Utility Week

UTILITY Week 8th September 2017

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10 | 8TH - 14TH SEPTEMBER 2017 | UTILITY WEEK Policy & Regulation Analysis T ake a glance at the water sector's offi- cial dataset for developer services, published by Water UK, and you'd be forgiven for thinking water companies are near-faultless. The figures, which have been published quarterly since June 2015, show high scores and a steady upwards trend across the sector – even the laggards come in with average scores in the mid-90 per cents. However, speak to certain customers and they paint a very different picture. Anecdo- tal evidence suggests water companies are hidebound by cumbersome, paper-based processes, and horror stories are whispered of housing developments being completed but sewage having to be tanked out because the new residents are waiting for sewerage connections. Builders, represented by the Home Build- ers Federation (HBF), have told Utility Week that as water companies are "gied" new water and sewerage assets in perpetuity by housing developers, they should step up and offer more "dynamic" infrastructure provi- sion for new housing supply. Even more frus- tration can be heard from self-lay providers, who, as well as complaining about poor ser- vice, argue that a lack of transparency and openness in the sector is obstructing compe- tition for the provision of new connections. Ofwat has stepped into this fray with pro- posals for a new regulatory measure – D-Mex – as part of its methodology for the next price review, PR19. The qualitative measure would complement Water UK's quantitative data, using customer interviews to capture water companies' performance on developer services and reward it with financial incen- tives worth up to 5 per cent of developer services revenue. But if the sector is perform- ing as well as the data suggests, then why is this new measure necessary? And how will it change water company behaviour? First up, the Water UK data. The num- bers are based on companies' performance around statutory and non-statutory targets – the time taken to respond to different types of enquiries, and other milestones in the process. They are staggeringly good – South Staffs, the lowest performer on water in the most recent quarter for which data is avail- able (Q1 2017-18), scored 94.6 per cent; while the lowest performer on sewerage, Thames Water, logged 97.28 per cent. The service offered by the leaders is apparently near- perfect, with Bournemouth Water achieving 99.73 per cent on water, and Welsh Water logging 99.9 per cent on sewerage. How good is the data? As if to pre-empt criticism, Water UK com- missioned an independent audit of the data- set, which reported back this summer. The report, by CH2M, concludes that the sector and its stakeholders can have "trust and confidence" in the data, despite some areas of non-compliance. It stated: "All companies have appropriate processes, data recording and reporting arrangements in place." Richard Warneford, chair of the Water UK Infrastructure Policy Group, says: "Huge progress has been made with the introduc- tion of the service standard measures, which show a generally high level of performance. The industry sees housebuilders and devel- opers as important customers and alongside the existing measures, the industry is very supportive of the introduction of a qualita- tive measure that reflects how customers feel about the service provided by water companies." It will take more than that to convince the HBF, whose spokesman says "the metrics are… not being reported on a like-for-like basis, neither within a company nor across companies and [companies] may be report- ing their achievement against varying targets for the level of services – in other words, out- side of the defined metric". Ofwat acknowledges the disparity between the data and the complaints on the ground. Associate director Jon Ashley tells Utility Week: "We're aware that developers' services customers have continued to raise their concerns about poor service from some water companies. One of the reasons that we [consulted on the introduction of D-MeX] now was that one of the measures that has been in place is the Water UK data, and we're still getting feedback that these aren't work- ing for customers, that they are interested in the quality of the service rather than specific metrics around whether something has been delivered by a certain time." The regulator's proposed solution, D-Mex, will sit alongside C-MeX, the cus- tomer experience successor of SIM (service incentive mechanism), and create financial incentives specifically for developer services for the first time. While the final format of D-MeX is yet to be agreed, Ofwat is looking at a regular sat- isfaction survey that can be compared across companies to create an annual league table. It proposes that Water UK continues publish- ing its quantitative dataset and promises to "explore" with a task group of customers and water companies whether that should be incorporated into D-Mex in any way. The task group will also look at the exact nature and timing of the financial incentives. D-MeX has won the support of water companies, which recognise the need for qualitative data to work alongside the quan- titative data collected by Water UK. Alison Tregane, developer manager at South West Water, says: "We have been talking for some time about having a qualitative as well as a quantitative measure. We believe it will pro- vide a more rounded score for our service to developers – and they are really critical to our business, and we need to have the whole picture." Tregane adds that South West Water already performs its own qualitative research, saying: "We are all looking for ways to improve our service, and if things come out as part of [D-MeX] we will take them on board." The root of the problem However, not all customers are confident that D-MeX will solve their problems. Fair Water Connections (FWC), the body repre- senting self-lay providers, told Utility Week last month that Ofwat was "missing an opportunity" to address barriers to compe- tition by failing to bring measures around openness and transparency into D-MeX. Martyn Speight, the FWC managing co- D-Mex for developers The water sector gives itself high marks for developer services, but this isn't borne out by some housebuilders' experience. Ofwat hopes its new D-Mex measure will fix things. By Ellen Bennett.

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