves form the suppliers, and highlight their reliability. This, he said, reassures cus- tomers and helps contribute to the nearly 90 per cent satisfaction rating achieved by the networks. But he added that the sec- tor's culture needed to be similar to a com- petitive market, not only maintaining service standards but also ensuring innovation took place. "What other industry has to be told by its regulator to treat its customers in a fair, honest, appropriate and transparent manner?" Energy ombudsman Lewis Shand Smith "[Energy utilities] are the companies we love to hate." Minister for constitutional reform John Penrose "We are in a privileged position and we need to deliver for customers." Electricity North West chief executive Steve Johnson trust and confidence than the energy supply sector. Scarsella stated that distribution network operators had a nearly 90 per cent satisfac- tion rating because of the reliable service they provide, while Wright praised the regu- lator for pushing the water sector towards focusing on customer needs – thus boosting their legitimacy. One key element that is a constant thread across all the sectors, and was high- lighted by energy ombudsman Lewis Shand Smith, who was in the audience, is customer engagement – and in particular for energy, the roll out of smart meters. He said the rollout had the potential to raise a whole series of billing issues, and represents a "massive risk" to the industry. Whitehead wrapped up by saying the rollout had to be carefully managed, and customer expectations kept realistic, otherwise it risked being a real-life version of Spike Milligan's Snibbo, a spoof product that over the course of the famous 1960s comedy TV series Beachcomber, promised to do all manner of unlikely and unrelated things. "We want to stay off the radar and the key is providing value for customers." Southern Water chief executive Matthew Wright "Trust and confidence in networks has not been lost." UKPN chief executive Basil Scarsella "Energy is not a discretionary spend – it's like a tax. It's not very interesting and when it goes up people get annoyed." Citizens Advice director of energy Audrey Gallagher

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