Utility Week

UTILITY Week 13th May 2016

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24 | 13TH - 19TH MAY 2016 | UTILITY WEEK Customers This week Retail margin drove UU-Severn Trent JV Water Plus chief executive reveals Ofwat's tight 2.5 per cent retail margin prompted joint venture One of the main reasons behind the Water Plus joint venture between United Utilities and Severn Trent was the tight retail margin set by water regulator Ofwat, according to its chief executive, Sue Amies-King. Ofwat has said it will hold the margin for the non-household retail market at 2.5 per cent, despite claims from industry that this will stifle competi- tion when the market opens in 2017. Amies-King told Utility Week: "If you've got margins like that, then the best thing to do is to look for syner- gies with another player." She said scale was important, "so that when you are investing – and clearly both the companies need to invest in order to be fit to compete – then you're doing it once rather than twice". "That's actually the rationale behind the JV," she added. New entrants, such as Scottish supplier Business Stream, have been calling for the margin in England to be increased, suggesting there is uncertainty about the future market arrangements and that the margin should "reflect these uncertainties". However, in its most recent document, Ofwat said it had not found "any compelling evidence" that suggests it should revise the margin. The regulator said evidence from the Competition and Markets Authority in its investigation of the energy sector supported a net margin of between 1 per cent and 3 per cent. It added that, despite concerns that a 2.5 per cent net margin would be too low to attract new entrants into the market, "there are already signs of new entry". LV ENERGY CMA probe a 'damp squib', says Which? Which? executive director Richard Lloyd has warned that the Competition and Markets Authority's (CMA) energy market probe will be a "damp squib", and may disappoint those who hope it will reform the sector. The CMA set out its pro- visional remedies in March, including a temporary price con- trol for prepayment customers, and the creation of a database of disengaged customers. Lloyd told Utility Week: "I think it is on course to be a fairly damp squib. There are some interesting and useful ideas in there but where the CMA has got stuck is in proposing a whole range of ways in which con- sumers could be encouraged to engage with the market. None of those are tested and can't be tested in the CMA's timeframe." He also claimed consumers would not notice much change: "I think anyone who hoped it would be the investigation to reform the energy market for the foreseeable future will be disappointed." The final remedies are due to be published next month. WATER Yorkshire plans 'sustainable hub' Yorkshire Water is planning to attract businesses to base themselves near one of its larg- est wastewater treatment works in order to use the energy and resources it creates. Yorkshire Water innovation manager Jon Brigg told attend- ees at WRc's Innovation Day earlier this month that redun- dant land at Esholt Wastewater Treatment Plant, near Bradford, was set to be developed to create a "fully sustainable community hub". Energy, heat, nutrients and sub-potable water coming out of the plant could be sup- plied directly to the industries that site themselves in the hub, providing a cost-effective and sustainable solution for all par- ties. Potable water could also be supplied from local raw water sources to the hub, he added. ENERGY Second community fund for M&S Energy Marks and Spencer (M&S) Energy has launched the second edition of its Community Energy Fund to offer local energy pro- jects across the UK a share of up to £350,000 in funding. Last year's scheme saw 246 applications from a wide variety of groups and a total of 51,000 votes cast. The M&S Energy fund is welcoming applications until 31 May from not-for-profit organisations that want to use renewable energy to provide community energy benefits through innovative projects. Amies-King: 'it's best to look for synergies' I am the customer Jo Causon "UK utilities must monitor customer needs and wants" Our European Customer Satis- faction Index (EUCSI) recently found that the UK utilities sector has one of the highest customer satisfaction rates in Europe. Although this is good news, utilities is the only sector in which the UK didn't come out on top – falling into second place, behind Germany. So what is different about Germany's approach to customer service when it comes to utilities? The EUCSI data shows that German customers prefer to highlights the fact that invest- ment in customer service train- ing and processes is still needed. To boost its customer service ranking, the UK utilities sector needs to closely monitor the needs and wants of its customers and develop the necessary infra- structure to interact with them. There has to be synergy between the mode of communication a company invests in and that which consumers prefer to use. Jo Causon, chief executive, The Institute of Customer Service use email over other methods of communication and reports high satisfaction with customers' overall experience – particularly in the utilities sector. Conversely, the UK consumer reports the highest satisfaction with services through an app or in person, and yet the UK frequency of use for these channels is below the European average. This demon- strates that a key part of success- ful customer service is allowing customers to interact with a busi- ness in a way that suits them. The fact that a major UK energy provider was recently criticised for its management of customer call waiting times and complaint handling perhaps

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