Utility Week

UTILITY Week 28th October 2016

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

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Customers UTILITY WEEK | 28TH OCTOBER - 3RD NOVEMBER 2016 | 21 Utility Week Congress Birmingham, 18-19 October 2016 Transformation in the real world A revolution in utility business models has moved off the pages of strategy documents and corporate communications and into reality, finds Mathew Beech. U tilities as we have known them are dead, but what exactly should the organisations replacing them look like? That could sum up some of the dis- cussions and debates at the fourth annual Utility Week Congress in Birmingham, spon- sored by Unipart Group and Fugro Roames. Key figures from the industry talked about the changes that are under way, and what more can be expected in the future. Discussions covered deregulation, inno- vation, regulation, customer centricity, and the impact that Brexit is set to have not only on companies but consumers as well. Competition kicked-off the debate, fresh from the start of shadow market operation for the English non-household retail market, and the Competition and Market Authority's (CMA) remedies set to be enforced by Ofgem soon. MOSL market engagement director Tom Notman was confident that market open- ing would go smoothly because of the hard KEY POINTS DAY 1 New markets, new horizons KEY POINTS DAY 2 From utilities to service providers 1. Water companies need to step-up wastewater resilience planning 2. NIC to consult on key national infrastructure assessment programme 3. Low-cost debt and equity for utility asset owners is vital to customers as well as investors 4. Networks need to recalibrate performance metrics for a changing energy system and their changing roles within it 5. Demands of smart meter rollout may lead to gas safety compromises 6. Water retailers need to target SMEs who are less aware and less engaged with the imminent market opening 7. Utilities must learn from external markets and companies, such as Amazon, to understand and "steal with pride" customer service ideas 1. Ofgem "not delighted" by value from network innovation funds 2. Brexit will intensify affordability issues and exacerbate the skills shortage 3. Disaggregation of water value chain will require change in sector investor profile 4. Companies underestimate the commitment needed for successful culture change 5. Customer willingness and ability to pay needs to be understood before policy is set for decarbonisation of heat 6. Cyber security needs to attain status of health and safety in utility company cultures 7. With the adoption of innovative solutions there must be the acceptance of a greater level of risk 8. Regulation has helped promote internal innovation, but potentially stifled external and collaborative projects work undertaken by all the stakeholders to cleanse data, prepare their back office sys- tems and build the central market IT system. The water companies at Congress agreed that substantial progress had been made, and Business Stream head of commercial development and marketing Kate Bremner said the lessons from the opening of the Scottish market around data issues had been learnt. However, she warned that water retailers would quickly establish a list of good per- forming wholesalers and those that should be "on the naughty step". Ofgem senior director for customer and casework Richard Khaldi built on previous comments from the regulator and said that further deregulation is expected across the water sector. Wessex Water chief executive Colin Skellet said this will result in desegre- gation in the water industry and the ending of vertically integrated companies. Khaldi also hinted that changes to the with support from our sponsors

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