Water & Wastewater Treatment Magazine
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But it could be seen to be fairer and to align with customers' feelings of identity. National frameworks for the cost of providing service are already in place for telecoms and other utilities. So why not water and wastewater? So our current system is not designed to be directly re ective of the cost of providing service. Responsive to customer wishes As for being responsive to customer wishes, prices currently re ect the cost to provide the level of service that is desired by its customers, with the customers' wishes gauged through willingness to pay surveys and focus groups. However, these surveys have di• culties in gauging true customer wishes. In e• ect, we ask customers who have not had any failure of service how much extra they would pay for someone else to have no failure of service. It is a challenging concept to respond to. Customer wishes are also gauged uniformly across a water company's region, although at least one water MARTIN OSBORNE, TECHNICAL DIRECTOR, WATER, WSP What could retail competition do for customers? Domestic retail competition could provide an opportunity to look again at how we determine the price of water to the customer and make the entire system more refl ective, responsive and equitable, writes Martin Osborne If we introduce competition in the domestic water market, it provides an opportunity to improve the current charging structure to align with principles that all agree with; but do we know what those principles are? I suggest three principles that are a useful test of the current and potential future relationship between water customers and their suppliers. Charges should be: a) re ective of the cost of providing service; b) responsive to customer wishes; c) equitable. But when these principles are in con ict, which of them should take precedence? Refl ective of the cost of service Under the current system, the charges in each region re ect the regional cost of providing service and a regional target level of service. So having prices re ective of cost of providing service is accepted as a principle, but only at a regional level. The charge to an individual community does not directly re ect the cost of providing service to that community. This leads to some anomalies - for example, the Thames Tideway scheme will be paid for by the people of Purley in Berkshire, who neither contribute to the problem nor directly beneˆ t from the solution; but not by the people of Pur eet in Essex who do. However, switching models so the costs fall at the community level would have its own disadvantages – not least, in that communities would struggle to a• ord large "lumpy" expenditure when expensive key assets serving the community needed investment. (Some of the small water-only companies have already faced this challenge.) So how about the alternative of a national charge based on a national cost of providing service? This would need to be aligned to the devolved nations and potentially further sub-divided with future devolution to the English regions. The Talk: opinion company analysed the willingness to pay results separately by operating area. They found signiˆ cant di• erences, but they decided that it was politically unacceptable to actually respond to those perceived customer wishes with di• erent levels of service and charges. It is perhaps reasonable that a community should be deterred from opting for a lower level of service at a cut price - but should it be prevented from opting to pay more for a better level of service? If a community su• ers from river ooding they are not only able, but o• cially encouraged to pay extra to get a higher level of protection. But if the community su• ers from sewer ooding it cannot. So the current approach is not designed to re ect customer's wishes at an individual, group or community level. Equitable The principle of fair redress is an important part of our legal framework; that one who su• ers a wrong is recompensed for it and one who commits a wrong pays compensation. However this principle is not built in to our current system of charging for water services. As an example, if a customer is ooded with sewage, the water company pays the customer a rebate of a few hundred pounds, that is likely to be much less than the damage caused. However, if a company oods more than its target number of customers, then all customers, including the 99% who have not been www.wwtonline.co.uk | WWT | OCTOBER 2017 | 7 "Prices operate at a re- gional level... the Thames Tideway scheme will be paid for by some people who neither contribute to the problem nor di- rectly benefi t from the solution."