Towards a customer-driven water industry?

Hot-on-the-heels of Ofwat’s month-long social media campaign about ‘Spark’-ing innovation in the England and Wales water sector, we now have criticism of water companies’ handling the severe but forecast cold weather last week, and burst water pipe networks during the subsequent thaw.

This piece on BBC News, titled ‘Big thaw leaves thousands without water in parts of UK‘, captures the scene from today [6th March] and the past weekend:

“Homes across the UK are facing water supply problems – with thousands of people in Wales and south-east England urged to use as little as possible.

Water suppliers say a thaw has led to burst water mains and leaks.

About 13,000 homes are still without water in Kent and Sussex … and 5,000 homes in London also have no supply. …

At its peak, more than 20,000 homes in south and north London were left without water on Sunday. …

In Wales, about 3,500 customers are without water, Welsh Water said.”

The BBC notes the sector’s economic regulator Ofwat has responded. The most recent statement from new Chief Executive, Rachel Fletcher, is this (with added emphasis by me):

“The ongoing water supply problems affecting the country, most particularly parts of London and the South East of England, have been deeply distressing for all those affected. While the recent severe freeze and thaw have undoubtedly had an impact on pipes and infrastructure, this weather was forecast in advance. A number of water companies appear to have fallen well short on their forward planning and the quality of support and communication they’ve been providing, leaving some customers high and dry.

Everyone’s number one priority must be getting the water flowing as quickly as possible and ensuring that all customers – in particular those in vulnerable circumstances – get the support they need. When the taps are back on, we will take a long, hard look at what has happened here and we won’t hesitate to intervene if we find that companies have not had the right structures and mechanisms in place to be resilient enough.”

It seems there will be some kind of scrutiny and investigation of resilience planning for forecast conditions like these, and with possible penalties if ‘the right structures and mechanisms‘ were not in place. This process will be interesting to follow in the weeks and months ahead.

The sector’s England and Wales independent watchdog body, the Consumer Council for Water, has also responded, with its Chief Executive, Tony Smith, stating yesterday (again, my emphasis added):

“We have experienced a significant increase in calls from customers impacted by the supply interruptions across the country. We are aware that the severe weather has had a major impact on the network but some customers have been unhappy with the communication from their water company. Our immediate concern is making sure companies do all they can to help customers, particularly those in vulnerable circumstances. We will also be pushing water companies to improve their communication and planning which has, in some instances, fallen short of customers’ expectations.”

So it appears action may be forthcoming from CCWater too, in ‘pushing water companies‘ where their ‘communication and planning‘ has ‘fallen short of customers’ expectations‘.

The last time I remember covering water utility failures after forecast bad weather like this was in Northern Ireland back in late-2010/early-2011. At that time, cold weather and a subsequent thaw had similarly left up to 80,000 people without water, some for up to 11 days, in Northern Ireland Water’s areas of service. Resilience planning was again criticised, and some water utilities in Scotland and England were also affected.

One might imagine things have improved in terms of customer-driven and customer-focused planning for resilience in instances of extreme weather since that time, 7 years ago. The drive of Ofwat’s recent Spark! campaign was very much in this vein. Similarly the strategic focus of CCWater seems very aligned to this kind of issue, particularly with its primary aim of: “Securing the best outcomes for all water consumers – present and future“.

In the two decades I have researched the UK water industry, I have seen a gradual move – seemingly accelerated in recent years – that policies, regulations and strategies aim to make the sector more focused upon, responsive to, and driven by customer needs and expectations – particularly those of vulnerable customers. These developments are to be applauded and supported. At the same time the recent difficulties indicate they seem also to be very challenging for the sector actually to achieve.

So is this an intractable issue resulting from a water industry operating more as an ‘infrastructure’ and ‘environmental’ investment business (to paraphrase how Dieter Helm once put it, many years back) than as an industry driven by commitment to customer service? Ofwat’s Chairman, Jonson Cox, even echoed this kind of challenge as recently as a speech he made last week [1st March] to the Water UK City Conference 2018:

“I don’t think the sector has gone far enough.  A renewed effort is needed … [W]hat must customers feel about the headlines we’ve all read recently? They read of high dividends, high debt, complex holding company structures and off-shore companies. …

[Customers] do not have the sense that their water company is on their side, but rather that it is more interested in boosting financial returns.”

… and of course bear in mind that his speech came before the current thaw-related problems for water customers and those headlines!

My own view is that I think and hope that change is possible. However it is clear the regulator, watchdog and others may indeed need to intervene, engage and collaborate with utility companies, in order to change not only mindsets (as again highlighted by the Spark! campaign) but also perhaps ‘structures’, ‘mechanisms’, ‘communication’, and ‘planning’, as highlighted above, to move towards a more resilient water utility service to customers in future.

This will be challenging, and may involve ‘innovation’ of various kinds… but at the very least seems long-overdue…

Duncan Thomas

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