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10 | 14TH - 20TH JULY 2017 | UTILITY WEEK Interview million drop in income reported in its September interim results compared with the same period the previous year. So how confident is Karam that Bristol Water will not end up in another dispute about its final determination this time around? He responds with a smile. "I would answer it in a different way," he says. "My objective is to make sure that we have an effective business planning process that starts and finishes with our customers in mind. If we manage to do that, which is our intention, then by definition we should have fallen in line with the regulatory expectations of a good operator." Karam's plan is logical: listen to customers to under- stand what they want in the long term, translate that into a five-year set of customer priorities, and put a plan behind it that demonstrates that those priorities are being achieved at the lowest cost to customers and with as much innovation as possible. "Then, when we have asked our customers if they are supportive of our busi- ness plan, and they have said yes, that should put us in good standing with the regulator." Karam aims to put in place a process that "starts and finishes with the customer". "I'm confident that we're going to achieve that process and, to the extent that I believe that aligns with the regulatory requirements, I'm confident that we will have a good outcome." Karam's appointment at Bristol is his first turn in a chief executive's chair. He has big ideas, but as yet is not willing to set out a defined strategy for the company. Instead, he describes how he is in the throes of work- ing with stakeholders – including regulators, customer groups, the board and shareholders, and employees, particularly senior managers – to form a collectively rec- ognised vision. This work is already turning up "themes", which he believes will help Bristol "come out of its shell" and improve its standing in its community and industry. One of these is that the company needs to bet- ter understand its strengths and make sure they are leveraged to "create value for customers and other stakeholders". Bristol has a strong record of customer service, and scored in the upper quartile of the 2015/16 service incentive mechanism, with a very respectable 85 out of 100. However, Karam says there is more Bristol can do, beyond performing for regulatory mechanisms, to lever- age a special relationship with Bristol's famously localist community. This opportunity is "not very well under- stood", says Karam. "The question is how do we use that strength to become even more customer-focused, to be even more responsive to our customers, and even more valued?" The point Karam has identified early as a key consid- eration in developing a strategy for Bristol is its size – the company serves a relatively modest 1.2 million customers in total. "We need to recognise that we are a local com- pany," he says. And that "in a lot of cases" Bristol may not "have the full range of capabilities and resources that other utilities may have". On the other hand, Karam says Bristol's relatively diminutive stature gives it an "advantage of being able to act more quickly and be more agile, and do things differ- ently in a way that others can't". This is a latent opportu- nity which has not necessarily been recognised and built in to strategic thinking, he says. This kind of oversight reflects a Bristol Water that has become lacking in self-belief, according to Karam. The company must "believe" that it can compete and be better than others, insists its chief executive. "We don't nec- essarily need to be better than every one and everything, but we certainly need to understand what our strengths are and be ambitious." Bristol must be "much more confident about itself, and more outward-looking". Finally, the company needs to demonstrate how it is becoming more efficient – against both its own history, and where it needs to be in the future. Karam wants Bris- tol to become a more "active participant" in the industry, as well as in wider macro-challenges facing the UK – like climate change. It can teach others a lot about the merits of community-based activism, he states. However, bringing these lessons to the table will require sensitivity. The lead-up to the June general elec- tion raised questions about the legitimacy of privatised utilities, including privatised water companies, and Karam strongly believes it is the industry's obligation to respond to society's concerns. "It is hugely important for the whole of the industry – including stakeholders and regulators – that we work together to demonstrate that privatised utilities add a legitimate value to society as a whole," he says. "It isn't just about prices. It isn't just about services. It's about the trust and confidence that society has in us as good operators and, more importantly, as competent and confident longer-term custodians of what, in the customers' minds, are strategically important assets and services. They need to trust us that in the short, medium and longer term, we look aer their interests and that we are looking aer the infrastructure for them." One way of increasing trust in the sector is more com- petition, Karam suggests, and there are some "big areas" from which the industry can take lessons. "There is a general notion that the holistic monopoly does not nec- essarily provide the best level of service from a customer perspective – we need to address that, and part of that is about opening up the industry and allowing others to participate a lot more." Karam's view is that domestic competition in the longer term not only benefits customers but also improves the way an organisation sees itself as a service provider, rather than just a "compliance body" that ticks boxes to remain in line with rules and regulations. Although a strong supporter of domestic competition, Karam believes upstream competition is where industry should focus in the short and medium-term. "I would like to see [upstream competition] developed further and more rapidly before household competition is even discussed. I see there is added value in the creation of a market around a commodity to the customers, more than just purely competition in the provision of a service." He says the value in upstream competition – both in terms of water resources and in preparation for other types of competition – "makes it a priority". Whatever the timescale for the introduction of com- petition, Karam says Bristol Water will be a "very active participant" in the process of developing the industry. Aer all, the company was "very active" in its approach to preparing for non-household competition, display- ing an avid interest and input into the development of the industry codes and practices. And, Karam says, "we would certainly want to do that if household competition became a possibility". "It is hugely important for the whole of the industry that we work together to demonstrate that privatised utilities add a legitimate value to society as a whole."