Note: This post was delayed a few months because of Prof. Dale Whittington and I running our Water Supply and Sanitation Policy in Developing Countries ‘massive open online course’, supported by the University of Manchester, on the Coursera platform. That was a great first experience of doing a MOOC – we had 17,250 learners from over 180 countries, and more than 150,000 lecture views!

Back in April we had a guest lecture by former Chief Executive of Ofwat, Regina Finn. This was for a course I teach on, led by Prof. Dale Whittington, addressing Water and Sanitation Planning and Policy in Developing Countries, at the University of Manchester. I was really looking forward to Regina’s guest lecture. I hadn’t heard any proper news or reports since she left Ofwat towards the end of 2013 after resigning last May.

Photo: Regina Finn gives a guest lecture at the University of Manchester, April 2014.
Photo: Regina Finn gives a guest lecture on our course unit at the University of Manchester, April 2014.

I’ve talked here about reported reactions to the pace and direction of the regulatory reform programme that Regina spear-headed at Ofwat. For instance there had been naysaying, dissenting voices complaining that reforms were too fast, and Ofwat’s reforms did not have a consistent strategy from the top if critics were to be believed. This sounded like a toxic environment in which to reform the sector. I was therefore keen to hear about exactly what had gone on from Regina herself.

Regina first took our joint-UK/USA class through her view of the achievements of the old mode of economic regulation of the England and Wales water industry since privatisation:

Photo: Achievements of the post-privatised England and Wales water sector. Source: Regina Finn.
Photo: Achievements of the post-privatised England and Wales water sector. Source: Regina Finn.

Shen then gave us an overview of changing challenges posed by the landscape shifting in the 25 years since privatisation in 1989:

Photo: Changing challenges for the England and Wales water sector since privatisation. Source: Regina Finn.
Photo: Changing challenges for the England and Wales water sector since privatisation. Source: Regina Finn.

Regina then explained why she felt the regulatory model needed to change, and showed this graphic of diminishing gains in water and sewerage CAPEX and OPEX efficiency gains over time:

Photo: Diminishing returns from efficiency gains of the old Ofwat regulatory model. Source: Regina Finn.
Photo: Diminishing returns from efficiency gains of the old Ofwat regulatory model. Source: Regina Finn.

Regina’s vision for Ofwat’s new model was to future-proof the sector and make it more responsive to customers and to prices they can continue to afford.

Reviewing her tenure as Ofwat’s first-ever Chief Exec from 2006 to 2013, Regina told our class it took about two years initially to build a consensus that reforms to the sector were needed at all. People seemed happy with existing indicators, in spite of diminishing returns across the sector. Regina was clear that it then took even longer to get the reforms enacted – and even now some are still not yet with us, but are on the statute books for the near future.

Photo: Regina Finn addresses our joint-UK/USA class.
Photo: Regina Finn addresses our joint-UK/USA class.

Regina seemed to have been adaptable in her strategic approach. Where she couldn’t broach significant reforms straightaway, she took an incremental/proof-of-concept approach, e.g. to try out non-domestic retail competition first, but by doing so perhaps raising popular expectation for future domestic competition.

Overall, I came away from Regina’s lecture with a changed view of past year’s events. Before I’d imagined Regina’s time at Ofwat towards the end must have been turbulent, given the apparent internal and external sniping at the reforms she was leading. After hearing direct from Regina – and I may be wrong, and of course don’t know all the details – I think she left after she’d achieved what she set out to in the first place, and when she would leave a reform pathway in motion, unlikely now to be reversed.

Coincidentally, later in the same lecture our class also studied the water utility reform case of Phnom Penh, Cambodia. There, highly charismatic utility leader Ek Sonn Chan in just over a decade turned around a water sector that was previously in a woeful state. He literally got a gun put to his head by an opponent of his reform programme at one point, and yet this did not deter him on his course of action. Circumstances in England and Wales were not this harsh at least! And we don’t really want water sectors around the world to have to rely upon the strength of character or charisma of single personalities alone to lever any positive change. Nevertheless meeting Regina Finn for this guest lecture was a reminder for me – rather like when I first met my Waterstink co-founder Roger some 15 or so years ago now – that it is good to have someone with conviction, and with a forward-looking direction of travel, to shift progress more towards what we now expect and will increasingly demand from our water utilities in the 21st century.

Incidentally, if you’d like to know more about the fascinating Cambodia water utility reform case I’ve mentioned above, you can watch a short film about it here:

Duncan Thomas

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