Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/680922
14 | 20TH - 26TH MAY 2016 | UTILITY WEEK Policy & Regulation Market view F rom April 2017, 1.2 million eligible busi- ness customers in England will be able to choose who supplies their water and wastewater retail services. In 2020 the market could be opened up for household customers too. With these changes introducing greater competition and more choice to customers, water companies will come under increasing pressure to improve their reputation. This will change the relationship between water companies and their customers, and enhancing these relationships can lead to a better managed network. With water supplies coming under severe pressure due to an increasing population and a changing climate, the aim of the water reform is to encourage better innovation and more sustainable ways of managing the water network. By opening up the market and allow- ing greater competition in the sector, this should help to bring in new players, new ways of thinking and ultimately lower costs for customers. In light of these changes, water compa- nies are at a crucial stage in their relation- ship with the public and face the challenge of trying to win over the trust and loyalty of customers. Making the right judgements now will be vital to their long-term reputation. Currently, water companies are in a far healthier position in terms of their reputation than other utility providers, as discussed in Talis UK's Reputation and Water Report. Just over a quarter of the British public agree that water companies are doing a good job. However, the sector needs to avoid com- placency. While it may be outperforming other utility companies (gas and electric- ity companies achieve a lowly 15 per cent approval rating), this does not mean it is a high performing sector when compared with other services that compete for custom, such as supermarkets and mobile phone providers. If water companies are to avoid the repu- tational damage inflicted on the energy sec- tor, then studies tell us that more needs to be done to tackle leakages and provide a more efficient and affordable service for custom- ers. There are two key areas that, accord- ing to customer research, water companies need to focus on in order to create positive relationships with their customers and stay ahead of potential competitors. Reducing water leakage Research by the Consumer Council for Water (CCWater) found that consumers in the UK are demanding water companies to do more to tackle leakages within the system. Most people (70 per cent) do not think water com- panies are doing enough. This is further sup- ported by our Reputation and Water Report, which also found that 82 per cent of the public felt that greater efforts to tackle leaks would improve their perceptions of their water provider. Although most companies are working hard to reduce leakages caused by problems such as ageing mains, leaking joints, sub- standard valves and pressure surges within pipes, a large proportion of the system still remains in poor condition. In fact, the World Bank estimates that $14 billion (£10 billion) is lost each year in clean water that's wasted before it even reaches its point of consumption. Crucially, those companies seen to tackle the issue will achieve greater relationships with their cus- tomers and a better reputation in the indus- try compared with their competitors. Improving value for money and efficiency Under Ofwat's new totex regime, water com- panies will be challenged to choose valves not just on price but on the long-term needs of the network. As a result, suppliers will need to invest in products that will provide greater quality and long-term value. This is where opening up the market and attracting new ideas into the sector can help to improve the overall performance of the network. As product manufacturers become more familiar with the challenges faced by the sec- tor, this should encourage the development of solutions that will last longer, reduce leak- ages and provide a more efficient service. This not only benefits the network by reducing maintenance and operational costs and losses in revenue, but also eases the financial burden on the customers who are ultimately footing the bill. And when it comes to choosing suppliers, CCWater found one of the key factors that would influence a customer's choice is value for money and quality of the service they receive. The sector is facing a number of chal- lenges and changes and now is the time for companies to up their game and invest in the future of the network. When the water reforms take effect, water companies must embrace innovation, invest in efficiency and become more attentive to their customers' needs. Mark Hodgens, managing director, Talis UK Competition and efficiency Water competition will change the relationship between companies and their customers and could encourage networks to operate more efficiently, says Mark Hodgens. PERCENTAGE OF CUSTOMERS WHO AGREE WITH THE STATEMENTS BELOW Source: Tallis UK 35% 30% 25% 20% 15% 10% 5% 0% Offer a good service Are trustworthy Offer good value for money Treat customers fairly Water companies Energy companies 29% 24% 26% 12% 24% 12% 23% 11%